Bloomberg today reports President Obama as commenting on the $17 million bonus for Jamie Dimon of JP Morgan Chase and the $9 million bonus for Lloyd Blankfein of Goldman Sachs,
I know both those guys; they are very savvy businessmen,
and
I, like most of the American people, don't begrudge people success or wealth. That is part of the free- market system.
Taken separately, these statements are undeniably true. But put them together in the context of the Bloomberg story - we have to wait until Friday for the full text of the interview - and the White House has a major public relations disaster on its hands. [UPDATE: See the complete transcript and video below.]
Does the president truly not understand that Dimon and Blankfein run banks that are regarded by policymakers and hence by credit markets as "too big to fail"?
This is the antithesis of a free-market system. Not only were their banks saved by government action in 2008-09 but the overly generous nature of this bailout (details here) means that the playing field is now massively tilted in favor of these banks. (I put this to Gerry Corrigan of Goldman and Barry Zubrow of JP Morgan when we appeared before the Senate Banking Committee last week; there was no effective rejoinder.)
Not only that, but the incentives for the people running these megabanks is now to take on reckless amounts of risk. They get the upside (for example, in these compensation packages) and - when the downside materializes - this belongs to taxpayers and everyone who loses a job. (See my testimony to the Senate Budget Committee yesterday; there was no disagreement among the witnesses or even across the aisle between Senators on this point.)
Being nice to the biggest banks will not save the midterm elections for the Democrats. The banks' campaign contributions will flow increasingly to the Republicans and against any Democrats (and there are precious few) who have fought for real reform.
The president's only political chance is to take on the too big to fail banks directly and clearly. He needs to explain where they came from (answer: the Reagan Revolution, gone wrong), how the problem became much worse during the last administration, and how - in credible detail - he will end their reign.
What we have now is not a free market. It is rather one of the most complete (and awful) instances ever of savvy businessmen capturing a state and the minds of the people who run it. Is this really what the president seeks to endorse?
The transcript of Obama's exchange on bonuses:
Q Let's talk bonuses for a minute: Lloyd Blankfein, $9 million; Jamie Dimon, $17 million. Now, granted, those were in stock and less than what some had expected. But are those numbers okay?
THE PRESIDENT: Well, look, first of all, I know both those guys. They're very savvy businessmen. And I, like most of the American people, don't begrudge people success or wealth. That's part of the free market system. I do think that the compensation packages that we've seen over the last decade at least have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.Q Seventeen million dollars is a lot for Main Street to stomach.
THE PRESIDENT: Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don't get to the World Series either. So I'm shocked by that as well. I guess the main principle we want to promote is a simple principle of "say on pay," that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay. The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs' success and ultimately will make the performance of American businesses better.
Les Leopold: Obama Is No FDR, We're No Mass Movement
Obama has made his share of blunders. But his statement that we "don't begrudge" the high salaries on Wall Street is about the dumbest thing he's ever said.
Leo Hindery, Jr.: Where Were CEOs in the State of the Union Address?
As the administration seeks to transform rhetoric on jobs into reality, it needs to get beyond the political and the theoretical and to get into the head's of the nation's thousands of CEOs and business owners.
Robert Reich: Obamanomics One Year Out
If you want to understand Obamanomics one year out, look at the demand-side hole we're still in, the gargantuan boomer deficit we're heading for, and the mad-as-hell party these bad times have spawned.
NEXT ELECTION VOTE FOR DENNIS KUCINICH...Lets not accept whomever the Dems choose.
more honest than most in the hot spot light. Power corrupts absolutely. Socrates said, "The only person who should wield power is the one who does not want it." I paraphrase. He was speaking of Solon, a ruler who did not seek power, but was convinced to take it because of his lack of desire for it and because of his wisdom. Now, where are we gonna find a President with those stripes?
The JP Morgan family would do well to recall what happened to them in the late 1930's when they tried this before... the entire wealthy community of financial industries suffered when the public - fed up with this type of Wealth Controls the Country dogma was shot down by the Public and the spreading out of all that accumulated wealth that categorized the 1950's and 1960's periods where America as a whole benefited by numerous public laws that were passed to prevent the mass accumulation of wealth by a few Hands and Corporations. Those interested in seeing how this was done, should read about Supreme Court Justice Louis Brandeis - a Crusader for the Public Good... President Obama needs the same help that Justice Brandeis looked for, appealed to, and got... we can do no less than support our Crusader.
Does anybody on the wack-a-doodle Left know the meaning of the Washington Consensus?
Does anybody out there in the Outer Space Caucus realize that Simon Johnson pushed the right-wing policies that consigned millions of people to extreme poverty--all to empower multinational corporations.
Simon Johnson is a con man who has managed to fool a lot of people, particularly on the left.
Wal-Mart is responsible for thousands of lost American manufacturing jobs and small businesses being forced to close. Obama could be using the Sherman Antitrust Act to break it up similar to how Teddy Roosevelt broke up Standard Oil. Wal-Mart's stores should be separated from their manufacturing and importing, at a minimum.
We have a national shortage of nurses. Business groups are proposing that we import nurses from the Philippines using H-1C visas. The main bottleneck is training, because colleges cannot compete with the salaries of the private sector. Obama could have proposed a national program to train Americans to become nurses, with increased pay for instructors and improved facilities.
Obama made time to continue the Bush bail-outs, visit China, and welcome India to the White House. Only after he had been in office for one year did he declare that jobs were a high priority, proving that his views on outsourcing coincide with those of Clinton and Bush.
What exactly does Simon Johnson need Obama to do to be convinced that Obama has already and will continue to "take on the too big to fail banks directly and clearly?" Johnson wants Obama to explain to the american people that this is all Reagan's fault? Who will that help? Certainly not Obama. Simon Johnson used to be a reasonable advocate of bank nationalization and stronger stress tests. Now, apparently, he's being paid to do something different.
Simon Johnson would make a much better Treasury Secretary than Clinton retreads Geithner and Summers.
Lest you suspect me of being some tea-bagger, I got a Christmas card from the Barack and Michelle and used to work on the stock exchange. I'm sorry, man, but Obama has completely blown financial reforms and it's business as usual in the casino. If you know better, please show us all where the banks have put the bail-out money.
The previous 7 waves can here legally so that has nothing to do with this discussion.
If we need a new wave to serve our needs we can legalize one.
We are a nation of immigrants and let in several hundred thousand legally every year. We have at least 23 different Visa programs for employers to import workers if they cannot find an US worker, for example HB1. We need to evaluate our needs and adjust immigrate quotas accordingly. The US has more Illegal immigrants than any other country.
There are BILLIONS of poor people in the world, you think we can afford for them all to come? WE have 10% unemployment here. We get to decide how many immigrants to allow in. They MUST come thru LEGAL channels as many do every year. Your argument makes NO SENSE. It does not matter why they are here, if they came ILLEGALLY, they need to leave and apply for visas thru legal channels. US immigration laws are written for the benefit of the US only, as are the immigration laws of EVERY other country. You think Mexico has lax immigration laws you haven’t done you research. Google: “Mexico immigration law”
And employers can pay “crappy wages” because they can hire illegal workers.
I opposed Bush’s plan for amnesty, but at least understood why he was for it. Rich GOP people love low wageworkers. But I would like a so called progressive, who are supposed to be the champions of average American workers, to explain to me why THEY support illegal immigrants who depress the wages and take the jobs of average Americans. Especially now with 10% unemployment and our government paying Billions in borrowed money foe unemployment benefits. Progressives are supposed to be FOR union people, but unions oppose illegal workers as much as anyone. WHY??
Making E-Verify mandatory would create between 6 and 15 MILLION jobs for Americans tomorrow! And it would only cost a few million. E-Verify is an Internet-based system operated by U.S. Citizenship and Immigration Services (USCIS) in partnership with the Social Security Administration.
http://www.uscis.gov/portal/site/uscis
http://en.wikipedia.org/wiki/E-Verify
What is called a republic is not any particular form of government. It is wholly characteristical of the purport, matter or object for which government ought to be instituted, and on which it is to be employed, res-publica, the public affairs, or the public good; or, literally translated, the public thing...Every government that does not act on the principle of a Republic, or in other words, that does not make the res-publica its whole and sole object, is not a good government. Republican government is no other than government established and conducted for the interest of the public, as well individually as collectively.
2. It is inhuman to talk of a million sterling a year, paid out of the public taxes of any country, for the support of any individual, whilst thousands who are forced to contribute thereto, are pining with want, and struggling with misery. [LIKE BAILOUTS AND BONUSES TO BANK CEOS] Government does not consist in a contrast between prisons and palaces [MCMANSIONS], between poverty and pomp; it is not instituted to rob the needy of his mite, and increase the wretchedness of the wretched.
http://www.thirdworldtraveler.com/Corporate_Welfare/WalMart_Welfare.html
http://www.alternet.org/blogs/peek/53177/
http://www.progress.org/2005/tcs179.htm
http://www.larouchepub.com/other/2003/3045walmart_iowa.html
* Walmart gets corporate subsidy from the government. WELFARE. And they needn't a penny.
* They pay so little, their employees have to get welfare. (and when managers tell their workers how great they are for bringing business, don't ask if the workers get a cut of the share of the HARD WORK they put in.)
* walmart comes in with artificial prices (see 'welfare' above for 2 reasons how) and drives out other businesses
* as walmart destroys livelihoods, people can no longer spend so walmart leaves, claiming the area isn't profitable and what's left is tumbleweeds
And don't get me started on microsoft... :) I loathe them, but walmart is worse. And that says a lot.
Obama's dragging on these issues helps explain why his remarks were supposedly taken out of context. On an immediate level, his remarks on the bonuses did appear as though if he sanctioned them even though it was only a prelude to his suggestion on shareholder say in executive compensation (A sort of "yes, but..."). Yet, in a larger context--and this is what many of us have been saying yesterday and today--his overall actions do strongly suggest that he has approved of those bonuses all along.
However, we do expect a certain amount of damage control--and not just in the form of short-term stimulus packages. After all, why has Obama retained his three Wall Street stooges, Larry, Timmy, and Ben against all good judgment? (And as far as I've seen it, the Dow has continued to plunge after Benny's reinstatement, LOL.) Why is he not considering ramping up taxes on the extremely wealthy by adding a few tax brackets and hiking up the highest up to 94%--instead of letting seniors forego their cost of living? Why not fully reinstate Glass-Steagall instead of merely moving in that direction? Why is he still more or less retaining GWB's No Child Left Behind Act as perfectly functioning schools in inner cities (esp. in NYC) are being shut down?
It's not only the fact that progressives always quit when they don't get easy victories. It's also their inability to recognize when compromise is necessary and their seemingly complete inability and unwillingness to to understand what they're talking about. Progressives believe there are no insurance regulations in the health care bill. Progressives believe the credit card bill had nothing groundbreaking in it. Progressives take a foreclosure relief program for granted as if every president rolls them out and deems it a failure because only a million mortgage holders have been given affordable monthly payments. Progressives believe that a public option covering less than 2% of the market would be a major source of downward pressure on premiums. Progressives complain about Bush's methods while believing that Obama can and should force congress to pass legislation.
The complete idiocy on display here daily is unbelievable.
No one's saying that Obama has done squat. Or that he can do it all by himself. (Although GWB, as asinine as he was, was able to get his ends accomplished.) It's that BO isn't trying very hard--beginning with his appointment of his stooges Larry, Timmy, and Ben--the ones who helped CAUSE the crisis. Did Obama honestly believe that the ones responsible for the mess would be able to clean it up? And let's not forget that he's waffled on more than enough on his campaign promises from "Yes we can" to "Maybe we can"...and then "Well, maybe not." The last I remember, he was lying through his teeth when he said that he was never in favor of a public health.
And yes, the idiocy on display here is unbelievable--and unfortunuately, most of it is from the Obamabots who are no different from the Bushbots, Hillbots, or Palinbots in their belief that their man is not above reproach.
um, then you must not be a democrat. because democrats want anyone with wealth or success to "spread the wealth". wasnt that your stance during the election mr. obama????
hmmmmm, seems like you're caving.
Democrats want people to succeed fairly and rightly AND to help others succeed fairly and rightly.
Not through deceit, chicanery, tricks, dis-ingenuousness, thievery, bullying, or any other form of harm.