This week I had an opportunity most Americans would relish, just as I did. I was able to unload on two top executives of Goldman Sachs who descended from on high to my office because I clearly needed some educating. One was a Vice President and the other their Chief Risk Officer.
I had authored a letter on October 28, along with Congressman Peter Welch, that read, "We understand Goldman Sachs is expected to award its employees $21 billion in bonuses this year...Goldman Sachs is good at what it does, but its profits this year...were supplemented by the generous financial support of American taxpayers. In particular, Goldman Sachs benefited from a taxpayer payment of $12.9 billion from AIG on credit default swaps, insurance lending, and other contractual obligations between the two firms. AIG's payment to Goldman Sachs was, in fact, a taxpayer payment...Should taxpayers be repaid the $12.9 billion before bonuses are distributed to Goldman employees? We believe they should. We therefore urge Goldman Sachs to repay taxpayers the $12.9 billion it received from them through AIG."
The letter was signed "Sincerely" and I let them know just how sincerely I felt about it.
Amazingly, these visitors from another planet told me with very straight faces that I must realize that the $21 billion in bonuses were "accrued" bonuses. "Aaaaah," I nodded. "That will make all the difference in the world to my constituents who are losing their homes as well as their jobs." That's when I asked them exactly which planet they were in fact from.
"Forgive me for saying this," I said disingenuously, "but neither of you, as smart as you surely are, is worth 4,000 of my constituents," referring to the difference in the average salary of top executives in the financial sector and the average working person.
"Well we can't compare our employees with minimum wage workers," they pointed out. "We know that a $10 million salary sounds like a lot of money, but we are trying to get people who can make double that (that would be $20 million, I quickly calculated in my head) elsewhere. It's what the market demands."
Aaaaah, markets. Still, I resisted genuflecting. "I realize that you need to hire the kind of smarty-pants who truly understand complicated transactions like exotic derivatives and credit default swaps," said I, trying myself to sound like a smarty-pants, "but as I recall these are the very same people who almost brought down the entire global economy.
"Barney Frank," Chairman of the House Financial Services Committee and a bonafide smarty-pants, "makes $165,000 per year and he has done more to rescue our economy than anyone at Goldman Sachs. Or how about our CEO, President Barack Obama? He makes about $400,000, and lots of people would be willing to interview for that job."
By then I was furious and on a roll. "You are looking at one of the 57 members who voted against the repeal of Glass-Stiegel in 1999." That was the depression-era law that actually prevented financial institutions from becoming too big to fail by creating a firewall between the banking, insurance, and securities businesses. "And I am all for reinstating it, and I am from the school of, 'If you're too big to fail, then you're too big,' and besides all that, I am so far away from you in my thinking that your words barely compute, and from where I sit, you simply don't get it, and how stupid (yes I said the "s" word) can you be to think that any normal person can relate to "average" salaries for Goldman Sachs employees of $770,000 much less $21 billion in "accrued" bonuses," I sputtered as the bells rang in my office indicating a vote on the House floor.
No response -- just the same serious/tolerant expressions from the aliens. Then one of them thought of something. "We didn't ask for the bailout," he said hopefully. "And we paid the money back." Yes, after a record series of $100 million days and a record breaking $3.4 billion quarter, Goldman-Sachs, bless their hearts, paid us back. "But what about the $12.9 billion?"
"We'd like to tell you about that." The bells rang again. "I have to go vote now." "Would you be willing be meet again so we can tell you the valuable role that financial markets play in this country?" Now I'm silent, considering, then realizing that I'm actually enjoying myself. "OK" I finally respond. "We can talk but right now I'm out of here."
My only regret was that I didn't know at the time that Goldman Sachs had gotten for itself and its priceless geniuses H1N1 vaccines that lots of at-risk children are still waiting in line for. That would have been good to mention as I dashed out the door.