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November 1, 2008
The Facts
Most everyone has heard by now that Wall Street is going to use billions of taxpayer dollars to pay out year-end bonuses. Goldman Sachs, Morgan Stanley, and Merrill Lynch alone have earmarked $20 billion for such payouts; money they would not have had taxpayers not divvied up. There are six other companies doing the same thing; Citigroup, JPMorgan, Wells Fargo, Bank of America, Bank of New York Mellon and State Street. One-third of the employees surveyed said they not only expect bonuses, but expect bigger bonuses than they received last year. One ex-CEO said they would just find a way to get their bonuses and “–manage the political uproar”. He went on to say “I’m sure there are creative ways. There are all kinds of devices to cover yourself in terms of paying people”.
Representative Henry Waxman, the chairman of the House oversight committee, said his committee will investigate. But everyone knows that nothing ever really comes out of a political investigation except ammunition to use for gaining more political power. So New York Attorney General Andrew Cuomo decided to do his own investigation. Others are now doing the same thing.
My View
The very first image that came to my mind when I first heard this was the cartoon of the defiant mouse giving the finger to the elephant who was about to crush the mouse with his big foot. In this case, the executives are the mouse, but no elephant is around to stomp them, and they know it.
These companies are relying heavily on their non-paid spokespersons in the media to help them justify their swindle. CNBC’s Charlie Gasparino, Dennis Kneale and many others lead the way in speaking up on behalf of these individuals. Gasparino and Kneale keep telling us we need these people, and if we don’t pay them their blackmail money, they’ll just leave. They further insist they are the smartest financial people in the world and we can’t get along without them. Well, if these are the smartest financial people in the world, we are in much bigger trouble than we thought. Most of these people are the same ones that lead us into this financial mess. And, these media “experts” are also the ones telling us that Andrew Cuomo and Henry Waxman need to mind their own business; that they’ve got no right to be questioning how much they get paid, even if it is with taxpayer money. But here’s the bottom line; without the average working Joe’s tax money, not only would these thieves not be getting a bonus, they wouldn’t even have a salary. Therefore, this is nothing more than subsidized benefits.
The thing that seems to be getting lost in all of this money falling off the money tree is what the taxpayer money was supposed to be used for. But now that they’ve got our money, they are taking care of numro uno first. The money was supposed to be for keeping these lending institutions solvent by having money to lend. But one report says that more than half of the $163 billion given to banks will be used to pay shareholders. Ok, I understand that some of those shareholders are ordinary working people who have money in their 401k’s, but the majority are wealthy individuals who had so much extra money they didn’t know what to do with it. And those small businesses, auto and home buyers, and others that are supposed to be the benefactors from the easing of credit due to the bailout are no better off than they were before the bailout. So tell me again how this bailout was for main street?
Steve Pearlstein gives a very good summary of what is going on in an article he called “Hank Paulson’s $125 Billion Mistake“, although he, too, seems to subscribe to ‘keeping these needed intelligent people on the payroll’. As Pearlstein says, “banks aren’t using the money to make new loans to households and businesses, as they (the feds [added]) had assumed, but are using it to maintain dividend payments to shareholders, pay this year’s bonuses to executives and traders, or squirrel it away for future acquisitions”.
Two months ago when the bailout was first announced, it was reported that as much as 60% of the $700 billion would find its way into Wall Street pockets. I said then that I had no doubt that it would. The reason is the shear unlimited, unadulterated greed, and the arrogance of being untouchable. There will be a lot of superficial speeches by our elected officials, but they know as well as we do they aren’t going to do anything about it. And if the White House idiot had one bit of decency, he would speak out against this travesty. But that won’t happen, seeing as how his entire reign has been only to serve those same people.
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This is just all the more reason I was opposed to the bailout in the first place. Wall Street should suffer the consequences for their choices. I understand this would effect the economy and consumers. We’ve got that with the bailout anyway, but those consumers more directly involved aren’t paying anymore than the rest of us. The burden’s been shifted from those responsible.
Greed started this thing. And, it seems, greed is still a big piece of it. How can those getting these undeserved bonuses square their consciences with those left unemployed or homeless as fallout of their “good works?”