PROFITS FOR OBAMA’S
CRIMINAL BANKSTER DONORS HAVE SOARED MORE DURING HIS FIRST 2 YEARS THAN ALL
EIGHT YEARS OF BANKSTERS’ PILLAGE AND LOOTING UNDER BUSH! WHAT DOES THAT TELL
YOU?
OBAMA’S BANKSTER
DONORS DOIN’ GOOD! PROFITS UP! FORECLOSURES UP! BANK NO REGULATION GUARANTEED!
BAILOUTS FOR BUYOUTS…. And not a single bankster donor in prison!
WHAT DID THE BANKSTERS KNOW ABOUT OUR ACTOR
OBAMA THAT WE DIDN’T KNOW?
Records show that four out of Obama's top five
contributors are employees of financial industry giants - Goldman Sachs
($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207) and Citigroup
($358,054).
*
“Obama's rhetoric covered the whole financial industry,
but the key changes will affect only a few high-profile players, including
JPMorgan Chase & Co., while sparing investment banks like Goldman Sachs
Group Inc.”
*
Lou Dobbs Tonight
Thursday, July 9,
2009
And Harvard economics
professor JEFFREY MIRON will weigh in on the state of the U.S. economy—and why
the only plausible argument for bailing out banks crumbles on close
examination.
*
"There is a populist and conservative revolt against
Wall Street and financial elites, Congress and government," Democratic
pollster Stanley Greenberg warned in an analysis this week. "Democrats and
President Obama are seen as more interested in bailing out Wall Street than
helping Main Street."
*
August 21, 2010
Janet Tavakoli.President, Tavakoli Structured
Finance
August 15, 2010
How to Thwart the Assassins of the American Dream
Arianna Huffington's
new book, Third World America: How Our Politicians are Abandoning the Middle
Class and Betraying the American Dream, paints a grim picture of the State of
the Union:
"Every day,
Americans, faced with layoffs and tough economic times, are forced to use their
credit cards to pay for essentials such as food, housing, and medical care --
the costs of which continue to escalate. But, as their debt rises, they find it
harder to keep up with their payments. When they don't, banks, trying to offset
losses in other areas, turn around, hike interest rates, and impose all manner
of fees and penalties..."
Third World America,
(P. 77)
Our mediocre grammar
school and high school educational system continues its downward slide. The
Great Recession is squeezing school budgets. We are failing our children, our
most important resource of all.
In 2009, the American
Society of Civil Engineers gave the nation's infrastructure a near failing D
rating:
"Flip on a light
switch, and you are tapping into a seriously overtaxed electrical grid. Go to
the sink, and your tap water may be coming to you through pipes built during
the Civil War. Take a drive, and pass over pothole-filled roads and
cross-if-you-dare bridges. The evidence of decay is all around us." (P.
95)
The over-hyped
American Recovery and Reinvestment Act of 2009 earmarked only $72 billion of
the $787 billion appropriation of taxpayer dollars to projects to improve the
country's infrastructure.
Meanwhile,
multi-national corporations avoid taxes, sheltering $700 billion in foreign
earnings to end up with a measly $16 billion (2.3%) tax bill. GM is among those
companies, yet it took almost a half billion dollars in bailout loans. Boeing
and KBR Halliburton are among the defense contractors that avoid taxes, while
enjoying government contracts worth tens of billions.
Banks (not Fannie and
Freddie) Crippled the Housing Market
Fannie and Freddie do
not make loans. They purchase mortgage loans and earn fees for guaranteeing
payments on the loans. According to the Mortgage Bankers Association, in 2006,
Fannie and Freddie accounted for 33% of total mortgage backed securities
issuance. In the first half of 2010, they accounted for around 64% of new issuance.
They were forced to pick up the slack and buy more when Wall Street's private
label securitization Ponzi scheme blew up.
Fannie and Freddie
are Wall Street's dumping ground. They would have had problems on their own,
but their problems would not have been close to their current scale, and they
did not create the housing bubble.
Congress twisted arms
to make Fannie and Freddie buy more than $300 billion of phony "AAA"
rated mortgage-backed securities from banks, not counting loans that didn't
meet their stated requirements. Today Fannie and Freddie want banks to
repurchase tens of billions of these loans, since they fail to meet
representations and warranties, and the banks are fighting this obligation.
*
WHAT DID THE BANKSTERS KNOW ABOUT OUR ACTOR
OBAMA THAT WE DIDN’T KNOW?
Records show that four out of Obama's top five
contributors are employees of financial industry giants - Goldman Sachs
($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207 ) and Citigroup
($358,054).
*
Top subprime lenders
included Wells Fargo; Countrywide, purchased by Bank of America; Washington
Mutual, now part of JPMorgan Chase; CitiMortgage, part of Citigroup; First
Franklin (now closed), purchased by Merrill Lynch, which was purchased by Bank
of America; ChaseHome Finance, JPMorgan Chase; Ownit, partly owned by Merrill
Lynch, which was later purchased by Bank of America; and EMC, part of Bear
Stearns, which was purchased by JPMorgan Chase. Most of the rest depended on
massive loans from Wall Street. Many of these lenders were sued by states for fraud
and paid billions in settlements.
According to Inside
Mortgage Finance, the top mortgage backed securities underwriters during
2005-2006, only two of the subprime abuse years, included now defunct Lehman
Brothers ($106 billion); RBS Greenwich Capital ($99 billion); Countrywide
Securities, which is now part of Bank of America ($74 billion); Morgan Stanley
($74 billion);Credit Suisse First Boston ($73 billion); Merrill Lynch ($67
billion); Bear Stearns, which is now part of JPMorgan Chase ($61 billion); and
Goldman Sachs ($53 billion).
The above doesn't
even include the credit derivatives, collateralized debt obligations (CDOs),
and structured investment vehicles (SIVs) that amplified losses. Yet, Arianna
notes how America imploded while bankers soared:
"Someone like
[Robert] Rubin is able to wreak destruction, collect an ungodly profit, then go
along his merry way, pontificating about how 'markets have an inherent and
inevitable tendency -- probably rooted in human nature -- to go to excess, both
on the upside and the downside.' This from the man who, as Bill Clinton's
Treasury secretary, was vociferous in opposing the regulation of derivatives --
a key factor in the current economic crisis -- and who lobbied the Treasury
during the Bush years to prevent the downgrading of the credit rating of Enron
-- a debtor of Citigroup." (P. 150)
Robert Rubin operated
an economic wrecking-ball from prestigious positions of influence including
former co-chairman of Goldman Sachs, director of the National Economic Council,
former Treasury Secretary under President Bill Clinton, board member and senior
"risk wizard" counselor at Citigroup, member of the President's
Advisory Committee for Trade Negotiations, member of the SEC's Oversight and
Financial Services Advisory Committee, unofficial econmic adviser to President
Obama, and co-chairman of the Council on Foreign Relations.
Rubin is just one
example of the many bankers, who helped destroy the economy while creating a
connected financial oligarchy.
Hide Billions of
Losses, Take Bailouts, Collect Billions, Skip Jail
Instead of
apologizing for screwing up, the banks demanded the Great Bailout. At the start
of the meltdown, the IMF and the U.S. administration estimated losses of $2 to
$2.5 trillion. Unemployment and the losses are now shockingly worse. What was
merely a recession escalated into the Great Recession.
How big are the
actual losses? No one knows.
After destroying the
value of major banks, culprits used their enormous political influence --
funded with taxpayer dollars -- to get Congress to force the accounting board
to change accounting rules (as of April 2009) so banks don't have to recognize
losses until they sell the assets.
According to William
K. Black, after the much tinier S&L crisis, there were over 1,000
successful felony prosecutions, several thousand successful enforcement
actions, and roughly 1,000 successful civil actions.
This time Congress
gave us the Great Cover-up. Bank officers dodged jail time and collected
billions in bonuses. As one of my South American friends observes, he's
witnessed this third-world corruption before, and this time it's in English.
Banks Stall the
Recovery and Prolong the Great Recession
Unemployment marched
upward, delinquencies soared, and banks stalled foreclosures. The longer banks
delay foreclosures and sales, the longer they can avoid acknowledging losses.
Phony accounting and zero cost funding from taxpayers created an illusion of
recovery.
Stalling helps banks
while they pressure Congress to bail out failed mortgages with taxpayer
dollars. Instead of working out mortgages with homeowners, they can wait for a
government program to buyout or subsidize their failing loans. The markets
aren't recovering, because banks own colossal chunks of mystery-meat assets.
It's a black hole of
debt. If banks were forced to price these assets at market values and sell
them, the market would clear, and the market would make a faster recovery. When
Japan did this, it stalled its economy for twenty years, and it still hasn't
recovered.
Voters Must Demand
the Solution
Voters must demand
that Congress uncovers and publicizes facts and prosecutes the financial system's
massive multi-year frauds. This will mean thousands of felony prosecutions,
enforcement actions, and civil actions.
Congress completely
failed in genuine regulation and enforcement. It must start over on financial
reform, regulate derivatives, commodities trading, update Glass-Steagall, and
more. It will have to break-up the Too Big to Fail financial institutions.
CEOs of our
Systemically Dangerous Institutions (SDI's) fail to manage them, because no one
is capable of doing it. Like a morbidly obese junk food addict, banks won't
even get on a scale. Our banks refuse to properly measure (account for) the
problem.
Third World America
elegantly summarizes the way forward. Arianna Huffington names the culprits and
gives a roadmap for solutions. The rest is up to us. We deserve better than a
third world economy divided by ultra-rich on one side and debt-ridden middle
class and dirt poor citizens on the other. Citizens must demand a clean-up of
corruption and a foundation for healthy growth.
*
HUFF POST
IS THERE A GLOBAL WAR BETWEEN FINANCIAL THEOCRACY AND
DEMOCRACY?
BY LES LEOPOLD
Senate and House conferees are about to
reconcile a financial reform bill that is virtually designed to
institutionalize "too big to fail." And when they do we'll lose
another battle in the ongoing war between global financial markets and
democratic nation-states.
This war has been going on for decades
-- but democracy hasn't always been in full retreat.
The New Deal Conquest: During the Great Depression
democratic forces gained the upper hand in the war. We realized that financial
markets, which are driven by the largest banks and financiers, had to be
tightly controlled. We knew that global speculation on currencies only deepened
the Depression and had to be strictly limited. We knew that an iron curtain was
needed between commercial and investment banking to protect Main Street
depositors from market madness (that was the Glass-Steagall Act). And most
importantly we knew that the key to preventing economic upheaval was to limit
the wealth of the super-rich and to increase the wealth of working people
through progressive taxes, Social Security, wage and hour laws, and the
promotion of unionization. The Bretton Woods agreements forged by the Allies
during WWII set up strict rules for global finance, rules that kept financiers
in check for more than a quarter century.
And it worked pretty damn well. As
economist Joseph Stiglitz points out, this era saw only one financial crisis
(Brazil, 1964), and working people in western democracies made huge gains.
Since the era of deregulation took hold in the late 1970s, the world has
suffered over a hundred financial crises and middle-class incomes have
stagnated.
The Deregulatory
Counter-Offensive: By the late 1970s, bankers regained the advantage through
the spread of a new faith in self-regulated markets. The economic apostles of
unfettered markets lobbied against progressive taxes, unions, and social
welfare programs. The new orthodoxy was: Let the elites collect the
money--they'll invest wisely (instead of consuming), and all boats will rise.
This near-religious revolution rapidly spread through the economic and policy
establishment. Regulations were dismantled right and left, and the revolving
door between government and Wall Street started spinning. The American
financial catechism ruled the world. And on Wall Street, the money tap was
open. It did not trickle down.
Then, suddenly, in 2008, the market
gods destroyed themselves as the unregulated financial casinos crashed and
burned, just like they did in 1929. For a few months, it seemed like the
deregulatory theology become a global heresy. It was obvious that Wall Street's
reckless speculation and its bold new wave of financial engineering had caused
the Great Recession. (See The Looting of America for an accessible account.). It was also clear that if
government didn't come to the rescue, Wall Street would lay in ruins, along
with the rest of the economy. This was the perfect moment for democracy
reassert democratic control on financial markets, just as we did during the New
Deal. We blew it.
The Victory at Too
Big to Fail: At the moment when Wall Street was on its knees, we decided
to bypass serious reform. Instead, we rebuilt Wall Street, using taxpayer money
and guarantees - more than $10 trillion worth. We let bankers use our bailout
money to pay themselves $150 billion in bonuses -- at a moment when over 29
million Americans were jobless or forced into part-time jobs. We allowed the
top hedge fund managers to walk off with over $900,000 an hour (not a typo) in 2009. Windfall profits taxes? No. In fact
we let hedge fund honchos pay an extra-low tax rate by calling their income
"capital gains." We didn't restore Glass-Steagall, we didn't break up
"too big to fail" financial institutions. In fact the biggest banks
became even bigger, courtesy of the U.S. government.
The Invasion against
Democracy: The war is escalating. Right now, financial elites aren't
just fighting a defensive battle against new regulations. They're playing
offense: They're whipping up deficit hysteria around the globe and calling for
drastic cuts in middle class programs. Why? They want to ensure that their
loans to governments aren't threatened by rising public debt. Ironically, the
public debt they're so worried about was created in large part by them -- the
result of huge bailouts and other expenses stemming from the crash they caused.
Although the bankers want us to dismantle what remains of our worker-oriented
policies, welfare for the financial elites is still fine and dandy.
This is the most dangerous counter
attack in the history of finance. We had better know a great deal more about
the attackers. Who makes up this shadowy force called "global
markets"? Who fights their battles? Do they have a high command?
Not really. There is no executive
committee of financial elites. There's no international conspiracy, no Elders
of Zion. Instead these markets are pulled and pushed by about 50 very large
banks and financial institutions. This is where much of the nation's $2
trillion in hedge fund money roams. This is where the top six US banks frolic.
They don't have to sit around a table strategizing. They instantly sense
threats to their power. They instantly smell profitable openings and they're
poised to grab what they can, whenever they can. They thrive on turmoil, which
gives them new "proprietary" trading opportunities to exploit.
Volatility means big bucks, especially now that the largest players know that
the government will back up even their wildest gambles. History has just proven
that they are way too big to fail.
Of course they still have to lobby
government officials--many of whom either were bankers, or will be once they
leave office. But their most powerful lever on government is through the market
itself: Here, by moving vast quantities of money around, they can instantly
veto policies they don't like. If the EU talks seriously about financial
transaction taxes, the markets go down the Euro grows weaker, and interest
rates rise--making it more expensive for governments to borrow the money they
need to operate. Politicians have learned to "listen" to the markets
and are conditioned to placate them.
Should a nation state get out of line
(Greece, Italy, Spain, Portugal, etc), the markets slap them silly. Politicians
rush to the scene and start slicing social spending. If instead they demand new
taxes on financial elites to reduce public debt, the markets respond with even
more fury. Money flees.
All the external machinery of democracy
still clanks along. We still pull the levers in the voting booth. But the
decisions that affect us the most are made in a profoundly undemocratic way.
Faceless financial markets exercise far more control over politicians than the
voters who elected them.
So the problem isn't just the corporate
campaign contributions, or corporate media control or the academic consensus
supporting our financial theocracy. It's the raw power of the markets. They've
been roaming free and virtually unregulated for more than a generation, and now
their power is unparalleled. Just months after they brought our economy
crashing down, they're right back to their old tricks, setting the stage for
the next crash and the next bailout while getting filthy rich along the way.
Bill Clinton nailed it on the head when
he reportedly said:
"You mean to tell me that the success of the economic
program and my reelection hinges on the Federal Reserve and a bunch of fxxxing
bond traders?" (See Agenda by Bob Woodward)
No Retreat, No
Surrender? There's no room for
pacifists in this war. Clearly, Wall Street and its global minions are not
seeking a truce. Instead, they're coming after our Social Security, Medicare
and Medicaid programs. They want us to work longer before we retire and get
less when we do. They want us to pay more for health care and get less of it.
They want less public money to go to schools, teachers and public
infrastructures. And they want us to get used to a jobless recovery with double
digit unemployment rates. (And when millions and millions of people are
unemployed, we can't maintain high labor standards, and our wages and benefits
erode.) In short, they want to undermine all the policies and programs that
have built and sustained middle class life.
Already government officials in the UK,
Germany and here are telling us we must endure austerity for "decades to
come." As Fed Chair Ben Bernanke candidly put it:
"We can see what problems can arise in a country if
investors lose confidence in the fiscal position of that country, so it is very
important that we address this problem."
Of course, he's not going to point out
that this austerity is only for the masses, definitely not for the financial
elites. Or that the underlying cause of the debt investors are so worried about
is the giant economic crater caused by the very same financial elites who now
might "lose confidence" in financing a middle class society.
We shouldn't kid ourselves about the
pitched battles ahead. Fighting back won't be easy, and winning will be even
harder. People in country after country will have to mobilize themselves in
defense of real democracy, in defense of each nation's right to provide its
people with a decent quality of life. In my opinion, that includes sustainable
jobs with decent benefits and a solid public infrastructure that promotes
equity, protects the vulnerable and enriches the environment.
Unfortunately, no one can guarantee
that democracy will prevail in the war against financial theocracy -- just
recall the totalitarian chaos in Europe during the Great Depression. But don't
count it out, either. It's true that many of us regular folks have been
diverted by the media, distracted by the Internet or lulled into a stupor by
pharmaceuticals. But when we realize that we've been shoved into a corner with
no way out, we'll act. A popular struggle will begin. And when it does, we'll
at least have a fighting chance to recapture our democratic souls.
*
“Altogether, Goldman, JPMorgan Chase
and Morgan Stanley will gain nearly $20 billion in tax breaks from their
employee compensation this year.
$$$
“Records show that
four out of Obama's top five contributors are employees of financial industry
giants - Goldman Sachs ($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207)
and Citigroup ($358,054).
$$$
THE BANKSTER PRESIDENT AND HIS
BANKSTERS AT WORK. OR, ACTUALLY HE WORKS FOR THEM!
BANKSTERS ON A ROLL, A RAPE AND
PILLAGE ROLL! BROUGHT TO US BY THE BANKSTER PRESIDENT AND HIS HAREM OF
BANKSTERS’ SLUTS, LIKE BIDEN, FEINSTEIN, DODD and BARNEY FRANK!
BANKSTER PROFITS UP!!!
FORECLOSURES UP!!! (REAL) REGULATION UNLIKELY!!! BANKSTER CAMPAIGN
CONTRIBUTIONS GUARANTEED TO BE UP BIG TIME!!! THEIR PROFITABLE RAPE OF A NATION
IS GOIN’ GOOD WITH THIS BANKSTER OWNED PRESIDENT!
OBAMA FIGURES THE ONLY THING HE
NEEDS TO WIN ANOTHER 4 YEARS OF CON JOBS, ARE THE VOTES OF ILLEGALS. HE’S BEEN
SELLING US OUT TO 38 MILLION ILLEGALS EVEN BEFORE HE WON THE WHITE HOUSE!
$$$
January 23, 2010
Banks May Get Help to Escape Risk Limits
Only a year after the
government stepped in to aid Goldman Sachs and Morgan Stanley by granting them access to the federal safety
net, policy makers are developing an exit path that would allow them and others
to escape limits on banks being proposed by the Obama administration.
President Obama wants to limit the scope of risk-taking by
barring banks with federally insured deposits from trading securities for their
own accounts and from owning hedge funds and private equity funds. The plan, policy makers said on Friday,
would effectively require bank holding companies — which Goldman and Morgan
became at the height of the financial crisis — to divest themselves of these lucrative
operations.
But Treasury Department officials are also seeking to give banks that
do not like the proposed rules the option of dropping their status as holding
companies to keep their trading and other investment businesses.
The move is likely to
turn the spotlight on Goldman, which could be one of the biggest potential
beneficiaries because it makes sizable profits from proprietary trading and
runs many private equity and hedge funds. Goldman traders are known for taking
large trading positions, even as they manage trades for clients.
It is less clear that
Morgan Stanley would consider such a step, because it has aggressively raised
deposits and reduced trading operations since its big losses during the crisis.
Officials from each bank
declined to comment on Friday.
Allowing Goldman, or
other institutions, to abandon their bank charters carries risks. Such a plan
could create a two-tier system, where Goldman could pursue business activities
different from its bailed-out peers like JPMorgan Chase. Goldman would lose access to the Federal Reserve’s overnight lending program, which provides
emergency financing. But investors may still assume that the government would
bail out Goldman if it had trouble, elevating the risk of moral hazard.
Simon Johnson, a former
chief economist at the International Monetary
Fund, said allowing either
bank to revert to a securities firm would do little to address the underlying
problem. They are so large and interconnected that a collapse would imperil the
global financial system, he said.
“You can call them an
investment bank, a hedge fund, or a banana, but they are still too big to
fail,” Mr. Johnson said.
Andrew Williams, a
Treasury spokesman, confirmed that the proposal would allow the banks to
reverse their decision to become bank holding companies. But he said the Fed
would still closely regulate companies like Goldman because they would still be
systemically important.
“There is no escape
hatch,” he said. “There is nowhere to hide. Large, interconnected, highly
leveraged financial firms must be regulated on a comprehensive, consolidated
basis, the same as those for big firms who run banks.”
While bank holding
company status is generally permanent, investors have speculated for months
that Goldman might seek a way to unshackle itself from some of the additional
government regulation that goes with it.
Goldman officials have
said privately it would like to shed its holding company status, although they
have stated publicly that they do not plan to change the company’s charter. On
Thursday, David A. Viniar, the bank’s chief financial officer, said the topic
was not under discussion.
“I just think it’s
unrealistic,” Mr. Viniar said in a call with reporters. “I think we’re living
in a world where basically every major financial institution is going to be
regulated by the Fed.”
But Goldman could change
its tune if the Treasury created guidelines for banks to shed their holding
company status.
The first step for
Goldman would be to dispose of its debt, which is backed by the government, or
wait until it expires in about two years, the person with knowledge of the plan
said.
In addition to the
federal bailout, the government agreed that the Federal Deposit
Insurance Corporation would back some bank
debt issued when the markets were frozen and banks could not otherwise raise
money. Goldman has issued $21 billion of the debt.
The Treasury will
include the exit strategy in the legislative proposal it is preparing to send
to Congress, Mr. Williams said. Lawmakers could make significant changes to the
proposal.
The plan does not now
clarify what proprietary trading activities would be limited. Officials said
banks would not be permitted to use their own capital for “trading unrelated to
serving customers.” They also said that the rules would require banks that own
hedge funds and private equity funds to dispose of them over several years.
Mr. Obama called the ban
on trading “the Volcker Rule,” in recognition of the former Fed chairman, Paul A. Volcker, who has championed the proposal to prohibit
bank holding companies from owning, investing in or sponsoring hedge funds or
private equity funds and from engaging in proprietary trading. Big losses by
banks in the trading of financial securities helped fuel the credit crisis in
2008.
$$$
Three top Wall Street banks to award $49.5
billion in year-end bonuses
By Barry Grey
5 January 2010
The US media has been virtually silent on the colossal year-end bonuses for
2009 that will shortly be handed out by major American banks and financial
firms. This is doubtless a deliberate response by the corporate-controlled
media to popular anger over the financial gains reaped by Wall Street
executives, who have been bailed out at taxpayer expense while working people
have been left to face depression levels of unemployment and mounting home
foreclosures, hunger and poverty.
A brief article published on the inside pages of the business section of the
January 1
New York Times (“With Bigger Bonuses, An Upside for Banks”)
notes in passing that the three top Wall Street banks will pay out an estimated
$49.5 billion in cash bonuses and stock awards.
Those banks—Goldman Sachs, JPMorgan Chase and Morgan Stanley—received a
combined $45 billion in cash under the $700 billion Troubled Asset Relief
Program (TARP) passed by Congress in October of 2008. Along with the rest of
the banks, they have benefitted from trillions of dollars in nearly
interest-free loans, debt guarantees, securities purchases and other subsidies
from the Treasury and the Federal Reserve Board.
The government has further underwritten bank profits and surging bonuses by
keeping interest rates at near-zero and pumping trillions of dollars of cheap
credit into the financial markets, while placing no restrictions on the ability
of the banks to resume the speculative practices that precipitated the
financial crash of 2008.
Meanwhile, the American people have lost $11 trillion in wealth, primarily
through the collapse of home values. For their part, the banks have sharply
curtailed lending over the past 15 months, draining more than $3 trillion of
credit from the economy.
In the fall of 2008, the Bush administration, with the support of
then-presidential candidate Barack Obama and congressional Democrats, sought to
sell the bailout to the public on the grounds that it would enable the banks to
resume lending. However, the TARP law imposed no strings on the bailed out
banks, allowing them to do with the money what they wanted, without even
requiring that they tell the government how they were using their cash
windfalls.
The curtailment of lending by the banks has played a major role in deepening
and prolonging the recession. Instead of increasing credit to businesses and
consumers, the banks have made large—in some cases, record—profits through
speculative trading in stocks, bonds, currencies and commodities.
The same article in the
Times cites Robert Willens, an accounting
and tax analyst in New York, who estimates that US banks will hand out $200
billion in total compensation, a figure that does not take into account the
hedge fund industry.
To place this sum in perspective, it is roughly equal to the annual median
salary of 4 million American workers.
All of the major banks have been allowed by the Obama administration to
repay their TARP cash injections, thereby freeing them from minor restrictions
on executive pay imposed on banks that continue to hold TARP money.
According to Willens, the banks will reap $80 billion in tax savings from
the $200 billion in compensation, since most employee compensation is a tax
deductible expense under existing tax laws. The biggest tax break will go to
Goldman Sachs, which expects to award its employees a record $23 billion in
bonuses. Goldman will save about $9 billion in federal income taxes on the
bonuses it pays out for 2009.
Altogether, Goldman, JPMorgan Chase
and Morgan Stanley will gain nearly $20 billion in tax breaks from their
employee compensation this year.
Indicative of the year-end bonanza for bankers, the
Times reported
in a separate article on January 1 that Wells Fargo, the fourth largest US bank
by assets, which received $25 billion in TARP cash, plans to pay its top four
executives a combined $25 million in bonuses. These are to be paid entirely in
stock options, rather than cash.
In awarding the bonuses in stock rather than cash, Wells Fargo is following
the example of other big banks, including Goldman Sachs. Under prodding from
the administration, banks are paying a greater portion of executive
compensation in deferred stock, supposedly to tie pay awards to long-term
growth rather than short-term gains. However, as the
Times points out,
“If banks… continue to rebound from the financial crisis, their shares—and the
executive payouts—could surge.”
Since the government has made clear that it will impose no genuine reforms
or restrictions on the banking industry, and will spend unlimited sums to
protect the wealth of the Wall Street elite, the bankers have every reason to
believe that stock bonuses will prove more lucrative than cash.
The government’s undiminished commitment to rescuing Wall Street was
underscored on Christmas eve, when the Treasury announced that it was removing
a $400 billion cap on government aid to the mortgage finance giants Fannie Mae
and Freddie Mac and approving cash pay packages of $6 million each to the CEOs
of the government-controlled firms.
Surging bank profits and bonuses go hand in hand with a dizzying rally on
the US stock market. In a year that saw the permanent destruction of millions
of jobs, all three major US stock indexes recorded massive increases. The Dow
Jones Industrial Average ended 2009 up 18.8 percent for the year. The broader
Standard & Poor’s 500 stock index surged 23.5 percent, and the
technology-heavy Nasdaq rose 43.9 percent.
From their lows in early March, the stock indexes recorded even more
staggering gains in a “rally many investors had not seen in their lifetime,”
according to the January 1
Washington Post. The Dow rose 59 percent,
the S&P 500 soared 65 percent and the Nasdaq was up 79 percent.
Financial stocks were up 15 percent for the year, including Bank of America,
whose share price quadrupled from its March low. Ford stock increased 532
percent from its low point in March.
In all, the value of US stocks increased by $5.6 trillion from the market’s
nadir, the resulting windfall going disproportionately to the wealthiest
investors.
A major factor in the stunning rebound in the financial markets was the
refusal of the government to impose any serious reforms in the wake of the
worst financial crash since the Great Depression. As the
Wall Street
Journal noted in a year-end review on January 4: “But more than a year
after Lehman Brothers, American International Group Inc., Fannie Mae, Freddie
Mac and Washington Mutual collapsed or were saved by the government and
financial markets swooned, it is striking how little on Wall Street has
changed.”
The scale and character of the government bailout was summed up aptly by
Simon Johnson, the former chief economist at the International Monetary Fund,
in a review of recent books on the financial crash. Writing in the December 27
Washington
Post, Johnson said, “The Wall Street executives kept their jobs, their
bonuses and their pensions; they benefitted from unprecedented rule changes and
unlimited monetary and fiscal support; and their firms became even bigger and
more dangerous to the economic health of society…
“The executives of our largest banks ran their firms into the ground, taking
excessive risks that even now they fail to understand fully. But, as these
individuals saw it, unless they personally were saved on incredibly generous
terms, the world’s economy would grind to a halt.”
The Obama administration and the Democrats, no less than Bush and the
Republicans, agreed that their chief mission was to rescue the personal
fortunes of these executives and the financial oligarchy they represent.
*
BANKSTERS THAT BOUGHT OBAMA, EVEN BEFORE HE CONNED US INTO
THE WHITE HOUSE WITH HIS PERFORMANCE OF “CHANGE”, HAVE REAPED MASSIVE BENEFITS
FROM THE PURCHASE OF BARACK OBAMA, LISTED ON JUDICIAL WATCH’S TEN MOST CORRUPT
AGAIN IN 2009!
*
WHAT DID THE BANKSTERS KNOW ABOUT OUR ACTOR OBAMA THAT WE
DIDN’T KNOW?
Records show that four out of Obama's top five contributors
are employees of financial industry giants - Goldman Sachs ($571,330), UBS AG
($364,806), JPMorgan Chase ($362,207) and Citigroup ($358,054).
*
BARACK OBAMA HAS COLLECTED NEARLY TWICE AS MUCH MONEY AS
JOHN McCAIN
BY DAVID SALTONSTALL
DAILY NEWS SENIOR CORRESPONDENT
July 1st 2008
Wall Street firms have chipped in more than $9 million to
Barack Obama. Zurga/Bloomberg
Wall Street is investing heavily in Barack Obama.
Although the Democratic presidential hopeful has vowed to
raise capital gains and corporate taxes, financial industry bigs have
contributed almost twice as much to Obama as to GOP rival John McCain, a Daily
News analysis of campaign records shows.
"Wall Street wants change and wants a curtailment in
spending. It wants someone who focuses on the domestic economy," said Jim
Cramer, the boisterous host of CNBC's "Mad Money."
Cramer also does not discount nostalgia for the go-go 1990s,
when Bill Clinton led the largest economic expansion in history.
"It wants a Clinton like in 1992, but not a Hillary
Clinton," he said. "That's Barack Obama."
For both candidates, Wall Street's investment and banking
sectors have become among their portliest cash cows, contributing $9.5 million
to Obama and $5.3 million to McCain so far.
It's a haul that is already raising concerns that, as the
nation's faltering economy has become issue No. 1, the two candidates may have
a hard time playing tough on issues like market regulation or corporate-tax
loopholes.
"No matter who wins in November, Wall Street will have
a friend in the White House," said Massie Ritsch of the Center for
Responsive Politics, which crunched the data for The News.
Wall Street's generosity toward Obama, in particular, would
seem to run counter to its self-interests.
In addition to calling for corporate and capital gains tax
hikes, Obama has proposed raising income taxes on those earning more than
$250,000.
But Wall Street is often motivated by something more than
money - winning.
"In general, these are professional
prognosticators," said Ritsch. "And they may be putting their money
on the person they predict will win, not the candidate they hope will
win."
Records show that
four out of Obama's top five contributors are employees of financial industry
giants - Goldman Sachs ($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207)
and Citigroup ($358,054).
McCain's top five include Wall Street's Merrill Lynch
($230,310) and Citigroup ($219,551).
Obama's Wall Street haul is not the biggest ever. That
distinction belongs to President Bush, who as an incumbent in 2004 raised
$10,852,696 from Wall Street interests through April that year - about $1
million more than Obama.