Bacon's Rebellion

Democracy Thrives in Sunlight

Why People Are Pissed

—

by

James A. Bacon
in

There are good reasons why the American people are angry at the big bankers on Wall Street. The latest news is the revelation by way of Bloomberg that the Federal Reserve Bank discretely lent up to $1.2 trillion to United States banks at below-market interest rates during the height of the financial meltdown, a gift that translated into roughly $13 billion of income. There was no transparency to the action, and no accountability. This subsidy came on top of the subsidies made available through the Troubled Assets Relief Program.

With their purses thus padded by public intervention, executives in the financial sector went on to pay themselves obscene compensation packages. (The New York Times estimated pay packages averaged $595,000 per employee at Goldman Sachs and $463,000 for JPMorgan Chase.) While millions of Americans were losing their jobs, scrimping by on part-time work and coping with wage cutbacks, they were also paying for the privilege of enriching the masters of the universe whose great claim to business acumen was the ability to borrow and risk extraordinary sums of money, pocket the gains when they won their bets, and socialize their losses when they lost.

This is not free-market capitalism. This is heads-I-win-tails-you-lose crony capitalism. Wall Street does provide a legitimate and valuable function for society in allocating capital. But it was a party to a grotesque mis-allocation of hundreds of billions, if not trillions, of dollars in the 2000s, and the Attilas and Tamerlanes in pinstripes who pillaged the nation should be prostrating themselves in gratitude that they live in a country where the peasants don’t string up their oppressors by the gibbet.

Of course, the mercy bestowed upon these wealth destroyers may have something to do with the fact that the financial sector has donated $130 million so far in 2011-2012 to Congressional and presidential candidates of both parties, including President Obama. Donate millions to the politicians, reap billions in ill-gotten gains. That’s a pretty good Return on Investment.

— JAB

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8 responses to “Why People Are Pissed”

  1. TMT Avatar
    TMT

    Companies on the public take in the form of a bailout should be required to pay their officers no more than the SES pay schedule and other employees no more than the GS schedule. No future payoffs either unless and until Uncle Sam has been paid back fully. Also, all communications from the affected company should bear the statement “This company is being subsidized by taxpayers.” The combination of no big paychecks and public shame would go along way to fix this problem.

  2. Groveton Avatar
    Groveton

    Of the thousands of posts you have written and I have read that was your best!

    Absolutely spot on.

    Some of my friends make disparaging remarks about the Occupy Wall Street crowd. I have to disagree with them and their remarks. The young people who are occupying wall Street have a very legitimate complaint and I support them in that complaint. Sometimes, I wish they could translate their frustration to the people who ultimately bear the responsibility – the US federal government, but their hearts are in the right place.

    Now that Europe stands on the brink of financial turmoil, I have to wonder if we are headed for TARP II. There has been great fanfare about the exposure of German banks to risky loans made to fiscally decrepit Eurozone countries. However, there has been an almost chilling silence about the exposure of American banks to these same counties. In the world of underhanded and opaque American politics, silence is never a good thing.

    When the dot com bubble burst, President Bush put quite a few miscreants in jail. Congress passed a fairly draconian law called Sarbanes-Oxley.

    When the big banks on Wall St were determined to be too big to fail and bailed out with taxpayer funds, nobody was even indicted. The Frank-Dodd banking bill was a masterpiece of illusion. Now, Barney Frank has decided to retire. Does he see TARP II on the horizon? Or, as he claims, is he just too tired to run for reelection at age 71? One thing for sure, he will retire comfortably. In 2006 he reported assets valued between $525,020 and $1.6 million; by 2010 Mr. Franks’ net worth had soared to between $1.9 million and $4.6 million, with nary a down year in between. During four years of steady recession a man making $174,000 per year quadrupled his personal net worth.

    Neat trick.

    Please don’t get me wrong. The Republicans are no more interested in holding the bankers accountable than the Democrats. Nothing would have been different if John McCain were president instead of Barak Obama.

  3. larryg Avatar
    larryg

    ” Of course, the mercy bestowed upon these wealth destroyers may have something to do with the fact that the financial sector has donated $130 million so far in 2011-2012 to Congressional and presidential candidates of both parties, including President Obama. Donate millions to the politicians, reap billions in ill-got gains. That’s a pretty good Return on Investment.”

    tell us again which President signed off on this?

    bonus question: How did Barney Frank “protect” Fannie/Freddie when he was a minority congressman and the Republicans owned the Presidency and both houses of Congress… and passed tax cuts (not paid for), agreed to fight two wars (not paid for) and Medicare Part D (not paid for)?

    We can never get to an honest understanding here as long as we play this little anti-Obama game….

    Obama certainly deserves some blame ..mostly for not being as effective in dealing with the meltdowns and/or perhaps picking stimulus rather than something else ( something else being mostly.. allow the country slid into a depression).

    The TARP, bank and auto bailouts were no Obama decisions. But the current narrative is that we must dump Obama because he “supports” the auto and bank bailouts and did not act to undo what George Bush started.

    and the “solution” to the original Republican role in Fannie/Freddie, TARP, etc?

    or course.. vote Republicans in to “fix” the problem.

    ;-0

  4. Hydra Avatar
    Hydra

    Only 463,000?

    That is bad business. Ican easily imagine the damage they have done tothe economy is going to cost them more than that.

  5. Hydra Avatar
    Hydra

    TMT:

    Excellent.

  6. Hydra Avatar
    Hydra

    a man making $174,000 per year quadrupled his personal net worth.

    ==============================================

    You are only counting his public salary. If someone looked at my salary and my net wroth they might well say the same thing, but I have other sources of income.

    So, after 40 years of effort he’s got $4million and his pension. In todays world with that, he might be able to retire. In today’s world a nest egg of one million will throw off a whopping $20,000 a year in interest. If you get $2000 a month from social security you will be living on $40k a year.

    Barney, and a lot of other public servants will retire far better than that, but whoppee-do: it is nothing compared to the real fat cats who make that much — per day.

  7. Groveton Avatar
    Groveton

    Hydra:

    You are missing the point.

    The point is that he quadrupled his net worth between 2006 and 2010.

    During that time he made $174,000 per year.

    Therefore, his investments must have risen dramatically.

    Did your investments quadruple between 2006 and 2010?

    The only way I can even imagine pulling that off is to have been short.

    So, the elected official and head of the banking committee who was proclaiming Fannie Mae to be in fine shape was actually short the market?

    I am open to other ideas. However, very few people quadrupled their net worth from 2006 to 2010. The fact that the head of the banking committee dod so makes me suspicious.

  8. larryg Avatar
    larryg

    we need to separate out some things ….

    I have zero problem with purpose making money at lucrative endeavors.

    some people have a knack for making money….

    I do not think members of Congress nor staffers should be allowed to participate in financial transactions that they have insider info on.

    I think money in politics is different from financial chicanery… and much, much worse and will ultimately and sooner than later destroy any vestiges of a legitimate representative government bestowed on us by our forefathers.

    If you want to fear / revile something… fear this….before you ankle bite the “rich” and the so-called “job-creators”.

    and for Gawd sake.. STOP blaming Obama for everything from herpes to Hemmroids… it was our wonderful Supreme Court who voted to neuter Democracy .. even our LITE version of it.

    As a society , we’ve deteriorated into the “angry bees” … we’re mad as hell and we’re going to sting (blame)…. without regard to logic or common sense.

    Cries of “FIRE Bernanke” or Fire Holden… or FIRE the EPA or FIRE Treasury Secretary Timothy Geithner…. and replace them with WHO?

    another Obama selection?

    Nope… just fire them… and then fire Obama… and we’ll figure out who to put in charge afterwards…

    notice there is no…. ” this person” is the person who should be in charge…

    nope..

    it’s anyone but the guys currently doing the job.

    what idiocy this is……

    at any rate.. I do not blame the rich… or highly paid CEOs or sports figures or celebrities as long as they are not cheating and doing anything illegal.

    I don’t understand these attacks on anybody and everybody these days…

    it’s lunacy.

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