I’d like nothing more than to give the bailout scandal a rest — but the bankers won’t let me! They just keep coming at us with ever-more-clever inventions of greed and deceit.
Their latest bit of hocus-pocus, accompanied by big puffs of smoke, is a dazzling show of profits. Yes, Goldman Sachs, Citigroup, Bank of America, JPMorgan Chase and other financial giants that only yesterday were insolvent basket cases now report that poof! — in the first quarter of this year, they magically produced blockbuster profits. Absolutely A-mazing! Of course, it’s a con job. After all, magicians don’t perform magic. They create illusions.
First — and most obvious — the “profits” are made possible only because you and I have stuffed the banks with massive infusions of tax dollars. Indeed, they wouldn’t even be standing without our money. I don’t mean merely the $700 billion straightforward bailout approved by Congress, but also the nearly $2.5 trillion in such backdoor subsidies as dirt-cheap loans and government guarantees quietly extended by the Federal Reserve and the Treasury.
Second, the banks lobbied for and won a regulatory break that lets them pretend that all of those bad housing investments weighing down their books like a load of toxic waste are worth ... well, worth whatever the bankers say they’re worth. So — Shazam! — huge losses are wiped clean by banker fantasy.
Then there are special little puffs of smoke used by particular banks. For example, Goldman Sachs (which has us taxpayers on the hook for more than $50 billion in its bailout package) breathlessly announced a dazzling profit of $1.8 billion for the first quarter. The dazzle dimmed, however, when it was learned that Goldman had altered its definition of “quarter,” shifting its normal December-to-March quarter ahead one month, thus disappearing December. That was a month in which the bank lost $1.5 billion, so scrubbing it gave the revised calendar a neat banker buff job.
Meanwhile, these same bankers are using their miraculous profit numbers as an excuse to — guess what? — bulk up executive paychecks! While the Obama administration has imposed some limits on the pay of the very top executives of bailed-out banks, the CEOs expect to be out from under these restrictions before long. So, to take care of themselves — and to restore Wall Street’s sense that investment bankers are the most deserving people on the planet — they are now setting aside billions of dollars to be distributed at the end of the year as executive compensation, including the return of outlandish bonuses.
Goldman Sachs leads the pack, having reserved $4.7 billion to cover such compensation just for the first three months of this year. “We need to be able to pay our people,” barked a Goldman spokesperson. Well, yes, but at the rate of nearly $5 billion per quarter, every banker in the firm would average $569,000 — and, of course, top executives would draw many times that average.
Can these guys (and they are mostly guys) even spell “outrageous”? These set-asides would return Wall Street to the bloated 2007 level of gilded greed that perverted its ethics and led to the crash that has swamped us all. Meanwhile, every billion dollars snapped up by the self-absorbed bankers is a billion that doesn’t go into loans to help our economy, doesn’t go to repayment of the federal debt run up by the bailout and doesn’t go to shareholders who’ve lost huge sums thanks to these very bankers.
As Chaucer once said about goats: They “stinken.”
This is proof that Wall Street bankers have learned nothing. It’s also proof that Barack Obama’s present bailout policy of saving the bankers must go, and that the bankers
themselves must go.
To connect with a grassroots campaign to bring real structural change to Wall Street, go to www.anewwayforward.org.