Big Bank Paychecks
There was a disturbing article in the Sunday New York Times about big banks, all recipients of TARP funds, distributing paychecks almost as large as before the financial crisis.
Also last week, several of the same banks posted big first quarter “profits”. How big? Wells Fargo announced $3 billion; Goldman Sachs had $2.8 billion; JPMorgan Chase, $2.1 billion; Bank of America, $4.25 billion and even Citibank had a “profit” of $1.6 billion. (Newsweek)
Then yesterday, buckling under heavy lobbying from banks, the Senate rejected a measure to help homeowners facing foreclosure.
It seems that Wall Street is back to business as usual or as Brad Hintz an analyst at Sanford C. Bernstein, told the Times, “Like everything on Wall Street, they’re starting to sin again. As you see a recovery, you’ll see everybody’s compensation beginning to rise.”
But, where is the recovery? What have they done since receiving $600 billion in bailout funds to help the rest of America? They have not loaned out the money to businesses and individuals as promised to help kick-start the economy. Instead, they are taking the TARP funds, approximately $36 billion of it, to hand out humongous paychecks.
At Goldman Sachs workers are looking at an average pay of $569,220 per worker and at JPMorgan Chase $509,524 per worker.
How do the banks justify hefty paychecks when just a few months ago they cried that their coffers were bare? Staff retention. Citigroup Chief Executive Vikram Pandit has talked to Treasury Secretary Timothy Geithner about paying special bonuses to keep demoralized workers from getting poached by competitors. (LA Times)
Is this the same staff that helped guide us into an economic crisis? Are they really worth an average of $500,000? And what is the worst that could happen if they leave? I’m guessing there are a least a few hundred others willing to step into that void for less money.
Unemployment is much more demoralizing than getting a paycheck less than $500,000, and are there really that many job openings right now on Wall Street that they can jump to?
I understand that they have to pay their workers, but instead of paying them unreasonably high retention bonuses, shouldn’t some of that money be used for expanding business, lending and paying back taxpayers?
Bogus Profits
Apparently the banks want us to believe these big pay checks come not from TARP money, aka our tax money, but from the sudden profits that these banks have made in the first quarter.
Right. If someone gave me a couple of billion dollars, I could post a profit too.
According to Rana Foroohar of Newsweek, these profits the banks profess to have suddenly earned, are bogus. She says, “A careful look at the banks’ profit news quickly reveals that there’s still plenty of uncertainty lurking on the balance sheets of top banks.”
Gasp.
I know. Who would have thought big banks would not be completely honest?
What they seem to be doing is just shifting the money around into different categories. Take for example Goldman Sachs. Their good news, according to Foroohar, came not from savvy trading, but from an accounting shift. Goldman switched from being a securities firm to a bank holding company last autumn, which changed its fiscal year, allowing it to leave much of December – a month with plenty of write-downs – largely off the books.
“There are plenty of smart people who believe that the improved profits of not just Goldman, but also most of the big banks in question, are in large part the result of relaxed accounting rules,” Foroohar continued.
Gasp again.
Banks Lobby Against Taxpayers
But I think the most disturbing news occurred yesterday. The Senate rejected a measure, which had already passed in the House, to help homeowners facing foreclosure. Banking lobbyists had fought hard against this measure and 51 Senators to their disgrace, capitulated.
At least one Senator was furious. Sen. Dick Durbin (D-Ill.) said, “I am sick and tired of being asked to give billions to these banks. If they have no sympathy for homeowners facing foreclosure, I don’t have any sympathy for them.” (LA Times)
These same bank lobbyists are working feverishly to stop legislation next week which will impose new consumer protections on credit card companies. The banks want to keep those record high interest rates and fine print on credit cards. The House passed that bill last Thursday.
In short, banks are using taxpayer money to lobby against taxpayers. Isn’t that called biting the hand that feeds you?
I think its time to make some calls to Senators.
Cheri Cabot, Politics Correspondent
Cheri’s column, “Personal About Politics,” published every week, will reflect on how the life of a 59 year-old, middle class woman is affected by politics, policy and the current state of the nation - a look at the personal aspects of politics. Her column is part of Gather Essentials.
Cheri is a freelance writer, living in Southern California. She has two grown children, one in Iowa and one a recent graduate of Columbia University, and is the proud grandmother of two. Cheri is also a purveyor of fine coffee, warm chatter and dry wit.
You can find all of Cheri’s columns on Personal About Politics at www.personalpolitcs.gather.com, The Obama Watch at theobamawatch.gather.com or her home page here, www.ccabot.gather.com.
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Comments: 49
Sen. Dick Durbin (D-Ill.) has been battling the banks the last few weeks in an effort to get 60 votes lined up for bankruptcy reform. He's losing.
On Monday night in an interview with a radio host back home, he came to a stark conclusion: the banks own the Senate.
"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place," he said on WJJG 1530 AM's "Mornings with Ray Hanania." Progress Illinois picked up the quote.
Housing is one of the two mandatory necessities humans require, food is the other, banks are, and for too long treating customers like an object, feeding upon our needs like leeches they are intoxicated on their expanding power of their own making. I hope citizens will convey their feelings to their senator(s) and representatives and urge them to consider a fair ceiling on interest rates and to STOP foreclosures without giving folks an opportunity to redress their refinancing options.
Good job Cheri.
Pass the cheese doodles.
It's not just the banks out of touch! We the people's representatives are out of touch too!
If the bailouts are necessary to prevent economic meltdown, fine, but then lets put more rules and regs in place and enforce them. Banks shouldn't be allowed to play with our money fast and loose and as Brad Hintz said, "sin again".
I, apparently like Marilyn, get most of my news from the fair and balanced FNC.
On FNC there were reports that banks (I don't remember which ones) who had recieved some of the initial baliout money decided that they didn't need it or didn't like the strings attached and tried to return it, but when they tried to return the check the government refused take it.
The banking industry is one of the most regulated in the country how much more involved should the government get?
If you think the pay that the excecs get from any institution is to extravagant then don't do business with those banks/companies/institutions.
I don't bank with any of those banks. Never have. I bank with a smaller bank that has never gotten involved with mortgages and is considered one of the most safe in the country. I'm not nearly as dumb as you think I am....sorry to disappoint you.
The government is supposed to be working for the people. all of them and not just banks or lobbyists.
Obama needs to step in and do something rather quick.
And yes, people who only listen to Fox get slanted reports that come down on the side of right-wing conservatives. It isn't news, it is propaganda. And for people to call it "fair and balanced" is utterly ridiculous.
http://www.usa.gov/Contact/Elected.shtml
Cheri,
Well I for one an not dissapointed and I also don't think you are dumb...except for promoting additional governmental control.
I also have not been involved with these banks......Does that mean I'm not dumb either? LOL!
Carla,
My problem is that my reps are Democrats and they support the mass spending. I have however contacted them and expressed my thoughts on the matter....More than once....They used to thank me for my correspondence....LOL!
Even here, thought, I remember seeing a news item shortly after the economic meltdown started that said a woman obtained the last 40 year mortgage to be allowed under rule changes. The woman looked to be in her later 40s. How long do they expect her to be able to pay a mortgage? She will be in her late 80s before the place is paid for. Doesn't she get to retire ever? That's all kinds of messed up.
We have to get past the disease of always wanting more.
Credit card companies stealing frequent flyer miles from their customers than "reallocatiing frequent flyer miles" for sweetheart loan deals.
Please join my credit card protest at http://www.daily-protest.com All you have to do to make a difference is put up a daily-protest sign.
Now, I received a bill for a yearly fee of $49.00. Minimum payment $15.00.
I'm sending a letter to them that I closed the account a year ago, and that I want that fee removed or I will be contacting my attorney.
I thought the banks were told to offer terms to make it possible for people to keep their homes. It sounds like some shady dealing is going on.
I (like many, many others) have begun to barter and trade services and supplies and am working two part-time jobs to keep the rain off my head.
Each of us has at least one sorrowful tale to tell since being "victimized" by those that hold the financial ax above our heads. I'm sick of being a "victim", and I won't be bullied anymore in the game of Have and Have Nots.
A letter-writing campaign? Good idea? Yup. On paper; no e-mail stuff. In an envelope, through the post office. It's time to kick butt.
What I find ironic is that my relatives who looked down at me these past 13 years for "not moving up in the world" , not buying a house, a better car, in other words, living way beyond my means, are suddenly looking at me in a different light. My car is paid for, I don't have any credit card debt, I have lived in my lovely apartment with great neighbors for 10 years. Both my kids are grown, happy and successful. I'm pretty darn happy.
Those same relatives that scorned me are now struggling with mortgage payments, payments on two high end cars, and can't afford to go out anymore. They are very stressed.
Could the way they are now looking at me be admiration?
Obama's done NOTHING, he didn't tell us he was going to do. It's Congress baby, and you can BET Nancy Pelosi is on her way OUT as speaker of the House. Her little gang has taken the Obama vision and made it their own, and as the polls tell the story, the public probably won't stand for it much longer.
Yeah. Cause NO control has worked SOOOOO well!
"If you have noticed, the republicans and democrats are increasing their attacks against each other while Chase bank expands into California and the credit card industry in general increases it's attack against millions of americans by changing terms and not allowing opt out clauses."
Of course, the Democrats HAVE to battle the Republicans! Have you missed the last 8 years under Corporate Bush? Someone HAS to fight the GOP to get something done! Guess who's obstructing progress?
"These pigs had better PRAY to whatever they worship that Hoovervilles and anarchy does not result from their actions,,,,, or they will be the first targets. "
Agreed. We're rapidly approaching the limit. All we need is one to actually SAY "Let them eat cake."
"Lots of contributions, Georgiana...on both sides of the aisle. As usual, money talks. "
More than that, Cheri! Cushy, high-paid jobs for life...once they leave government!
Cheri...great stuff...as always. Beware the Corporate GOP!
Regards,
Doyle I <~~~~~
I wasn't selling anything, merely stating facts. Even Obama has been co-opted here, and the only common thread between two presidents, is CONGRESS ! ! ! !
Nancy Pelosi is the albatross that must be killed and thrown into the sea. She's taken a so called "crisis" and used it for political advantage, moving beyond the role of government that EVEN OBAMA had in mind.
Harry Reid isn't far behind, he's just Nancy's puppet boy in the Senate, attempting to rubberstamp her lead.
Obama's probably already political toast, and he only has Pelosi to blame.
THATS THE PROBLEM WITH THE GOVERNEMENT TRYING TO PICK WINNERS AND LOSERS AND TRYING TO KEEP BAD COMPANIES FROM FAILING!
All the money wasted on TARP should have been put into building up the FDIC and then let the bad banks fail. But Obama and the Fed like the idea of socialism.
I have my money in TCF bank and am proud of it.
I will also never buy a GM or Chrysler car again. Once my Caravan dies, thats my last.
I don't buy from government run auto makers!
Sadly, I think Buckminster Fuller had it right when he said the nation's banks took control of the government during WWII.
What is the obverse of nationalizing the banks? Bankifying the nation?
Great article, Cheri.
Our little family does not have any credit cards or home loans (thankfully). We are just hanging on by the skin of our teeth, counting down these last few months until the car is paid-off; then, maybe, we can afford to get our vehicles repaired.
If Durbin told me the sun was shining, I'd have to go out and check. He's a wind checker of the first degree with few, if any original thoughts to his credit. He'll just make some noise and hope aboard the next gov takeover with the rest of the congressional lemmings.
Und...er...who told you they were fair and balanced? They themselves, perhaps?
It's called "indoctrination".
Good article, as usual, Cheri. I have been chewing over how big banks can possibly be making huge profits again since I first heard it mentioned on the news. It seemed incongruous, to say the least.
@ jJack Midknight - personally I think recognizing that the system of government is corrupt is a much better option than blindly believing that essentially nothing is wrong.
If nothing is wrong then I suppose it is just natural for these crises to occur and there's nothing we can do about it. But recognizing that something is deeply wrong is good news indeed, because it means it can be fixed and that we can all enjoy a better life.
There is a difference between cynicism and realism.
Although almost never published in accessible newspapers, the amount of well-researched scholarly work tracking corruption in government over the last hundred years or so is pretty staggering.
To understand please visit www.nopom.info.
To find examples, read the history of any nation.
Who said "nothing is wrong?"
There is a difference between cynicism and realism
Is it "realism" to believe the only motivation for serving in office is to "rake in the cash?"
former Florida Secretary of State Kathrine Harris spent 12 MILLION dollars of her own money to try and get elected to the US Senate. She failed. Why would someone be willing to spend their entire inheritance to get a job that pays less than $200K a year? The answer is that there is a "Lotta Mo" money being passed out "under the table" by corporate lobbyists!
The idea that if you accept money, as a legislator, you are therefore "bought and paid for," is obscene.
Sure, there are obviously some, taking "bribes" in a quid pro quo, cash for consideration scam.
Too many people however believe it MUST be true for ALL. It isn't "realism" to suggest our politicians are interested in nothing but personal greed, it is CYNICAL in the extreme.