New Rise of Executive Pay at Banks Exposes the Folly of Bush & Obama Handling of Financial Crisis
Yesterday the New York Times ran a story reporting that executive pay at the nation’s largest banks is again approaching pre-financial crisis levels. This is simply a signal that management teams in New York, Charlotte and elsewhere in banking headquarters are pursuing a business as usual approach to what many believe is the beginning of the end to the recession.
Krugman’s column today further adds to the case he’s been making all along during this financial crisis – Wall Street’s emperors have no clothes and taxpayers are footing the bill to rebuild their wardrobe.
So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.
Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks?
Here’s what I think is most disturbing about recent financial history and the Bush and Obama Administrations’ policies:
Full Text – Documents: Cuomo Letter and Docs Regarding BofA Merrill-Lynch Merger
Paulson Threatened to Fire BofA’s Mgmt & Board
Paulson & Bernanke Demanded Silence from BofA CEO
Mr. President, We’re Not All In The Same Boat
I just read the biggest bunch of horse pucky to come out of the Obama marketing machine since all of the false “outrage” over the AIG bonuses.
According to a story on the Reuters business wire tonight, President Barack Obama will meet with bankers on Friday and tell them, “We’re all in the same boat.” His press secretary, Robert Gibbs, explains further:
“The president looks forward to getting an update on what they’re seeing happening in the economy,” Gibbs said on Wednesday of the banking chief executives who are slated to meet with the president later this week.
He said Obama’s message at the meeting would be to say that what is good for Wall Street is good for Main Street.
“We’re all in the same boat,” Gibbs said. “We have to understand that … what is good for one has to be also good for the other.”
This is becoming the schizophrenic presidency. One day we get Obama, hero for the middle class. This Obama campaigns on a middle class tax cut – a true middle class tax cut, not Republican trickle down – and puts it in his budget. The next day, after attacks from Capitol Hill, the middle class tax cut is suddenly a “maybe.” One day we get President Outrage – angry beyond belief at those bloodsuckers on Wall Street for taking advantage of the taxpayer. The next day we get a trillion dollar pledge from the President’s treasury secretary to use more taxpayer money to further front toxic assets.
Today, this is just President Bad PR. Do taxpayers want to hear the President coddling bankers? “We’re all in the same boat?” Give me a break. We’re all in a barrel headed over the Niagra Falls – a barrel the bankers and brokers put us into. So far, in this recession, this financial crisis, the bankers and brokers have been sailing aboard the Queen Mary. I mean, come on — they made all the mistakes and we’re stuck footing the bill.
I know I’m not in the same boat with the suits Obama will speak to on Friday. When they fuck up, Hank Paulson, Timothy Geithner and Ben Bernanke are like the OJ Simpson Dream Team, pulling Wall Street’s chestnuts out of the fire. When you or I fuck up – we’re just fucked.
With Wall Street Democrats Running the Bank Bailout, Thank God for Paul Krugman
It’s too bad Paul Krugman isn’t the one watching our tax dollars, from his column today in the New York Times:
Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.
This is more than disappointing. In fact, it fills me with a sense of despair.
After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.
And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.
It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.
Follow the link above and go read the rest. Krugman explains the economics of the issue. Anyone else getting the feeling the Obama Administration – like the Bushies before them – are bending over backwards to not offend the people who brought our economy to its knees?
AIG: The PR Nightmare That Keeps on Giving
Last Weekend Bonus Story, This Weekend AIG Suing the IRS
How many WTF? moments will the American International Group give us by the time the company is once again solvent or is finally taken out behind the barn and put out of its misery?
Last Saturday night, with just enough time to allow the Sunday shows to prepare killer questions for Larry Summers, the AIG bonus story entered the media consciousness. If you’ve been in a cave all week the story goes something like this: Since last September the U.S. government has pumped $170-180 billion into the gaping maw of the world’s largest insurer and biggest loser in the reality show known as the credit default swap market. Uncle Sam now owns 80% of AIG. It was revealed last Saturday that the company has paid $165 million in bonuses to executives and staff of its financial products division. This is the division that has essentially ruined the entire company. The American public is royally pissed off and every politician worth his or her salt is “outraged.”
