Obama Misses Opportunity To Fix Wall Street
When the story broke last week that the Merrill Lynch rammed through executive bonuses in advance to merging with Bank of America, it set off a firestorm. Out of the $25 Billion that Merrill Lynch and Bank of America in TARP money last year, Merrill’s compensation committee voted to give nearly $4 billion in bonuses to executives. Talk about rewarding failure. Your company has just been taken over, you took taxpayer money to survive and here, take some taxpayer money home with you. As further insult, the now merged Bank of America and Merril Lynch will get another $20B in TARP money this year.
Then the story hit that overall Wall Street bonuses were at the same level as they were in 2004, that is to say sizable, but at least 44% less than last year, coming in at $18.4 million.
So then President Obama gets revved up at calls the practice shameful.
I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses — the same amount of bonuses as they gave themselves in 2004 — at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don’t provide help that the entire system could come down on top of our heads — that is the height of irresponsibility. It is shameful.
While it’s a good thing that Obama addressed the issue, sort of, he missed the mark. Wall street firms that didn’t take bailout money, that are not teetering on collapse can dole out bonuses all they want. It’s the bailout grabbing firms that shouldn’t be able to grant bonuses with taxpayer money. And maybe a little bit more than that, because while I understand that divisions within these financial conglomerates can have profit centers, and those workers should be compensated, the issue is that the corporate management that holds the conglomerate together failed catastrophically and lost the money that was generated to pay those profits.
Instead of strings attatched to the money these firms are getting we get this platitude from Obama:
There will be time for them to make profits, and there will be time for them to get bonuses — now is not that time. And that’s a message that I intend to send directly to them, I expect Secretary Geithner to send to them — and Secretary Geithner already had to pull back one institution that had gone forward with a multimillion dollar jet plane purchase at the same time as they’re receiving TARP money. We shouldn’t have to do that because they should know better. And we will continue to send that message loud and clear.
Loud and clear? How about some specifics there? Is it so hard to say that any financial institution that gets fed bail out money can’t give out bonuses? Can we require the sell off of assets to help pay for the bailout funds? Things like carpets, and corporate jets and artwork?
Meanwhile Senator Chris Dodd, who has his own probles with coziness to Wall Street is out there with statements such as these:
“I’m going to be urging — in fact not urging, demanding — that the Treasury Department figures out some way to get the money back,” Dodd said. “This is unacceptable.”
As the chair of the Senate Banking Committee, Dodd was in a perfect place to put those strings on the bailout money in the first place. He didn’t. Now he wants to get the money back? How about the money going out now?
“Secretary Geithner already had to pull back one institution that had gone forward with a multimillion-dollar jet plane purchase at the same time as they’re receiving TARP money,” the president continued. “We shouldn’t have to do that.”
No we shouldn’t. But it starts with the legislation crafted doesn’t it?
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