The Wall Street banks and other major financial institutions that have received hundreds of billions of dollars of bailout money from U.S. taxpayers “just don’t get it.” Even as these firms plead for the support of American taxpayers in order to survive, their executives and employees continue to waste billions of dollars on unreasonable excesses. As President Obama has concluded, Wall Street’s actions are “the height of irresponsibility.”
The events of the last ten days are indicative of just how far “overboard” Wall Street has gone. During that time the following have occurred:
- It was learned that John Thain, Merrill Lynch’s CEO spent approximately $1.22 million decorating his office during the very time that Merrill Lynch was suffering billions of dollars worth of losses that required a taxpayer bailout. The irony is that many U.S. taxpayers who have lost their homes have been called on to pay for part of Thain’s office expenses that could have purchased 10 to 20 homes.
- American International Group (“AIG”), a company that has required a government bailout in excess of $150 billion offered more than $450 million in retention pay to employees that engaged in selling the very credit-default swaps that caused AIG’s problems and necessitated its bailout. These employees, who should have been fired for misfeasance or malfeasance, have ended up getting bonuses instead.
- Wall Street banks paid out approximately $18.4 billion in bonuses in 2008 despite the fact that it was one of the worst years in the history of our financial markets. These bonuses were reportedly the sixth largest bonus payments made by Wall Street in history and exceeded bonuses that had been paid in much better times. These bonuses were paid in a year that Wall Street firms lost an estimated $47.2 billion according to the Mayor of New York. Apparently Wall Street believes that poor performance justifies exorbitant bonuses.
- Bank of America, which recently acquired Merrill Lynch, reportedly has offered $5 billion in retention bonuses to various employees in order to induce them to remain with the firm. With countless qualified Americans unemployed, why is Bank of America paying bonuses with taxpayer money to retain employees?
It is readily apparent that the foregoing expenses are being borne by the American public. Notwithstanding Wall Street’s suggestions that this money came out of another pot of money, there would have been no need to burden the American taxpayer with the bailouts if there were truly other pots of money. Put simply and clearly, the American public continues to be duped by Wall Street’s greed.
Wall Street’s response should fall on deaf ears. The Wall Street firms’ attempt to justify the bonuses by arguing that they must compensate top employees or risk losing them. While that may have been true in the past when there were numerous viable brokerage firms and top brokers were in heavy demand, it simply is no longer the case. In short, what is the employees’ alternative? The major brokerage firms of the past are now out of business or laying off tens of thousands of people. The level of interest in stocks and bonds trading is suffering. Every Wall Street bank is suffering from the same problems. Simply put, “the grass is not greener” anywhere else.
Enough is enough. Wall Street’s decision to continue paying excessive compensation to many of the very people that caused the problems confronting our economy and to pretend that the financial crisis never occurred is spitting in the face of the American taxpayer. It’s time to put a halt to Wall Street’s greed. Wall Street’s excesses have been a major contributing factor to the current financial meltdown that has harmed the American economy, American business and American taxpayers. At a minimum, the excesses must be stopped and accountability must be restored. If Wall Street continues to resist, maybe it is time to pull the plug and let the chips fall where they may.