Don’t Bail on Wall Street Outrage
PRESIDENT OBAMA is far too absent of outrage over Wall Street's continued abuses. As a candidate, he railed against its "greed and irresponsibility.'' He had more to say in his first month in the White House, after finding out that Wall Street firms were still paying $18.4 billion in bonuses despite bringing America to its financial knees and dropping to their own knees for an unprecedented $700 billion taxpayer bailout.
"That is the height of irresponsibility. It is shameful,'' Obama said. Calling on Wall Street to share in the recovery out of the "big hole'' of the economic crisis, Obama said, "There will be time for them to make profits, and there will be time for them to get bonuses - now is not that time.''
So now is the time? Just a year after the bailout, the Wall Street Journal last week reported that the nation's top 23 banks and investment firms plan to give out a record $140 billion in bonuses. The Dow may be back up over the 10,000 mark, but unemployment is still going up, too, to nearly 10 percent, more than double what it was at the beginning of this decade. Black unemployment is 15.4 percent. States, including Massachusetts, are still announcing massive job and funding cuts. Workers are told to be patient, that jobs might not come back in a few months or even a few years, but they will come back.
But the toga party is already back on Wall Street. All that Obama has done so far is send out his charges to bleat some mild humbugs on the talk shows. Chief of staff Rahm Emanuel said, "The American people have a right to be frustrated and angry. . . . Wall Street is back doing what Wall Street did. They have a responsibility to part of the solution.''
Adviser David Axelrod did call the bonuses "offensive.'' He said it was also offensive that ordinary Americans were not yet seeing the kind of lending that helps them. But then he qualified everything by saying the administration has "limited sway other than moral suasion.''
It is time for that moral suasion. One possible reason the administration has not been as assertive as it should be is that in conventional Washington politics, it is biting the hand that fed them. In the 2008 elections, JPMorganChase, Citigroup, and Bank of America gave the majority of their $10 million in campaign contributions to the Democrats. Another reason is that the administration still wants banks to increase lending as well as accept consumer protections.
But these reasons are not enough when Bank of America is about to pay out $30 billion in bonuses, followed by JPMorganChase at $29.5 billion, Citigroup and Goldman Sachs at $22 billion each, and Morgan Stanley at $16.4 billion.
They are behaving as if last year never happened at all, candidly crying to the Journal that if they didn't pay billions in bonuses, oh my, their employees would flee. Goldman Sachs spokesman Lucas van Praag told the Journal, "The easiest way to destroy the firm would be if we didn't pay our people. . . . Destroying a profitable enterprise would not be in anybody's interest.''
That sounds like professional spoiled brats, especially when there are still too many once-profitable mom-and-pop enterprises going down the tubes and too many nonprofit enterprises like public schools, police, fire, and public works construction being slashed to the bone. He should demand that the bonuses be slashed, say by half, with the other half going to long-established charities. Can you imagine what $70 billion would do for the United Way or the Boys and Girls Clubs?
Back in January, Obama said, "We're going to be having conversations as this process moves forward directly with these folks on Wall Street to underscore that they have to start acting in a more responsible fashion if we are to, together, get this economy rolling again.'' All that has happened thus far is that Wall Street is rolling again, a steamroller once again flattening the American people.
