No pom poms or short skirts, but it is all the same game, jumping, cheering, chanting, leering. Gimme an L, Gimme an E, Gimme an N, Gimme a D-I-N-G! Yay, Wall Street! Wall Street! Wall Street!
Dec. 25 (Bloomberg) -- New York Senator Charles Schumer warned Wall Street firms to "live up to your responsibilities" and increase lending, particularly to small businesses, while showing restraint on executives' bonuses. "Get that money out there," Schumer said in an interview Dec. 23 on Bloomberg Television.
Banks should make sure the bonuses aren't "excessive" and are based on merit, Schumer said. The position of firms such as Goldman Sachs Group Inc. that they didn't need the government's help to survive "is just false," he said. --
I wonder what Mr. Schumer considers excessive? Would one million-dollar bonuses to the top, say, twenty-five bankers at Goldman Sachs be excessive? How about the top fifty? Or even the top one hundred bankers? How about the top nine hundred and seventy-three bankers? Goldman Sachs plans to issue bonuses in excess of one million dollars to nine hundred and seventy-three employees. Is that excessive, Senator? I mean, considering the average working family only earns around a million five for a lifetime of work, would a million dollars be excessive for two hundred or so work days?
"At the same time, reinstating the Depression-era Glass-Steagall Act that split investment and commercial banking should be considered, yet is 'easier said than done,' Schumer said. Last week lawmakers, including Senator John McCain, proposed reinstating Glass-Steagall, which was struck in 1999 by the Gramm-Leach-Bliley Act."
Not that I believe John McCain was at all serious about reinstating Glass-Steagall, but I wonder what the Democratic majority thinks of the idea?
"Schumer, who sits on the banking and finance committees, said the proposal is 'something we should look at' because proprietary trading is different from other parts of the business. Some issues include how to square such a change with less-stringent foreign regulation and with 'loophole after loophole' created by the Federal Reserve under former Chairman Alan Greenspan, Schumer said."
Go long! Its called passing the buck! Or in the words of Richard Nixon, "Let me say this about that." Gee, we really need to look at that, but gosh darn it, I don't know if we can fix it because of that darned old Alan Greenspan. And, gee, there's all that less-stringent foreign regulations stuff.
A US Senator, who sits on the banking and finance committees, says um, ah, um, ah, I don't know if we can. If you can't do it, Senator, then who can? You are in government work, you know, that's what you get paid to do. Are you telling us the federal government is powerless to face down Wall Street? Or that they don't want to face down Wall Street because it would be messy and unpleasant?
"With the U.S. unemployment rate of 10 percent close to a 26-year high," Schumer said, "the government needs to find ways to create incentives for banks to increase lending to small businesses." He also urged more spending on infrastructure to boost jobs.
The government needs to find ways to create incentives for banks to increase lending to small businesses? All I can ask Senator is, what the hell are you smoking? The major banks are borrowing money from the Federal Reserve at .25% and lending it out at a minimum four percent, sixteen percent on credit cards. They've changed their fee schedules to allow them to be more profitable than ever, and yet we need to incentivize them to do their job?
The regulation of the Federal Reserve requires that the Fed has to announce beforehand their intention to buy certain securities. This gives the big Wall Street banks time to buy up the securities and pump up the price before the Fed can place their orders. Imagine going to Las Vegas and getting to look at the dealer's cards before you place your bet. It just makes it all that much more galling because these big profits which produce those big bonuses are, for all intents and purposes, government subsidized.
While the big boys on Wall Street show huge profits, the banks on Main Street continue to suffer. But other reports question whether the banks are making any money at all, or just moving piles of chips to make themselves look profitable. Of course the IRS gave Citicorp a free pass on $38 billion in taxes, but other banks have been playing with the figures too. As non-performing assets and net charge-offs climb, the banks are lowering their loan loss ratio. During the Fed's stress test, banks were held to a 63.6% standard but they've lowered that to 60.1%. Had they not, they would have needed and additional $12 billion which would have turned the $2.8 billion in reported profits into horse pucky.
But don't you worry, don't you fear, the bonus checks are going to clear. And Senator Schumer will continue to take a hard line on the banks. He'll be working nights and weekends to come up with incentives to make banks do what they are chartered to do in the first place. And if they don't? Yes, by God, and if they don't, why he'll wag his finger and say, "Well, um, that um, ah, can't be helped," and then he'll wag his finger again and warn the banks, "You better do what we would like for you to do, or I'll wag my finger at you again!"
"In fact, in these last four years, we have made the exercise of all power more democratic; for we have begun to bring private autocratic powers into their proper subordination to the public's government. The legend that they were invincible--above and beyond the processes of a democracy--has been shattered. They have been challenged and beaten." (Franklin D. Roosevelt)
"We of the Republic sensed the truth that democratic government has innate capacity to protect its people against disasters once considered inevitable, to solve problems once considered unsolvable. We would not admit that we could not find a way to master economic epidemics just as, after centuries of fatalistic suffering, we had found a way to master epidemics of disease. We refused to leave the problems of our common welfare to be solved by the winds of chance and the hurricanes of disaster." (Franklin D. Roosevelt)
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