Send a Tweet
Most Popular Choices
Share on Facebook Share on Twitter Share on LinkedIn Share on Reddit Tell A Friend Printer Friendly Page Save As Favorite View Favorites
Exclusive to OpEdNews:
OpEdNews Op Eds

Obama's "Savvy Bankers" and the 2009 Wall Street Bonuses

By       Message John Paul Rossi       (Page 1 of 1 pages)     Permalink    (# of views)   No comments

Related Topic(s): ; ; ; ; ; ; , Add Tags
Add to My Group(s)

View Ratings | Rate It

Author 26746
- Advertisement -
Americans can cease looking to the President and his administration for any justice regarding the recent financial collapse; a collapse which catapulted the U.S. into one of the worst recessions since 1945.

Here's why.

In an recent interview with Bloomberg News/Businessweek, President Obama said that "he doesn't 'begrudge' the $17 million bonus awarded to JP Morgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein. "I know both those guys; they are very savvy businessmen," the President continued. "I, like most of the American people, don't begrudge people success or wealth. That is part of the free-market system." Mr. Obama went on to compare Dimon and Blankfein to "baseball players who are making more than that and don't get to the World Series either, so I'm shocked by that as well."

There are several problems with the President's analysis, the first is that baseball players, whatever their faults, were not architects of a system which bet the nation's financial future on ever rising housing prices. Baseball players did not create a system of easy credit that let virtually anyone get a mortgage and then re-package this investment junk as safe investments.

- Advertisement -

JP Morgan Chase, Goldman Sachs, along with other big banks and Wall Street financial firms built this system and they richly rewarded their executives for it. Goldman Sachs CEO Henry Paulson, for example, took home $101 million in salary, stock options, and bonuses between 2003-2006.

When the financial house of cards these lords of finance built collapsed, too many Americans lost their homes, their jobs, and their retirements. Long term unemployment, teen unemployment, and the number of home foreclosures have all reached records highs.

Wall Street, however, has not suffered, as the $26 million in "bonuses" awarded to Dimon and Blankfein attest. The bonus pool for Goldman Sachs, Morgan Stanley, JP Morgan Chase & Co. for 2009 is $39.9 billion. This is a mere 9 percent below the 2007 bonus pool ($44.7 billion), the top Wall Street pay year on record.

- Advertisement -

The reason why Wall Street bankers are reaping in millions while working Americans suffer is because the Bush Administration, the Obama Administration, and independent regulatory agencies such as the Federal Reserve Board eliminated "free enterprise" in finance and saved these firms from paying for their mistakes with bailouts.

While President Obama's $787 billion stimulus is regularly attacked by critics as wasteful spending, the trillions that the Treasury, Federal Reserve, FDIC and other agencies have spent to prop up Wall Street typically goes under the political radar.

If there was free enterprise in American finance, many of the nation's top banks and financial firms would have failed in the winter of 2008-2009; the Dimons, Blankfeins, and other top executives would more than likely be without jobs.

Instead, bailout programs such as the Treasury Department's TARP and the Federal Reserve's repurchase of mortgage-backed securities transferred more than $2 trillion of taxpayer dollars to the "too big to fail" banks and financial companies. These and a host of other U.S. taxpayer-funded bailouts have propped up Wall Street and made its obscene banker bonuses possible.

Unfortunately, it was necessary to "rescue" the irresponsible banks and financial firms to prevent another Great Depression. But these bailouts could have been done in ways that required the replacement of top executives and required that they and their employers pay for a good bit of the damage they inflicted on the economy and working Americans. Instead, they are rewarded with what are in essence taxpayer funded bonuses.

Free enterprise on Wall Street is a myth, as President Obama, should well know. As to this year's banker bonuses, Henry Paulson put it best: "If you have losses, you are supposed to bear responsibility."

- Advertisement -

The tragedy of the situation is that President Obama, his regulators, and Congress all should be working to hold the responsible bankers accountable and make them share some of the economic pain that the rest of America is feeling. Instead, they would rather propagate myths about savvy bankers and free enterprise.


- Advertisement -

View Ratings | Rate It

Dr. John Paul Rossi is a associate professor of American history at Penn State Erie, The Behrend College. He writes on business and economic history, and has co-authored ENTREPRENUERSHIP AND INNOVATION IN AUTOMOBILE INSURANCE: SAMUEL P. (more...)

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon Share Author on Social Media   Go To Commenting

The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Recipe for Failure? The Auto Bailout and the Failure of the New Deal's Economic Recovery Program

The Auto Bailout Bill's Defeat and the Politics of Class Warfare

Bailout the Big Three and Revitalize the Economy

The State of the Union, 2010: President Obama, the Democratic Party, and Change Betrayed

Obama's "Savvy Bankers" and the 2009 Wall Street Bonuses