By Richard Trumka
So, $9 million in stock options as a 2009 bonus for Goldman Sachs CEO Lloyd Blankfein is now considered a big concession from Wall Street–a way of recognizing that the rest of the nation isn’t sharing in the Big Bankers’ party. Before we all start applauding, let’s take another look at what’s really happening on Wall Street. Over at Bank of America, a top CEO is raking in $29.9 million. Chairman and CEO Jamie Dimon is getting $17.6 million at JP Morgan Chase. And at Goldman? Bonuses total $16.2 billion.
Concessions? From financial institutions saved by taxpayers in a year when more than 4 million Americans lost their jobs, largely because of the actions of these very institutions? But wait. We’re actually supposed to feel sorry for the pampered financial set–because this year they’re not getting as much in up-front bonus cash as fast as they’d like since the corporate payouts are more often in stock (another concession). So taxpayer-bailed-out corporations like Bank of America and Citigroup are doling out stock shares that employees can sell within months–much sooner than normally allowed–because as the Wall Street Journal tells us:
The new pay culture is squeezing bankers with hefty mortgage payments and private-school tuition bills–and has prompted some companies to find ways to assist cash-squeezed employees.
“I know it sounds ridiculous to Main Street, but it’s a hardship,” says Gary Goldstein, who runs Whitney Group, a financial-services job-search firm in New York.
Meanwhile, these same corporations are spending multi-millions to kill reform of the financial industry. In 2009, JP Morgan Chase spent $6.2 million in lobbying. Bank of America: $3.7 million. Citigroup: $5.6 million Wells Fargo: $2.9 million. Goldman Sachs: $2.8 million.
We’ve got an idea for these Wall Street wreckers: Instead of tucking billions of dollars away in the pockets of a handful of individuals, how about putting that money toward creating jobs–a few billion dollars can go a long way. Just $8.4 billion spent on transit would create 253,539 jobs–and generate untold positive economic reverberations throughout communities starved for dollars to keep them viable. Just $1 billion would fund the Clean Water State Revolving Fund (H.R. 2847) and result in 27,823 jobs. Another $10 billion would rebuild the infrastructure of our nation’s deteriorating schools and create the jobs to do it.
Main Street has helped Wall Street–and it’s time for Wall Street to pay the bill to create jobs and fix the economy it wrecked. From March 15-26, the AFL-CIO and our allies are holding rallies and demonstrations at branches of the Big Six Wall Street banks–Bank of America, Chase, Citigroup, Wachovia-Wells Fargo, Goldman Sachs and Morgan Stanley–across the country. We are telling the banks: Make Wall Street Pay for Creating New Jobs.
So-called ‘green shoots’ and rises in stock prices aren’t going to fix our economy. We will not be out of the recession until we are creating good jobs on a large level. We need 11 million jobs to get out of the hole dug by the recession. And we need to make sure this kind of financial crisis never happens again.
One way Big Bankers can help honestly rather than playing at responsibility is to back a financial speculation tax on securities transactions to curb financial guessing games. A modest financial speculation tax will help curb harmful Wall Street practices–and raise
$100 billion to $300 billion annually to pay for job creation. This would go a long way toward creating the jobs we need, and also would help curb churning, high frequency trading and other speculative activity that harms capital markets. I joined Warren Buffett and other business leaders who came together under the auspices of the Aspen Institute to call on Congress to consider a financial speculation tax because financial companies must not be allowed to go back to business as usual–or worse.
Another way Wall Street could act honorably is to support a strong, independent consumer protection agency that would root out the kinds of abuses that helped lead to the financial crisis and destroy jobs. Harvard Law Professor Elizabeth Warren, who heads up the congressional committee to oversee the Troubled Asset Relief Program (TARP), writes that the financial industry can regain the public trust by supporting such a program.
For years, Wall Street CEOs have thrown away customer trust like so much worthless trash.
Banks and brokers have sold deceptive mortgages for more than a decade. Financial wizards made billions by packaging and repackaging those loans into securities. And federal regulators played the role of lookout at a bank robbery, holding back anyone who tried to stop the massive looting from middle-class families. When they weren’t selling deceptive mortgages, Wall Street invented new credit card tricks and clever overdraft fees.
But as Warren points out and as the big bonus payouts show, there hasn’t been a whole lot of real soul searching among the banking class.
So far, Wall Street CEOs seem determined to stop any kind of watchdog. They seem to think that they can run their businesses forever without our trust. This is a bad calculation.
Hard-working Americans will not be ATMs for Wall Street. That’s why we in the labor movement are working to hold Wall Street, and Congress, accountable for protecting Americans who play by the rules, preventing future bailouts and job losses and laying the foundation for a financial system that promotes stability and long-term economic growth for our nation and for all.
We support President Obama’s proposed tax on the largest financial institutions to recoup the cost of their bailout program. We urge the president and Congress to make financial re-regulation a top priority by:
- Creating an independent new consumer financial protection agency.
- Regulating the shadow capital markets, including hedge funds, private equity and over-the-counter derivatives.
- Reforming corporate governance and executive pay.
- Creating a systemic risk regulator that is fully public and accountable.
But remember when President Obama announced his intention to propose a Financial Crisis Responsibility Fee? That fee would require the largest and most highly leveraged Wall Street firms to pay back taxpayers for the extraordinary assistance provided so the TARP program does not add to the deficit.
Even before the announcement, Big Bankers were squealing like stuck pigs. From Think Progress:
Edward Yingling, president and chief executive, American Bankers Association: “To impose yet another burden on the industry would obviously decrease their ability to lend.”
So it’s not looking real good that Wall Street’s change of heart is more than a wink and a multi-billion-dollar nod. That means it’s up to the president, Congress and the rest of us.
Posted March 18, 2010 at 8:30 am, in From AFL-CIO