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more lipstick .....
America, it seems, can't wait to get back to business - risky business - as usual. No matter how atrocious business has been.
Newsweek's latest cover story declares that The Great Recession is over. A Merrill Lynch report concurs, saying, "The recession is over ... We are bullish on global equities." Goldman Sachs is placing riskier bets on the market than it did before the financial meltdown (and setting aside huge amounts of money to pay its executives).
The problem is, this victory dance is being done on top of the same shaky financial system that nearly toppled over, sending us all plummeting into the economic abyss. And while the market is over 9,100 (with another 10 percent gain predicted by the end of the year) and Goldman, Citigroup & Bank of America are reporting multi-billion dollar profits, unemployment is heading to 10 percent, foreclosures continue at a rate of 10,000 a day, credit card defaults are hitting record highs, and states all across the country are cutting vital services to the bone.
We've seen this headlong rush to move on before. And it should be making us very afraid.
http://www.truthout.org/072809U?n
meanwhile ...
Citigroup is considering paying a $100 million bonus - to one guy.
This is the same Citigroup that received $45 billion in bailout money. The same Citigroup that will soon be 34% owned by the U.S. government. The same Citigroup that has lost 95% of its share value since 2007.
Citigroup is in no position to be awarding bonuses of $10 million -- let alone adding another zero to that amount. So why is it mulling such a colossally dumb move? Because the guy demanding it is probably the bank's most valuable employee.
Enter Andrew Hall. He's a rock star, a legend among banking circles. He makes a boatload of money for Citigroup as head of Phibro, the bank's energy-trading unit. The Wall Street Journal calls Phibro a secretive operation, housed in a former Connecticut dairy farm, that "occasionally accounts for a disproportionate chunk of Citigroup income."
Phibro made so much money for Citigroup last year that Hall got a $100 million bonus (His bonus is based on Phibro's profits). Phibro was the main source of the $667 million in pretax revenue Citigroup received in commodities trading, the Journal reported. And the unit is doing so well this year that Hall may be in line for a similar amount.
http://blogs.moneycentral.msn.com/topstocks/archive/2009/07/27/a-100-million-bonus.aspx
and, if you think that's a worry .....
The Wall Street Journal reported last week that "Executives and other highly compensated employees now receive more than one-third of all pay in the US... Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total US pay in 2007, the latest figures available."
One of the questions often asked when the subject of CEO pay comes up is, "What could a person such as William McGuire or Lee Raymond (the former CEOs of UnitedHealth and ExxonMobil, respectively) possibly do to justify a $1.7 billion paycheck or a $400 million retirement bonus?"
It's an interesting question. If there is a "free market" of labor for CEOs, then you'd think there would be a lot of competition for the jobs. And a lot of people competing for the positions would drive down the pay. All UnitedHealth's stockholders would have to do to avoid paying more than $1 billion to McGuire is find somebody to do the same CEO job for half a billion. And all they'd have to do to save even more is find somebody to do the job for a mere $100 million. Or maybe even somebody who'd work the necessary sixty-hour weeks for only $1 million.
So why is executive pay so high?
and the size of the trough .....
"The total potential federal government support could reach up to $23.7 trillion," says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a report released today on the government's efforts to fix the financial system.
Yes, $23.7 trillion.
"The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn't even imaginable," said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee.
"If you spent a million dollars a day going back to the birth of Christ, that wouldn't even come close to just $1 trillion -- $23.7 trillion is a staggering figure."
- By John Richardson at 29 Jul 2009 - 10:45pm
- John Richardson's blog
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latest pork futures .....
You might recall that Merrill had essentially collapsed in 2008, having lost an astonishing $27 billion dollars due to the greed and incompetence of its top investment bankers. Rather than letting this failed firm actually fail (as in, go kaput), however, the Bush regime engineered a quickie takeover of Merrill by Bank of America. The key to this rescue was you and I - $45 billion from us taxpayers were doled out to Bank of America to grease the merger.
But - shhhhh - just before the deal was complete, those slap-happy bankers at Merrill quietly paid themselves $3.6 billion in bonuses! The shareholders of both Merrill and B of A were not informed of this heist. Nor were the White House, the Congress, and such oversight agencies as the Securities and Exchange Commission.
Merrill's grab for the cookie jar was so underhanded and shameless that even the SEC was compelled to investigate.
This agency has become more of a Wall Street lapdog than watchdog, so it was not surprising that the agency officials concluded in early August that the whole sorry mess could be swept under the rug by assessing a measly $33 million fine on Merrill (which had become a fully owned subsidiary of Bank of America). Thirty-three million bucks is chump change to these banks. Come on, some of the bonuses paid to individual Merrill bankers were bigger than that!
Still, the SEC had ruled, so that was that. Except for one little detail: the agreement between the government and the banks had to be rubber-stamped by the federal court.
Enter Judge Rakoff. Far from wielding a rubber stamp, he refused to OK the agreement and immediately began demanding answers from the big-shots involved.
Noting that the banks had "effectively lied to their shareholders," he wanted to know the names of the liars, suggesting that those "who made the wrongful decisions" should be held personally accountable. Also, Rakoff pointedly asked the kind of questions that folks all across the country would ask if they had the chance, such as, "Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?" The judge also went after the SEC, calling its meek fine "strangely askew" and bluntly telling the agency's lawyer that his feeble explanation for the low fine "seems so at war with common sense."
Bank and SEC officials are squawking and squirming, but Rakoff has not backed off even by an inch. After two full-fledged hearings, he still refuses to approve the sweetheart settlement and has set Sept. 9 for another hearing, demanding that both the banks and the agency present better explanations for their actions.
I like this guy! Can we dismiss Timothy Geithner and put Judge Rakoff in charge of the bailout scandal? Pretty please.
http://www.creators.com/opinion/jim-hightower/holding-wall-street-bankers-accountable.html