“They frankly own the place,” Dick Durbin said back in April referring to the power that banks hold over policy decisions in Washington. If they own the place, presumably they can make the rules. But as Goldman Sachs brings in record profits and prepares to dole out handsome bonuses to employees and executives, many are lauding the company’s willingness to take risks. So is Goldman Sachs, dubbed by many ‘Government Sachs,’ a risk taker or a coup maker? And what will it take to confront what may be the most powerful lobby in American history?
Connect the dots: Goldman Sachs made $3.44 billion in profit this past quarter, while the U.S deficit topped $1 trillion for the first time in the nation’s history and appeared to be headed toward doubling that figure before the budget year is out. Since most of the increase in the federal deficit is due to bailing out the banks and salvaging the greater economy they helped destroy, why is the top investment bank doing so well?
Well, because that was the plan, as devised by Bush Treasury Secretary Henry Paulson, a former CEO of Goldman Sachs. Remember that Lehman Brothers, Goldman’s competitor, was allowed to go bankrupt. The Paulson crowd wouldn’t let Lehman change its status to that of a bank holding company and thus qualify for federal funds; soon afterward, Goldman was granted just such a deal, worth a quick $10 billion. Much is now made of Goldman paying back part of its bailout money, but forgotten is the $12.9 billion that Goldman got as its cut of the $180 billion AIG payoff. That is money that will not be paid back.
If you’ve seen the news today, you know Goldman Sachs exceeded its second quarter expectations for earnings, making $3.44 billion after dividends. As I wrote yesterday, this gigantic, much better than expected profit is largely from engaging in the same risks that got Goldman and other companies into trouble in the first place- taking massive risks on things like volatile currencies. The same risks that has helped lead the country to economic collapse. Apparently the only thing Goldman learned from the financial collapse was that the government would bail it out if it kept taking big gambles, which isn’t the lesson I was hoping it would learn.
And hey look, even more thrilling, it’s been reported in late June that the company plans to pay its employee record bonuses. Congrats, guys.
Okay, Goldman. So as long as you’re paying record bonuses to many of the same employees that engaged in these wildly speculative trading ventures, how about paying back the $13 billion you got from AIG by way of the U.S.Treasury? Or the unrevealed billions (likely many tens of billions) from the Federal Reserve?
Wells Fargo is a roadblock to economic recovery. That’s what members of the United Electrical, Radio, and Machine Workers (UE) are claiming, as they literally blocked a busy Rock Island, Illinois intersection late last week to protest Wells Fargo’s decision to cut off credit to the Quad City Die Casting factory.
100 Quad City factory employees risk losing their jobs if Wells Fargo doesn’t extend tens of thousands of dollars in credit to continue day-to-day operating costs. So why won’t Wells Fargo use some of its $25 billion in bailout funds to keep this factory afloat, particularly when the Illinois-Iowa Quad Cities region is losing $6.1 million in wages and tax revenue annually? According to UE organizer Leah Fried, “[Wells Fargo] want[s] to get out from under the TARP money because they want to get out from the scrutiny. They’re hoarding.” Wells Fargo has even gone so far as to prevent the company from paying the wages and benefits owed to its employees, which prompted UE to file charges with the National Labor Relations Board last week.
Across the country, we’re seeing more and more protests this one. As journalist/labor activist Mike Elk recently noted, these public demonstrations are highly effective ways of bringing national attention to the bailed out banks that are cutting off credit and have done pathetically little to jump-start our ailing economy. We saw this last December, when laid-off UE workers held sit-ins at Republic Windows and Doors in Chicago because Bank of America and JPMorgan Chase wouldn’t fork over credit for the company to pay severance.
The Federal Reserve is one of the most powerful and secretive institutions in Washington, long considered beyond the reach of lawmakers. But now, as details emerge of how the Fed secretly doled out more than a trillion dollars during the financial crisis, a rare bipartisan movement in Congress demands that the Fed be held accountable.
Chris Hayes, Washington Editor of The Nation, reports for Al-Jazeera English about the United States Agency for International Development (USAID). President Obama promised, on the campaign trail, to double US foreign assistance, but though USAID’s staff has increased, it still lacks a director and suffers from problems of privatization and militarization left over from the Bush years. Carol Lancaster, of Georgetown University and the Center for Global Development, says it has become “less of a thinking agency and more of a check-writing agency.” Will Obama manage to turn USAID back to its original mission?
In part three of a three-part debate series between The Nation’s Chris Hayes and Reihan Salam of the National Review, the two journalists discuss whether the US is moving towards socialism as a nation. “Compared to where we were in 1900, I think the United States is pretty clearly socialist,” says Salam. He argues that the country “is getting to the point where we’re not going to be able to reverse some of the moves in the direction towards a socialist economy.” Hayes points out that socialism has a lot of different meanings but believes that America should be moving towards social democracy. Check out the first two debates on US healthcare and the military
Ever notice hardware, grocery stores and banks are harder to find than a Help Wanted sign in many black communities, but liquor stores are still standing on just about every other corner. Then, you have probably also noticed the black community has a “newer” menace in the payday lender.
I know there are some folks out there right now who might be sitting around with the lights turned off if it weren’t for that quick, few questions (all you need is a check book and a paycheck stub) asked and no credit needed, injection of liquidity. For these folks, there are no other options and payday lenders fill that need.
Hardline consumer advocates argue it’s an artificial one. But it’s a moot debate and likely one the payday lending industry relishes having.
As long as the issue is either or, folks will likely go with the status quo as opposed to risking having no service at all. After all, folks still have the freedom to not do business with payday lenders. You can’t legislate people out of making bad choices, right?
This week, workers at Hartmarx Factory won a major victory against Wells Fargo, as Wells Fargo agreed to keep their factory open. The story of the Hartmarx workers had drawn national attention as they threatened to occupy their factory if Wells Fargo closed it. Their victory yesterday represents a major triumph in the growing trend of factory sit ins that started last December when workers, members of United Electrical, Radio, and Machine Workers (UE) occupied the Republic Windows and Doors factory in Chicago
Last January, Hartmarx, the maker of men’s apparel and an employer of nearly 4,000 people, filed for bankruptcy after Wells Fargo refused to extend them a line of credit. Wells Fargo then pushed for the company to be liquidated in order to increase their short term profits. They favored liquidating the factory and laying off the 4,000 workers despite the fact that there were proposals by several groups to purchase the company and keep it running.
Opposition to union organizing within the workplace has become more intense and punitive in recent years making it incredibly difficult and risky for workers to unionize. As unemployment continues to rise and workers struggle for a bit of parity, will the Employee Free Choice Act (EFCA) pass? Kate Bronfenbrenner of Cornell’s Labor Education Research in a new report, No Holds Barred: The Intensification of Employer Opposition to Organizing, details the hurdles that workers face in trying to form unions and why EFCA would help. Bronfenbrenner, Mark Winston Griffith, Director of the Drum Major Institute, Pat Purcell, Director of Special Projects at the United Food & Commercial Workers (UFCW) Local 1500, and Bob Master, Political Director of Communications Workers of America on whether the recession will strengthen unions.
