“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.
Check out the surprise teaser for Moore’s newest documentary about the economic meltdown. I always love his ability to bring much-needed attention to serious issues using humor. If you think the bailout for AIG, Goldman Sachs, CitiBank and Bank of America simply wasn’t enough, it’s time we dig deeper and help out those poor, struggling CEOs! Apparently, when this teaser aired in select theaters in LA, New York, Washington, D.C, and Chicago, ushers walked down the aisles with collection jars and some audience members actually contributed.
Everyone wants the economy to bounce back, and the President’s not wrong to believe that the way to revive things is to boost confidence.
But if mass confidence is what it’s gong to take, the people at the bottom of our economic pyramid need hope — not only that they’ll have jobs again and homes to keep – but protection against mortgage crooks – and restitution if they’ve been scammed.
The city of Baltimore is currently pursuing a suit against Wells Fargo.
Wells Fargo stands accused of disproportionately denying minority consumers favorable loans while targeting them for subprime ones with high interest rates, mandatory arbitration clauses and punitive prepayment penalties.
Workers at the suit makers, Hart, Schaffner & Marx make fine suits including the suit that Barack Obama wore to his inauguration. But now they’re facing layoffs. If Wells Fargo bank goes through with its plans to liquidate the business some 500 workers will be out of a job. And the workers are threatening to sit down and not leave until Wells Fargo — a bank that received $25 billion in taxpayer dollars — agrees to change course.
We speak with Ruby Sims, a 31-year employee of Hart Schaffner & Marx and President of Local 39C of the union, Workers United and Joe Costigan, Treasurer, of Workers United-Chicago region.
If you think Bank of America is curbing their predatory practicies now that they’ve ousted Ken Lewis as chairman, think again. Check out this ad I came across:
SHORT SALE!
Have You Had Difficulty Negotiating A Short Sale With Your Lender?
To approve a Short sale of your primary home, did the Lender make you sign a note or letter stating you must repay the difference between your loan and the sale amount, even if you never refinanced your home?
Did the Lender force you into Foreclosure and Bankruptcy?
We are a group of individuals (not attorneys) concerned with the way certain Banks have treated troubled borrowers and are investigating their practices, especially in light of the billions of dollars banks have received in TARP Monies. Some of these ill-advised business practices may even be illegal under California law, and costing taxpayers millions of dollars.
This is not a solicitation of business. We want to hear from you. Confidentiality assured.
Please call 1-866-981-8781 and leave a confidential message. Thank you.
What prompted this ad is that Bank of America has apparently been screwing over troubled mortgage borrowers who are attempting to negotiate short sales on their homes. Borrowers who can’t afford to keep their homes have to work out a deal with their bank, selling short on their home at whatever the market value is currently in order to avoid foreclosure altogether. Bank of America, however, is forcing these troubled borrowers to sign deficiency letters, meaning the borrower has to repay the difference between the sale price and the remainder of the existing loan on the property, which could easily force borrowers into bankruptcy.
What’s odd is that banks get far less in foreclosure than in short sales, so it would be in their best interest to work something out. What’s more, Bank of America recently announced it was easing its policy on short sales, requiring 5 percent of short sale proceeds instead of 10 percent. But this ad makes it sound like Bank of America is still having it both ways with troubled borrowers.
In California, Bank of America’s predatory behavior might be violating the law, since they are refusing to bless a short sale if the borrower does not sign a deficiency letter, even when the borrower’s home has not been refinanced. If you know anyone, particularly in California, who has had difficulty negotiating a short sale, urge them to call 1-866-981-8781 and leave a confidential message. Bank of America has already taken tens of billions in our taxpayer money through the bailout; we can’t allow them to continue screwing homeowners at every turn.
The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.
This big story was so easily missed because it runs against one of the main myths that our elites have cultivated about the US economy: that the country has a “comparative advantage” in highly skilled labor. In this story, the United States will continue to lose manufacturing and other “less-skilled” jobs as its economy becomes more concentrated in highly skilled sectors.
This story was convenient for our elites because it meant that the decline of manufacturing was a necessary, if sometimes painful, part of a natural economic progression.
It also justified the growing inequality in US society that benefited not just Wall Street bankers and CEOs, but also millions of doctors, lawyers, economists, and other highly educated workers. These people took their six-figure salaries as a birthright, even as the pay of less educated workers stagnated or declined.
In most areas of public policy the Obama administration has given the country a sharp and welcome break from the policies of the prior administration. Unfortunately, this is not the case with his financial policy. To a large extent Treasury Secretary Timothy Geithner has continued the Bush-Paulson “save the banks” first approach.
Geithner has continued policies initiated in the Bush administration whereby the banks received vast amounts of money from the public trough while offering relatively little in return. Most of the executives at these banks continue to earn multi-million dollar compensation packages and the shareholders and bondholders have been enriched at the taxpayers’ expense.
It is undoubtedly painful for the public to see their tax dollars going to reward the people who are most directly responsible for the economic crisis. The Wall Street banks played a game of high-stakes poker over most of the last quarter century. In the process, the major actors got incredibly wealthy at the expense of ordinary working people.
Now this game has blown up in their face, effectively bankrupting most of the big players, and bringing the economy down in the process. But rather than leave the bankers to suffer the consequences of their own actions, Geithner and Co. are rushing to the rescue with gigantic buckets of taxpayer dollars.
