BANK BONUSES WHILE KILLING GROWTH, GOOD JOB!

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Written by Jim McGrath Thursday, 07 January 2010 19:15

THEY EARN BONUSES AT TAXPAYER EXPENSE, BUT WILL NOT GIVE!

WHY SHOULD THE PAY CZAR APPROVE ANY COMPENSATION PLAN?

We see that pay czar Kenneth Feinberg will review AIG and others' business plans for executive salaries, in the article below.  There should be virtually no bonuses for these banks and firms that have sunk their companies into the ground and ruined the economy, or pensions and savings.  Why would the pay czar even consider such a move? 

Feinberg Says Lack of Pay Authority Is Disappointment (Update1)

By Ian Katz

Jan. 6 (Bloomberg) - Kenneth Feinberg, the U.S. special master on executive compensation, said he's disappointed he lacks authority to have greater influence over Wall Street pay.  "The biggest disappointment, I think, is that under the statute my jurisdiction is so narrow, and so circumscribed, that I have no real direct mandatory power over other Wall Street or other national companies,"

Feinberg said today in an interview with Bloomberg special contributor Judy Woodruff. The entire interview can be seen this weekend on Bloomberg Television's "Conversations with Judy Woodruff," airing Jan. 8 at 6 p.m. New York time.

Feinberg in October ordered pay cuts averaging 50 percent for the top 25 executives at Citigroup Inc., Bank of America Corp. and five other companies that took U.S. bailout money...American International Group (A.I.G.), Chrysler Group LLC, Chrysler Financial Corp., General Motors Co. and GMAC Inc. must submit 2010 pay plans for their highest-paid 25 employees by Jan. 15. Feinberg, 64, said he will rule on those proposals in the first quarter.

"I have my fingers crossed that we have developed some guidelines, some compensation prescriptions that will be emulated," Feinberg said...

WHILE RECEIVING PUBLIC LARGESSE, BANKS CONTRACT CREDIT, CONTRARY TO THE BAILOUTS MANDATE TO LEND TO THE AVERAGE CONSUMER TO STIMULATE ECONOMIC GROWTH

....WHILE WE PAY HIGHER FEES, NONEXISTENT SURCHARGES, OUR PENSIONS AND SAVINGS TANK...WHY?

Because we have become accustomed to giving business everything it wants.  This sacred cow must be slain, lest it block the train of true economic progress, where government does not allow firms too big to fail to remain economic giants with great sway over us, only for their own profit.  These firms and banks were preserved in order to revive the economy through lending but the figures show the complete opposite. Credit keeps contracting, as these zombies eat up and hoard everything in order to survive and grow fat, devouring government bailouts in the form of pay and bonuses, devouring the consumer by increasing fees and costs of doing business, and tanking the economy by starving small business with refusing to lend and thus spark business revival.  To see how credit is precipitously contracting, see the graph accompanying the article below at:

http://www.businessinsider.com/rosenberg-the-economy-still-sucks-credit-is-tight-and-banks-are-hoarding-cash-2010-1

ROSENBERG: BANKS ARE HOARDING MORE CASH THAN EVER AND IT'S KILLING GROWTH  by Vince Veneziani, Jan. 7, 2010

In this morning's Breakfast With Dave newsletter, Street favorite David Rosenberg discusses at length the troubles that still exist in today's economy and financial markets. One topic Rosie touches on is how despite continued government intervention, growth and credit remain stagnant.

It says, "Look at the charts below and you will see how little effect the policy stimulus is exerting leaving the government continuing with demand-growth policies, such as extended and expanded housing tax credits, and the Fed, Treasury and the FHA doing all it can to keep the credit taps open ... and for marginal borrowers at that. So the charts below show what, exactly? That the transmission mechanism from monetary policy to the financial system and the broad economy is still broken fully 2½ years after the first Fed rate cut. Cash on bank balance sheets as a share of total assets is at a three-decade high.

Bank lending to households and businesses has contracted more than 7% from a year ago, an unheard-of rate of decline unless you want to go back to Japan in the 90s or the U.S.A. in the 30s."

A LEAD WE SHOULD ALL FOLLOW: VICTIMS OF BIG BANKS SEEK REDRESS FROM EXCESS EXEC PAY!

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Written by Jim McGrath Friday, 08 January 2010 15:29

Pension Fund Sues Goldman Sachs Over Employee Pay

Here is good old American free enterprise philosophy at its best: fail or stand according to performance, and when you cause financial ruin, you are sued to recoup losses.  The average consumer whose finances fail must face debtors, collections and bankruptcy court; why not the same for the average behemoth bank whose reckless failures got us all into this, all our savings, investments, and pension funds?  The AP article below points to a lead we should all follow, to show to the world that we will not stomach the wholesale fleecing of our resources for the private profit of a few, then support these reckless giants under the excuse that they are too big to fail. Break them up so we can escape their tentacles and further ruin!

The Associated Press,

Thursday, January 7, 2010

NEW YORK - An Illinois pension fund that bought shares of Goldman Sachs in January of last year is suing to recover "billions in compensation" that the investment firm paid its employees in 2009.

The Central Laborers' Pension Fund filed the suit in the Supreme Court of New York on Thursday, saying that Goldman continued to pay out lavish bonuses even though a government bailout was crucial to its survival.

"Defendants' conduct shows that, even though Goldman is supposedly owned by public shareholders, defendants have scant regard for the interests of those shareholders," the plaintiff said in the suit.  Goldman Sachs spokesman Ed Canaday said in a statement that "the suit is completely without merit."

OBAMA NEEDS TO CONFRONT THE BANKS AND HEALTH INDUSTRY LIKE JFK DID BIG STEEL!

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Written by Jim McGrath Friday, 08 January 2010 18:05

IN LIGHT OF THE upcoming meeting next week between President Obama and the bankers, we believe the President should in no uncertain terms call these big interests to account, and put pressure and sanctions where needed, considering how these powerful execs have helped ruin our economy, our savings and our pensions, among other things. The mismanagement by investment in overly risky assets and "financial innovations," really what we believe history will call fraud -- for a quick profit, (much of it Ponzi-like) and the consequences be damned attitude that have wreaked ruin on us and that continue to this day, rewarded with bonuses aided by taxpayer money, no less -- must be addressed with bold action. 

The article below reminds us that JFK took appropriate action when Big Steel executives flagrantly defied their agreement to partake in the sacrifices that Americans were demanded of during that generation.  Now, when the American people are faced with much worse, problems that have begun to rival the Great Depression, while the banks and big interest defy their obligations to society, one being their agreement to lend to stimulate activity, there is no need for the President to soften the tone or rhetoric for behavior that is a far greater threat.  The article reminds us of what is right, and evokes the proper role of the president as moral leader of the nation:

A LESSON FOR OBAMA: PRESIDENT KENNEDY"S STAND AGAINST THE STEEL INDUSTRY  

The Huffington Post

by Joseph A. Palermo

In April 1962, when U.S. Steel and five other steel corporations unilaterally decided to jack up their prices and squelch an intricate set of compromises that the Kennedy Administration had expended a great deal of effort in negotiating, President John F. Kennedy responded with an aggressive counter attack that shocked the Washington press establishment. He turned loose his younger brother, Attorney General Robert F. Kennedy, who subpoenaed the expense accounts of the top steel executives and dispatched F.B.I. agents to "interview" them. Robert Kennedy also sent the not-so-subtle message that the Justice Department and its Anti-Trust Division, along with the Internal Revenue Service, were about to make the executives' lives miserable unless they honored their original agreement with the White House and the labor unions to maintain prices.  

Here's what JFK told the nation at a press conference about the steel crisis:

"In this serious hour in our Nation's history, when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking reservists to leave their homes and families for months on end and servicemen to risk their lives -- and four were killed in the last two days in Vietnam -- and asking union members to hold down their wage requests at a time when restraint and sacrifice are being asked of every citizen, the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans."

Can anyone imagine President Barack Obama saying anything like this about the economic crisis and the wars requiring sacrifice and how unconscionable the health insurance and pharmaceutical industries are behaving today against the national interest?

And what was the result of Kennedy's honest public appraisal of the situation taking on big business? Contrary to what the David Broders and the Mara Liassons and the Adam Nagourneys and all the other Beltway savants would opine today -- the public supported Kennedy's tough stand by a margin of 58 to 22 percent and the President's approval rating stood at 73 percent. Taking on big and powerful corporate executives and denouncing their greed and "contempt for the interests" of the American people turned out to be good politics! Who woulda thought?

Ah, but times were different back then and any president today has no choice but to toady up to big business in order to avoid attacks from the Republican Right. But when Kennedy took his stand against Big Steel conservative publications blasted him comparing him to Mussolini and claiming that his administration belonged in the Soviet Union. Bumper stickers blared: "Help Kennedy Stamp Out Free Enterprise!" And Arizona Senator Barry Goldwater said that Kennedy was trying to "socialize the business of the country." Sound familiar?

The point is that in politics there are no guarantees. A president cannot always split the difference or compromise or get along or be "bipartisan." Sometimes a president has to take a chance and risk his approval rating to stand up for the people who elected him.

If the Democrats go into the 2010 midterm elections without passing concrete measures that move the pendulum back toward labor and away from corporate domination it will remind voters that the Democratic Party is still the party of Mondale, Dukakis, Gore-Lieberman, Carter, Clinton, and Kerry. These guys can ride in tanks, say they love guns and the death penalty, call for deregulating business and slashing welfare, or salute and say "reporting for duty" -- but they're still a bunch of hapless losers. That's why it's so easy to Swift Boat the Democrats. Their "brand" is already identified with weakness and waffling. You can always leave it to the Democrats to fumble the ball on the goal line -- just as they did with the health care reform bill.

'

The health insurance and financial services industries that Obama must confront on behalf of the people have wreaked far more damage to American society than anything Kennedy faced. One year in office is too short a time to judge a president's success or failure. That's why historians never do that. But so far we've seen Wall Street, the health insurance and pharmaceutical industries, and even Fox News roll President Obama.

In 1962, John F. Kennedy was heavy-handed in his response to the steel industry. You could even say (accurately) that he abused his executive power. But he did it for the right reasons and as a result it was a politically popular heavy-handedness. President Obama seems to never do anything "heavy handed"; he has a "light touch." In 1960, Kennedy had squeaked into office in one of the closest elections in American history (a far narrower margin than Obama's in 2008), the Southern wing of his party was up in arms against him, and he had a serious challenge daily from Nikita Khrushchev and the Soviet Union. Yet even while facing a contentious midterm election Kennedy rapped the knuckles of steel industry executives. The time will come when Obama is going to have to rap some knuckles of corporate titans himself if he wants to deliver on his promises and be remembered as a successful president.

GO FURTHER THAN THE OBAMA PLAN OF FEES ON BANKS, WITHDRAW YOUR SUPPORT THEY NEED! OH, YES WE CAN -- BY VOTING WITH OUR FEET!

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Written by Jim McGrath Monday, 11 January 2010 17:45

WHY IS IT TIME TO GO FURTHER than the Obama plan for fees on banks to recoup bailout money reported today in The New York Times (see link below)?   No serious proposal for clawbacks has been enacted by our legislators, be it due to timidity, encapturement by banking interests, or both.  Obama's proposal sounds like a good idea, but these behemoth banks will only pass these fees on to customers, even as they thrive under our (taxpayer) money and grant themselves huge bonuses for their shenanigans.  They will do the same and worse than they are doing now with outrageous charges and other fees, like jacking interest rates up 30 percent, tacking on fees for not using your credit card, etc.

HOW TO GO FURTHER: VOTE WITH YOUR FEET -  it is time to abandon the banks, they have abandoned us. Promising to use government aid to lend to small business in order to revive the economy, again, they have instead hoarded billions in bailout funds and gather to themselves great largesse and perks.  Vote by transferring your deposits (which is their lifeblood) to smaller community banks. Do what thousands of others are doing, as emboldened by the grassroots Move Your Money campaign. Their website shows instantly where local community banks are near you, by zip code (see my homepage for the link).

Coverage by the New York Times: http://www.nytimes.com/2010/01/12/business/economy/12bailout.html?