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At Failed Firms, No Bad Deed Goes Unrewarded
SAN FRANCISCO - Thousands of angry U.S. workers took to the streets Thursday to protest some major banks and insurance companies that have handed out extravagant bonuses on the taxpayers' dime, as the U.S. House of Representatives voted to get some of the bonus money back.
Protesters gather outside the AIG building in Los Angeles March 19, 2009. The action was part of a national protest against major U.S. banks and firms with participants calling on Congress to take action on employee free choice, health care, and banking reform. (REUTERS/Mario Anzuoni) "Banks get bailed out and people get sold out!" yelled janitors, hotel workers, security workers and others pounding on makeshift drums outside a Wells Fargo bank in San Francisco.
The protesters, from ACORN, Catholics United, Jobs with Justice, the powerful Service Employees International Union (SEIU) and other groups marched in Boston, Chicago, Denver, New York and other cities. The actions were aimed at raising support for strong banking reform, the right to unionize and health care for all. Some also marked the sixth anniversary of the start of the Iraq war.
"We're not about to let up until we see effective change in San Francisco, Sacramento [California's state capital] and Washington, D.C.," Matt Roberts, a security officer and SEIU member, told IPS.
Rev. Israel Alvaron, of Clergy and Laity United for Economic Justice, marched in front of the San Francisco Wells Fargo in solidarity with hotel and restaurant workers in the Bay Area whose employers, including Hyatt and Meridian, are discouraging them from unionizing.
"Wells Fargo is a client of the hotels. That's why I'm here," Alvaron told IPS.
Roberts said Wells Fargo and other banks are taking taxpayer dollars with one hand and with the other, are lobbying against a bill in Congress that would remove barriers to unionizing, called the Employee Free Choice Act.
"We're absolutely opposed to AIG [American International Group] getting multi-million-dollar bonuses," Roberts added.
Wells Fargo paid its CEO 26 million dollars in 2007 and paid its bank tellers about 21,000 dollars, SEIU says. The bank has increased its fees on consumers by almost 30 percent since 2003. It spent 690,000 dollars on lobbying in just the last three months of 2008, SEIU says. The protests came just days after the public learned that AIG, a global insurance firm, handed out 165 million dollars in bonuses to its top employees on Mar. 13.
The ailing company has so far received 173 billion dollars in taxpayer assistance to keep it and major banks from a total collapse. U.S. taxpayers gained 80 percent of the company in exchange for the funds, but the deal has been widely criticized because the U.S. has no shareholder voting rights and no representation on the company's board.
AIG is in bad shape because it insured the risky trades of major banks, trades of exotic products, called credit default swaps, derived from questionable, high-interest mortgages held by banks. More than 2 million mortgages have since gone belly up.
Many banks now want to cash in on their insurance and AIG says it is out of cash.
New York Attorney General Andrew Cuomo subpoenaed AIG and learned that the company paid bonuses to 417 employees and that 298 were paid more than 100,000 dollars. More than 50 people were paid 1 million dollars each. Eleven of those who were given bonuses are no longer with AIG.
"I know 165 million is a very large number," AIG CEO Edward Liddy told the House Financial Services Committee on Wednesday. "We thought it was a good trade," for the work the company has done to reduce its debt, he said.
AIG is just one of more than a dozen major banks that have received huge infusions of bailout cash from the U.S. Treasury, and that then attempted to hand out hefty bonuses to CEOs. Some halted the bonuses, under public pressure.
Merrill Lynch is expected to hand over its bonus information soon to Cuomo.
According to a recent report by the Institute for Policy Studies, Wall Street firms handed out 18 billion dollars in bonuses in 2008.
An angry congressional panel questioned AIG CEO Edward Liddy on Wednesday about the bonuses.
Thursday, the House passed a bill that would strip 90 percent of the bonus amounts, by heavily taxing them.
The taxes would only apply to people whose family income is 250,000 dollars or more, who received bonuses in 2009 and who work at one of the dozen or so banks bailed out by 5 billion dollars or more,, including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Morgan Stanley and the mortgage agencies, Fannie Mae and Freddie Mac.
The House bill was passed by 243 Democrats and 85 Republicans, and six Democrats and 87 Republicans voted against it. A similar bill is expected to pass the Senate soon and be signed into law by Pres. Barack Obama.
"Today's vote rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat," Obama said Thursday. "I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated."
Meanwhile, Rep. John Lewis, said Thursday that his research shows that at least 13 firms that have received the biggest bailouts owe more than 220 million dollars in back taxes - a violation of the contract they signed with the U.S. Treasury.
"Are they signing contracts knowing that they owe taxes but thinking they will not get caught?" Lewis said during a House subcommittee hearing. "Did then-secretary Paulson turn a blind eye? Either way, this is shameful. It is a disgrace."
"Taxpayers have no sense that there is any control over this money. They have no idea what, if anything, they will get in return. This entire program is based on trust - trust in the givers and trust in the takers. At this point, there is no trust," Lewis said.
A controversy has erupted within the Barack Obama administration about the bonuses, and who knew about them.
Special Inspector General Neil Barofsky told the House Financial Services Committee Thursday that the Bush administration's Treasury Department and AIG negotiated the bonuses in November 2008.
And AIG says it also gave notice last year to the Security and Exchange Commission that it planned to handout bonuses in 2009, and then told the New York Federal Reserve in January about the bonuses, led Timothy Geithner, since appointed head of the U.S. Treasury.
Neither the commission nor Geithner intervened or gave a heads up to President Barack Obama of the bonuses. Geithner has said he learned that the bonuses were going to be made on March 10 and that he couldn't stop them. Obama was told Mar. 12 of the impending bonuses, Geithner says.
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18 Comments so far
Show All"According to a recent report by the Institute for Policy Studies, Wall Street firms handed out 18 billion dollars in bonuses in 2008."
And according to a recent article in the Washington Post, "Financial historians say such payments are rooted in the days when Wall Street firms were partnerships, and the profits were divided among the partners, but the practice has long outlasted the conversion of all the larger firms into publicly traded companies."
This sounds like the old Wall Street "partners" decided to take full advantage of the "average Joe" investors after the firms morphed into publicly traded companies. This is not only evident in the outrageous bonus packages, but in the way Class Shares, discounts and investment returns are set up; essentially to favor the wealthiest investors while risking the invesment capital of Joe average.
It is this greedy, monopolistic control of wealth that has not only taken down this country but has destroyed public trust and confidence for decades to come. We have been repeatedly lied to, fleeced of our retirement income, and then "told" that we must bail out the Wall Street predators to save the country.
If the collusionistas on Wall Street and in Government don't get it right this time around, they might as well relegate any form of "public trust" to the trash bin.
I saw someone characterizing the national mood toward these bailed out corporations as a "lynch mob mentality." Well, a few righteous lynchings would work for me, especially when the regulators - those people that were supposed to be protecting the public - have had their heads corked up their butts and not doing their damned jobs. A lynch mob is justified because government has failed to protect the public and failed to start charging these executives with white collar crimes.
I also agree with the article saying "too big to fail" simply being too big to exist. We need to apply anti trust laws to break corporations like AIG. We should never again get caught with a bank bail out with the rationale that the corporation is simply too big to fail as it would collapse the entire economy.
Congress would not need this unconstitutional tax if our leaders had the 'balls' to enforce existing law!
There are legal remedies once a company is placed in receivership. The receveivership referee has the authority and right to demand certain monies be returned to the company. He also has the duty to set employee compensation at 'appropriate levels. A/P Payments made during previous 60 days can be recalled. The biggie is that he has the authority to demand return of monies paid to employees for the last YEAR.
All it would take is enough gumption to override the oligarchy and put the offending firms in receivershp.
If Congress and/or this administration doesn't suck it up and show some 'balls', the public could consider serving a feast of 'Congressional Oysters'
(google 'mountain oysters Virginia City' for reference)
"All it would take is enough gumption to override the oligarchy and put the offending firms in receivershp."
Damn straight. The laws are on the books. Enforce them. Of course this will never happen because the U.S. Congress is a wholly owned enterprise of "Big Money".
ekaton
The media and the politicians are milking this "populist rage" for all it's worth, but where has the outrage been over the shocking difference between CEO pay and that of the average worker that has ballooned over the past few decades? Where was the outrage over the growing inequality that helped to legitimatize these bonuses? It's all well and good that people are outraged over the bonuses, but until the focus of this anger is broadened to include the whole system of corporate greed and criminality and the undermining of democracy that this has brought about, I am afraid we will simply move on to the next scandal.
All those who are responsible for the economic and financial crisis should have all their wealth confiscated, then they should be tarred and feathered and ridden out of town on a rail.
Alternatively a hanging party might be simpler!
www.dangerouscreation.com
" ... then they should be tarred and feathered and ridden out of town on a rail."
I disagree. Far better to put them to work at two full-time minimum wage jobs and let them support themselves and their families on those wages. If they can afford health insurance, good for them. If they can keep the rent paid, the kids fed, doctors and medications bought and paid for, a running car, utilities, not to mention TAXES, and set aside some money for emergencies, and then after that save up for a down payment on a modest house, good for them. If they can't afford all of this on the proceeds of their two full-time minimum wage jobs, then, as they would say about many of US living in those same conditions ... TOUGH SHIT PEASANT.
ekaton
Face it; the American people are STUPID!! The French, with cradle to grave welfares and health care systems are in the streets protesting in millions and Americans stand by dumbly as they are evicted from houses while Corporado's take home millions in extortion money.
Want to do something REALLY usesless? Call your congressperson. They've been given hundreds of thousands of dollars in campaign funds by the people who are stealing from you; why should they care about a phone call?
It is about time citizens gave up their illusions that everything is going to be all right. The bonuses are just the tip of the ice burg, the real injury has been in the widening gap between rich and poor which has been growing like the widening rifts in the Antarctic ice shelves. It would have been better to get down to it ten years ago when there were more options but better late than never. Now, how not to let the energy flash and disappear.
It doesn't get more comical than this! These very rich men take huge risks with the money of ordinary people. They know they can't lose because if it works out they make a fortune for the handful of bankers who actually run America and improve their chances of winning a "seat at the table". If it all goes pear shaped they don't need to care as it's not their money or that of their bosses being lost.
Amazingly, if these greed-based deals go spectacularly pear shaped, threateaning the viability of their very corporation, the punishment is that a government tip- truck pulls up and buries them in money!
Too big to fail??? This is the biggest lie since the 'weapons of mass destruction' story! The logic being that if these 'money vacuum' companies go tits-up the whole economy would collapse. What do you think it's doing now??? The difference between the two scenarios is that bankruptcy would seriously impinge upon the ability of the rich thieves to grant themselves massive payouts, payouts which are easily hidden by the sheer scale of the numbers. Who's gonna care about a few million when we're talking about thousands of millions?
Democracy has one serious and fatal flaw; it is susceptible to, and can be destroyed by one thing: corruption. That is why Jefferson implored Americans to be vigilant (the price of freedom is eternal vigilance). Perhaps TJ believed that Americans would still be reasonably articulate well into the future. Unfortunately we have been inculcated into the belief that the implied threat would come from an other place or people. But being vigilant to external threats is a pretty obvious idea, certainly not worthy of Jefferson's exhortation. Corruption can only be countered by a vigilant populace prepared to act. I'm certain he didn't expect lazy, fat, self-centred and dumb!
Bottom line, corruption ends or America as we know it ends, and the flow-on would devastate many other nations.
How long will it take our trading partners to realize that US dollars mean nothing when the government throws new money at crooked enterprises in billion dollar lots?
Really, what can a dollar be worth if this is how we value them?
The push back in the lamestream media is unreal. They make AIG and the CEO's out to be the victims of a "lynch mob" mentality. They even go on to suggest that the populist rage is what's bringing down the economy. The Rush Limbaugh talking points are taking hold. Thank goodness for Common Dreams.
I hope Rush Limbaugh chokes to death on a handful of Oxycontin tablets. What gives a major league drug addict any credibility? The de facto leader of the Republican party is a narcotics addict. Is that the best they can do? Not that the democrats are any better. Democratic leaders don't seem to have enough intelligence among any half dozen of them to realize that they are supposed to pay income taxes. We are doomed because of the caliber and quality of our elected officials who are OWNED lock, stock and barrel by big money drug addicted criminal frauds. And we are doomed because we were stupid enough to elect them.
ekaton
For goodness sake, focus! Marching for banking reform, health care for all, and union rights will ensure the failure of all. Pick one. If you're protesting in front of a bank, maybe banking reform is what you address.
Highly inappropriate comment deleted by author.
Dammit! Even in the Progressive Press. We the People of the United Stated do NOT need the right to Unionize! We already have it!
First Amendment to the Constitution.
First Amendment – Establishment Clause, Free Exercise Clause; freedom of speech, of the press, Freedom of Religion, and of assembly; right to petition
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; OR THE RIGHT OF THE PEOPLE PEACEABLY TO ASSEMBLE, and to petition the Government for a redress of grievances.
And, beginning with cable news reports on Saturday evening, we find that AIG has even lied about the bonus amount. It is actually around $205 Million, not the first reported $165 million, but, of course, who knows if they are still lying? Besides, the "bonusgate" story is simply being used to cover the real story which is the $2.5 Trillion dollar exposure AIG has to credit default swaps, and the fact that they have been using U.S. Taxpayer Money to the tune of tens of billions of dollars to settle these "swaps" with banks in other countries. It is an outrage.
I see occasional references to its being over $400 million.
By the way, will we ever have real public discussion about the biggest outrage: that most major "news" outlets played a major role in selling this ponzi scheme to the prople?
It's time for us to demand that the FCC starts enforcing the regulations already in place and give us a list of any new regulations that might be necessary. Two would be at/near the top of many people's lists.
We need the reintroduction of the Fairness Doctrine. The likes of Limbaugh are not worried as much about a few liberal voices being (more widely) heard as they are about the regulations regarding the honesty clauses concerning discussion of public policy. That would put a lid on the deliberate lies he disseminates - on air anyway. We could look forward to the wing-nuts on all sides of issues being exposed.
Reestablishing limits on ownership has also been under increased discussion of late. (Is it too late?) Putting most of our (dis)information outlets in the hands of a few of the wealthiest people was a guarantee that truth would be squelched.
Of what use is the FCC in its present form? While they madly scrambled to decide what to do about a few-second exposure of a few inches of some entertainer's body, they blithely allowed dangerous corporate and government propaganda to be offered up as "hard news."