Twitter
StumbleUpon
Facebook
Delicious
Digg
Newsvine
Google
Yahoo
TechnoratiWhy Not Send My Tax Check Directly to Wall Street Execs?
My husband and I just made out a check to the IRS for $5,021. It's more than usual because of solid investment returns in his native Canada, where their quaintly regulated banking system continues to hum along. Normally, though, we don't mind paying our tax bill. We believe that strategic government investment is the way out of this crisis, and we're happy to contribute our fair share.
But this year I cringed as I dropped that check in the mail, thinking about how I might as well have just handed it directly to a Wall Street executive.
Congressional efforts to recoup the most outrageous of all the outrageous examples of bailout profiteering - the $165 million in AIG bonuses -- have stalled in the face of White House opposition. And now comes the news that Obama officials appear to be resorting to money laundering to help companies elude even the extremely modest compensation restrictions that Congress has already enacted.
A House oversight committee is investigating reports that the Treasury Department is creating special entities to receive bailout funds and then channel them to corporate recipients - no strings attached. Obama officials have reportedly already reversed a Bush administration decision to apply pay limits to one bailout initiative aimed at boosting consumer lending.
If you listen to President Obama's speeches, you wouldn't expect this kind of backsliding. He has spoken powerfully about how the current compensation system has "contributed to a reckless culture and quarter-by-quarter mentality that in turn have wrought havoc in our financial system."
In other words, the President rightly sees bloated paychecks as not just a moral outrage, but also a cause of the crisis.
The President also said that "in order to restore our financial system, we've got to restore trust. And in order to restore trust, we've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street."
So why the disconnect between the President and his own economic advisors? Treasury's argument against stronger pay rules has been that financial firms will turn up their noses at taxpayer support if it means having to limit pay for their top brass. They argue that while these firms might not go bankrupt without the aid, they wouldn't be able to increase lending enough to get the economy rolling.
But wouldn't other companies see their competitors' voluntary withdrawal from the lending game as an opportunity to take over the market? I say call their bluff.
Officials are particularly protective of hedge and private equity fund participants in the most controversial bailout program, Treasury Secretary Timothy Geithner's plan to provide heavily subsidized loans for the purchase of up to $1 trillion in toxic assets. These firms may not be getting emergency aid, but as many noted economists have pointed out, they are getting a sweetheart deal. Nobel prize-winner Joseph Stiglitz recently described it as a "win-win-lose proposal: the banks win, investors win - and taxpayers lose."
Since they're shouldering nearly all the risk, taxpayers have every right to demand that their government prevent excessive amounts of their money from going into financial executives' pockets. A recent poll showed that 81 percent of Americans support such restrictions.
I'm hoping the Congressional inquiry into the money laundering scandal will prompt a change of course at Treasury and even a renewed effort on Capitol Hill to tighten up existing pay rules. Otherwise, I'll have to keep wondering what a Wall Street executive might do with our $5,021.
For my husband and me, it might have meant finally fixing our gutters. For them, it wouldn't mean much. It amounts to roughly 0.05% of the average $10 million bonuses enjoyed by the top 10 Merrill Lynch executives last year and 0.001% of the average $464 million pocketed by the top 25 hedge fund mangers.
The out-of-control executive compensation system is one of the reasons we're in this economic hole. By protecting this system, Congress and Treasury will just dig us in deeper.
42 Comments so far
Show All"The President also said that "in order to restore our financial system, we've got to restore trust. And in order to restore trust, we've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street."
So why the disconnect between the President and his own economic advisors?"
Because Obama does a good speaking game as long as folks are still buying it.
Here is what I don't get--I happened to catch some of Obama's speech on the economy yesterday and his reasoning for bailing out the banks is to "free up credit". This line has been used repeatedly without being challenged. Isn't too much credit the problem? Aren't too many mortgaged up to thir eyeballs and barely holding on? Aren't too many over-leveraged from home equity and other loans and are now paying on things with less value after the bubble burst? Aren't there more charges and higher interest fees for credit during a time when most reflexively reduce spending?
How the hell can a sound financial base be built on more credit?
What a scam that no one asks.
sarah anderson apparently does not know that 99%+ of the taxpayer money being given these days to the "banks" to "save the financial system" is truly meant to be used to buy at face value the toxic assets owned by the world's upper crust, i.e., she does not know that the money is not truly meant for "WS and the bankers" as the latter indeed are only the middlemen of the rentier classes of the world.
didn't anderson hear, e.g., that AIG gave several dozens of bailout billions to UBS right after getting the money from W ? is UBS also part of WS? will UBS' swiss executives get dozens of billions in bonuses now, i.e., much bigger bonuses than their american counterparts will ever get ? can't anderson imagine that perhaps the money given to UBS was neither for UBS bankers nor for the UBS shareholders but rather to honor insurance policies bought by UBS from AIG when UBS sold additional "gambling protection" to UBS' upper class clientele in order to entice it to gamble even more ?
how can the left be so moronic to believe that the demoblicans are trying to save the "bankers" when in reality most of the toxic assets are owned by greedy garden variety parasitic billionaires who do not like to work at all, not even as bankers, parasitic billionaires that, however, know they can cover their asses by paying protection bribe money "for timely-legislation services" to the demoblicans and their "intellectuals" and pundits ?
do the useful idiots of the left "think tanks" truly believe that "WS and the bankers" will pocket the bailout moneys in full "as commissions and bonuses" and will let croak their upper-crust clientele that owns 99& of the toxic assets (and has been bribing the demoblicans for eons)?
do "WS and the bankers" now want the disappearance of the world's rentier classes ?!
have the useful idiots of the left "think tanks" ever seen a dog? have they ever been shown how the tail of a dog looks like ? if so, was the field trip sufficient for them to learn how to tell which is the dog and which is the tail !?
the trillions in bailout money that have been given and will continue being given by the Fed and by the federal government to the banks “to save the financial system” are a de facto immense transfer of wealth from the general population to the richest 1%, 0.1%, etc, a theft perpetrated in order to keep the upper crust as rich as it was before financial bubble bursted vaporizing the upper crust's "aggressive" investments in "innovative financial instruments" (and yes, what the middlemen like “greedy bankers” and “Wall Street” do with some crumbles of the bailout money should be ignored since many Americans have mixed feelings about “the financial system” because their pensions and life-time savings could come back to life if the stock market recovered).
the left must inform and educate the citizenry i) that the bailouts are an immense tax levied on all Americans to fund a "financial gambling welfare program for millionaires" that wants to bring save an upper crust that is now de facto ruined by its gambling addiction; ii) that the government should demand “investor rights” for every bank bailout that relies on taxpayer money, e.g., that any individual investor's portfolio that will be saved by the deployment of taxpayer money should be targetedly taxed to “get back” most of what the investor will manage to recover when the stock market recovers (i.e., that he/she should be taxed to repay with interest the “bailout help” he/she got from the taxpayers).
Guess what, Sarah, your tax checks do already go directly to the bankers -- that's the double scam that's happening. You see, since the Federal Reserve is privately owned, and since it has usurped Congress's authority to print money, and since it charges our government (us) interest on the monetization of your and my live certificates of birth when it "loans" us the money, and since the private bankers who own the Federal Reserve are guaranteed a steady 6 percent interest on these "loans," all of the taxes you pay already have been going directly to them. Now, not only are they loaning us the money to pay off their gambling debts and more, they are earning interest on those pay-offs. Pretty neat trick, eh?
Now, here's another fact that appears to have passed over your head: Obama may, as you say, "rightly sees bloated paychecks as not just a moral outrage, but also a cause of the crisis." However, what you fail to understand (perhaps in an act of selective ignorance?) is that Obama is the one who is deliberately orchestrating the heist. In other words, things are going exactly according to his plan. He intends for these ripoffs to happen -- this is why people like Summers and Geithner are in charge.
Well you did just that, so who's got the last laugh? You obligingly surrender your sovereignty, drop off your little duty, and then come here to whine? Paying taxes is like keeping a well-stocked liquor cabinet around an alcoholic and then complaining when they go on a binge. Cut them off at the source or they'll keep bleeding you until you're dead.
Well? Aren't you doing the same? Even if you get a tax refund, you're still getting cuts to critical public infrastructure services. Now, I agree that we would be better off holding our tax dollars until we got our services first but you, I, and others would have to unite first. She's not whining as you claim. She's only telling the truth that needs to be well known out there.
I went to a rally Saturday at the Fed in SF sponsored by A New Way Forward. 100 people showed up. I encourage Lefists to come out tomorrow to the conservatives' "tea parties." There's one in almost every town. They're against the bailouts.They won't agree with the Left on too much, but being against the banks is enough for now, IMO.
sarah anderson does not know that 99%+ of the taxpayer money being given these days to the "banks" to "save the financial system" is truly meant to be used to buy at face value the toxic assets owned by the world's upper crust, i.e., she does not know that the money is not truly meant for "WS and the bankers" as the latter indeed are only the middlemen of the rentier classes of the world.
didn't anderson hear, e.g., that AIG gave several dozens of bailout billions to UBS right after getting the money from W ? is UBS also part of WS? will UBS' swiss executives get dozens of billions in bonuses now, i.e., much bigger bonuses than their american counterparts will ever get ? can't anderson imagine that perhaps the money given to UBS was neither for UBS bankers nor for the UBS shareholders but rather to honor insurance policies bought by UBS from AIG when UBS sold additional "gambling protection" to UBS' upper class clientele in order to entice it to gamble even more ?
how can the left be so moronic to believe that the demoblicans are trying to save the "bankers" when in reality most of the toxic assets are owned by greedy garden variety parasitic billionaires who do not like to work at all, not even as bankers, parasitic billionaires that, however, know they can cover their asses by paying protection bribe money to the demoblicans and their "intellectuals" and pundits ?
do the useful idiots of the left "think tanks" truly believe that "WS and the bankers" will pocket the bailout moneys in full "as commissions and bonuses" and will let croack their upper-crust clientele that owns 99& of the toxic assets (and has been bribing the demoblicans for eons)?
do "WS and the bankers" now want the disappearance of the world's rentier classes ?!
have the useful idiots of the left "think tanks" ever seen a dog? have they ever been shown how the tail of a dog looks like ? if so, was the field trip sufficient for them to learn how to tell which is the dog and which is the tail !?
the trillions in bailout money that have been given and will continue being given by the Fed and by the federal government to the banks “to save the financial system” are a de facto immense transfer of wealth from the general population to the richest 1%, 0.1%, etc, a theft perpetrated in order to keep the upper crust as rich as it was before the bursting of the financial bubble vaporized its shrewd investments in “innovative financial instruments” (and yes, what the middlemen like “greedy bankers” and “Wall Street” do with some crumbles of the bailout money should be ignored since many Americans have mixed feelings about “the financial system” because their pensions and life-time savings could come back to life if the stock market recovered).
the left must inform and educate the citizenry i) that the bailouts are an immense tax levied on all Americans to fund a "financial gambling welfare program for millionaires" that will bring back from ruin an upper crust that is now de facto ruined by its gambling addiction; ii) that the government should demand “investor rights” for every bank bailout that relies on taxpayer money, e.g., that any individual investor's portfolio that will be saved by the deployment of taxpayer money should be targetedly taxed to “get back” most of what the investor will manage to recover when the stock market recovers (i.e., that he/she should be taxed to repay with interest the “bailout help” he/she got from the taxpayers).
Good point! Better yet, arrest them!
Our economy is in the hands of our own Darth Vader--Larry Summers and his fellow fraudsters from Wall Street. Here's their plan--makes the banks rich (again!) and their riches will trickle down to you and me. (From Summers's lips to my pockets!)
Obama/Summers--they a wholly owned subsidiary of Wall Street--favor finances (the flipping of paper) over manufacturing (actually producing something). A Wall Street run finance-centric economy has caused the past few bubbles and subsequent busts. We can expect more of the same from the current Banksters in power.
Another day closer to my journey through Caesar's world being concluded. Moses lead me to the promised land. Apparently this isn't the promised land!
Life is good. What an experience! It's always best to forgive.
Just be careful, my brother. Caesar will not rest until we all have either rendered unto him or have been rendered. Peace!
Wow. You actually did that?
I thought Americans only paid taxes once they are nominated for a cabinet position.
To meet the qualifications for an Obama appointment you must be an insider that will not rock the boat. Unlike working class people, insiders have many opportunities to cheat on taxes.
Outsiders will never be appointed by Obama because they would facilitate real change and that would affect the flow of dough into the DNC and Obama's coffers.
BBC channel 4 did a series on the CENTURY OF THE SELF. It has been on U-tube for some time now. It goes a long way in detailing how the British and American public have been brainwashed and turned into self interested consumer gotta have the next big thing morons we have become. We have been divided and marginalized by the PR machines of big business. The tacit that worked so well in business was applied to politics. Candidates were sold to us by the same lying ad-ware that got us to buy the useless crap that is overflowing our houses. Appeal to self interest, have the candidate reach out to the greedy child within each of us.
It will take tremendous strength and courage for us to climb out of the rut we have fallen into. A tax revolt would be a start. The folks at IRS might want to be a part of it, after all, they pay taxes too. The first American Revolt in 1775 was over taxation with out representation, so what's changed in 2009?
I heard part of that broadcast on www.kpfa.org during the fund drive. It is excellent!
Thanks for mentioning it.
Good reference: I saw it a few years ago when I was living in the UK, if I recall it was on BBC2, not 4. Funny how Adam Curtis' documentaries are not aired in the "land of the free". Two other excellent ones are "The Trap" and "The Power of Nightmares"
"Why Not Send My Tax Check Directly to Wall Street Execs?"
Because half of it's going to China for the vig, and the other half is going to Xe and Halliburton so they may continue their outstanding work in Iraq and Afghanistan.
SA says "Normally, though, we don't mind paying our tax bill." Guess they normally do not mind supporting illegal occupations that kill and maim millions, or torture centers and secret prisons, or welfare for the rich, or corporate subsidies...
Frank1569,
Very good points!
Two things condemn Obama the most No Strings Bankster Heists and Afpak drones and escalation.
No surprise Glenn, Obama said long before he was elected that he would bomb Pakistan and escalate the imperial occupation of Afgh. It was also crystal clear what was to happen when he had Penny Pritzker as one of his campaign advisors and took so much money from the Bankster Gangsters during a campaign that raised 100s of millions of dollars. As soon as Geithner/Summers were appointed the message was loud and clear. The old foxes guarding the henhouse again.
The winner-takes-all, most expensive elections in the world, corrupted free for all, media directed spectacle elections are a root cause of the deep-seated corruption in our system. The book title "Best Democracy Money Can Buy" is indeed fitting.
"What? The land of the Free" whoever told you that is your enemy"
It still amazes me that many members of the public have not shown up with torches and pitchforks calling for Geithner, Summers, Rubin, Gramm, and others to show their faces and face public prosecution for money laundering, fraud, and other criminal charges. People still are entranced by Obama's smooth talk, when in reality, he has proven to be the equivalent of a snakeoil salesman. Does the sky literally have to fall on peoples' heads before they realize they have been robbed in broad daylight? Maybe when their television sets have to be repossessed so they no longer can watch American Idol and Gray's Anatomy they might lift a finger to prosecute and incarcerate these crooks, or better yet, roll out the old guillotine and behead them. As comical and farcical as the tea parties have become, I must say that they do not go far enough, and that for a different set of reasons, I support people who participate in them.
Solutions:
1. Push for impeachment hearings.
2. Refuse to pay taxes.
3. Unleash relentless pressure on corporations - cut up your credit cards (I did and it feels great), don't buy any goods from corporations that support politicians, grow your own food (we all know the FDA is a joke and cannot be trusted).
4. Pressure good politicians like Kucinich to become Independent and team up with others like Bernie Sanders.
5. Teach your children to spend much more time reading than watching television and playing their Wiis.
6. Spend time protesting the military (which by the way has a huge presence at Indoor Arena Football Games - I recently attended one for the first time, and the Army was handing out free t-shirts, and constantly showing pictures on the scoreboard trying to convince kids of young, redneck parents in attendance that it is worth joining the military).
It may seem like protests are futile, but they are necessary. I constantly am bringing in articles to my classes to tell students the truth. It gets them stirred up and hungry to research why this country has been hijacked (yes, the unthinkable has been happening for quite sometime) by a shadow government with ties to elite interests. Like Bush, Obama is their puppet. We must continue to fight for telling the truth and to expose those who think they are above the law. As long as I am breathing, I will continue to do my part.
Excellent article. Thank you and I feel sorry for you or anyone have to pay the IRS creeps money that will go to W$ anyway. In fact, I'd still like to know why bother paying taxes when the pols in DC tell us to make them do it. It's like paying a greedy lawyer to do his job for him.
Better yet, how do we bring back the old Obama (pre2005 version) ?
Why not send the IRS nothing at all?
I believe it is time for a good old-fashioned taxpayers' revolt. Let's follow the moral example of Henry David Thoreau (who refused to pay taxes for the Mexican War) and refuse to pay federal taxes on the ground that the people's will has been continually ignored in this whole matter. People were not telling their congresspersons "Please give my money to the banks without any plan or conditions." Congress received thousands of telephone calls, letters and emails opposing the bailout last fall. Congresspersons, however, thought the campaign contributions they received from the likes of Goldman Sachs and J.P. Morgan Chase were more important than the will of the people. Therefore, the will of a whole nation was ignored by our elected representatives.
Congress is owned by the finance industry. That does not mean we have to go along with that arrangement. An organized tax strike might send a potent message to Congress. It is worth a try.
Honest Mr. Taxman, Zombie banks ate my tax return,and stole my government chese ,then they trashed the neighborhood! peas in
I just gamed the system like a CEO and went from owing 1500 to getting over 3000 back. I was planning on just sending an IOU, but this works better.
Better yet, let's elect a different Congress.
When the people fear their government there is tyranny,
when the government fears the people there is liberty.
~ Thomas Jefferson
When the voting public is finally fed up with being fleeced, they will vote for a different Congress, but it won't be the sidekicks (Democrats) of the Republican Crime Family.
We tried that in 2006 and 2008. How did that work out for us? Seriously, as long as big money and the money oligarchy influences political campaigns, we will only get the same thing election after election. I am kinda sick of the whole promises followed by betrayal political cycle myself. Campaign finance reform is the key to any real electoral change. Otherwise, the Benjamins ballot will always trump the paper ballot.
I think she means electing Independents for a change.
Even better, stop electing anyone at all to rule you. Everyone really should try reading 'Discourse on Voluntary Servitude' by Etienne de la Boetie. These monsters are only so because you make them so. Otherwise, they're a bunch of old white guys with suits.
Agreed. Ther is really nothing at all democratic about elections - particularly when those elected are professional politicians serving the powerful owners of capital.
Much more democratic would be citizen's councils - with the council members selected by random pick from the entire citizenry.
Just to answer the question posed in the title....
The reason why you do not hand over your check directly to the bankers is because your check is already well-spent even before you get that far.
Between the over-resourced military, two wars, and all the corporate subsidies that were being handed out PRIOR to this bail-out debacle the USA was ALREADY in deficit. That means your paltry $5k check is pre-spent on the things the government was already doing before the bailout was even a glimmer in Paulson's eye.
So where is the money from the bailout coming from? At the moment it is coming from bonds...which is a polite way of saying that we are in hock up to our great grandchildren's short and curlys to China.
So you needn't agonize over your $5k going directly to the bankers, there were plenty at the trough long before we got to this point!
Yeah, and meanwhile, Americans become further disillusioned and fed up with the lousy tax system.
Maybe now is a good time to buy stock in a company that makes pitchforks!
"The President also said that "in order to restore our financial system, we've got to restore trust."
Reducing excessive compensation packages alone is not going to regain our trust!
Until the 12 deregulatory steps leading to this meltdown (by Robert Weissman) are addressed, trust will not be regained on any significant level.
Here they are:
THE REPEAL OF GLASS-STEAGALL
OFF-THE-BOOKS ACCOUNTING FOR BANKS
CFTC BLOCKED FROM REGULATING DERIVATIVES
THE COMMODITIES FUTURES MODERNIZATION ACT
SEC REMOVES CAPITAL LIMITS ON INVESTMENT BANKS
BASEL II WEAKENING OF CAPITAL RESERVE REQUIREMENTS FOR BANKS
NO PREDATORY LENDING ENFORCEMENT
FEDERAL PREEMPTION OF STATE ENFORCEMENT AGAINST PREDATORY LENDING
ASSIGNEE LIABLILITY ESCAPE
FANNIE & FREDDIE ENTER SUBPRIME
MERGER MANIA
CREDIT RATING AGENCY FAILURE
"If a person murders another they can get the death penalty. But if a banker is responsible for fraud causing trillions of dollars of losses, affecting millions of people, the bankers claim ignorance and are not charged with any criminal activity." In fact, as we have seen, they get rewarded.
Trust is not a given.....it must be earned!
GAIL,
Last paragraph is right on target. We have hypocrites in Congress for "representation."
Two types of laws. One for the common people and one for the super-rich.
I would also list SECURITIZATION OF MORTGAGES.
Prior to the gov. allowing securitization of mortgages in 1978, mortgages were widely available to those who qualified for them and the fees banks charged were lower because each bank was required to hold the mortgage to maturity, so banks profitted from interest paid, not the fees.
In addition to enabling crooks to make a fortune at the expense of the rest of us by initiating bad loans and deceptively bundling them for sale around the world, securitization has resulted in consumers paying ever higher fees for loans.
Re Gail April 14th, 2009 10:53 am:
Good list, to which I would add the elimination of shareholders' right to file class-action suits for damages against brokers (sorry, don't know the name of the bill or its sponsors, although I wouldn't be surprised to find Phil Gramm at the bottom of the pile).
Easy money.
I know my this sounds harsh, but if you made so much money off of "solid investment returns", which is to say, per the value theory of labor, someone else's toil rather than your own, then you are partcipating - big time - in the same capitalist system that has caused the problem to begin with.
What were the deregulation-pushing bankers doing but simply complying with their fiduciary duties to maximize the returns of their investing clienets?
From what I can determine reading the Canadian press and reports from my brother in Toronto, the spectre of Ronald Reagan is haunting Canada in a big way, and Canada will be in the same boat as the US before long.
Like the old slogan says, the problem is the system!
Oops, should be "Labor Theory of Value".
And ray's points are well-taken, but, the post-New Deal deregulation itself is an inevitable aspect of Capitalism. The managers of investments are duty-bound to maximize the return of the investors, and this includes pushing politicians to deregulate. The system itself allow them no other course of action.
To change this, we need to declare that we will henceforth be a Socialist economy that allows private ownership of capital only where it is determined expedient - such as small shops and services, and farming and fishing. This is quite different from being a declared Capitalist economy with regulations imposed where they can. I believe that this is Chavez's overall approach for Venezuela.
I concur that socialism is the best way.
The brain-dead US electorate will, however, ensure that the best we can hope for is SOME meaningful regulation.
Obama's proposal to "provide oversight of banks that are too big to fail" is not even token regulation.
Meaningful regulation would include breaking up companies that are too big to fail in any industry.
FDR's New Deal initiated a 50 year experiment that proved that while unregulated capitalism enriches 1% of the population at the expense of the 99%, regulated capitalism enriches a majority of the population.
Ronny Raygun's Bad Deal initiated a 30 year experiment that proved that financial industry deregulation can transfer greater amounts of wealth to the 1% than the nineteenth century robber barons ever dreamed possible.
During the past six months the Federal Reserve, Snowbama, and his seven insiders have unconditionally handed over 12 trillion dollars to the same 1% that have been ripping us off, proving that there is no limit to how much unregulated capitalism enriches the top 1%.