Greedwashing on Wall Street
All eyes are on Wall Street this week as the big banks get ready to report their earnings and bonuses. Rebounding banks are preparing to pay out bonuses that rival those of the pre-crisis boom years.
During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation.
To avoid pitchforks and public outrage most banks are tamping down on the cash payouts and beefing up long-term stock options. One bank is taking an even more novel approach, dare we call it, greedwashing?
Goldman Sachs is coming off one of its most profitable years in its 141-year history. This profitability was made possible through extraordinary government interventions. Goldman was given $10 billion in TARP funds, repaid with interest, but that was just the beginning. After the $182 billion taxpayer bailout of bankrupt AIG, Goldman received $12.9 billion without having to take a discount. This was due directly to the intervention of the New York Fed, headed by Tim Geithner. The continuing drip, drip, drip of revelations of this deal threatens Geithner’s tenure as the Treasury Secretary. The Fed also allowed the investment firm to reorganize as a bank holding company giving their investors the backing of FDIC insurance and access to the Fed’s discount window. Now Goldman can borrow at very low interest rates and lend at 10 percent or more. Even worse, it continues to act like an investment bank, but now its risky moves are backed by the American taxpayer.
As Goldman gets ready to announce bonuses, anticipated to be worth around $595,000 per employee, the press team at Goldman Sachs has been working overtime to come up with clever ideas on how to defray public anger at firm. Remember when they announced their plan to mentor and loan to small businesses? Now they are thinking of creating a rule that would require all their top employees to engage in charitable giving.
According to the New York Times the idea would be similar to a program at the failed investment bank Bear Stearns, which required its top workers to give four percent of their pay to charity each year. The firm then checked their tax returns to make sure they did it. Can you feel the love?
Greenwashing is the unjustified adoption of environmental virtue by a firm or an industry to create a pro-environmental image. You remember British Petroleum’s multimillion dollar TV ad campaign trying to brand themselves as “Beyond Petroleum” with the cute little green flower?
Goldman and other banks are on the frontlines of greedwashing, masking their extraordinary paydays — which were only made possible by taxpayer support — in virtuous endeavors. I have a better idea. Instead of asking top officers to sacrifice, let simply apply a tiny tax to every single Wall Street trade and put that money to work rebuilding the real economy that Wall Street shattered. This would not only take the air out of the bonus bubble, but it would put Wall Street back to work serving Main Street — a job description they have long neglected.
© 2010 Center for Media & Democracy