For Immediate Release
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167
"Wall Street Is Mocking Us"
Prins, a former investment banker turned journalist, is author of the new book It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street.
President of Public Citizen, Weissman said today: "Wall Street is mocking us. The giant Wall Street firms likely would be out of business had taxpayers not provided trillions of dollars in bailout money and supports. Now, within a year of these unfathomable bailouts, Wall Street has the gall to siphon off record sums in salary and bonuses. As troubling as the scale and audacity of these payments may be, what is most appalling is that they are, in large measure, the result of Wall Street resuming exactly the same speculative gambling and consumer rip-off strategies that crashed the financial system in the first place.
"The obscene Wall Street payments should shake Congress out of its lethargy and drive it to adopt strong financial regulatory rules. These should include a Consumer Financial Regulatory Agency empowered to crack down on consumer rip-offs; tough limits on bonus payments (including a requirement that bonus payments be based on long-term performance, to remove the incentive for dangerous, short-term betting); and meaningful controls and restrictions on the trade in derivatives and other exotic financial instruments.
"Today, the House Financial Services Committee is considering legislation related to the derivatives market. Unfortunately, the legislation being considered will do almost nothing to curb the speculative frenzy on Wall Street."
U.S. banks and securities firms are on track to pay a record $140 billion in compensation to staff -- more than at the peak of 2007, according to a recent Wall Street Journal analysis.
The New York Times is reporting this afternoon: "A key House committee voted on Thursday to regulate, for the first time, trading in the arcane financial instruments known as derivatives, which have been linked to the financial crisis that shocked Wall Street and cut into the savings of millions of Americans."
But this morning, William Black, author of The Best Way to Rob a Bank Is to Own One, stated that the chairman of the House Finance Committee, Barney Frank, "has proposed legislation on financial derivatives that essentially exempts what are called over-the-counter derivatives from most regulation, and it is over-the-counter derivatives that have been a major cause of this crisis. So that's utterly insane. There's no conceivable justification for it. And he stacked the hearing." Black is a former bank regulator at the Federal Savings and Loan Insurance Corporation. In the 1980s he helped expose the savings and loan scandal. He now teaches at the University of Missouri, Kansas City.
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