Happy Holidays from America's Banks

Never mind Barack Obama's Audacity of Hope. It's the audacity of the banks that takes your breath away. Mean old Mr. Potter in It's a Wonderful Life seems like Father Christmas by comparison.

A recent report that Citigroup and Goldman Sachs may have received
preferential treatment getting doses of the swine flu vaccine was
enough to give Ebenezer Scrooge the yips. Then came news that in order
for us to get back the taxpayer bailout money we loaned them, Citigroup
is receiving billions of dollars in tax breaks from the IRS.

And there's a new study this week, "Rewarding Failure," from the public
interest group Public Citizen, revealing that in the years leading up
to the financial meltdown, the CEO's of the 10 Wall Street giants that
either collapsed or got huge amounts of TARP money were paid an average
of $28.9 million dollars a year.

In 2007, that amounted to 575 times the median income of an American
family. Now, thanks in part to the banks' monumental malfeasance that
led to our economic swan dive, food stamps are now being used to feed
one in eight Americans, and a quarter of all the kids in this country.
A new poll from The New York Times
and CBS News reports that more than half of our unemployed have
borrowed money from friends and relatives and have cut back on medical
treatment.

The Times
wrote that, "Joblessness has wreaked financial and emotional havoc on
the lives of many of those out of work... causing major life changes,
mental health issues and trouble maintaining even basic necessities."

Yet according to the non-profit Americans for Financial Reform the
reported $150 billion that Wall Street is paying itself in compensation
and bonuses this year would be enough to solve the budget crisis of
every one of the fifty states or create millions of jobs or prevent all
foreclosures for four years.

All of this wretched excess is occurring as more and more people can't
afford a roof over their heads. Foreclosures were up another five
percent in the third quarter -- 23 percent more than a year ago. Fewer
Americans are willing to buy foreclosed properties, and the Obama
administration's foreclosure prevention plan has been a bust so far --
way too timid, critics say, and many of the banks won't play ball,
refusing to negotiate in good faith with homeowners desperate to hold
on.

We got a first hand look at the crisis this week, when thousands lined
up at the Jacob Javits Convention Center just a few blocks from our
Manhattan offices to attend a mortgage assistance event sponsored by
the non-profit Neighborhood Assistance Corporation of America (NACA).
So many showed up for this leg of the "Save the Dream Tour" that on
many days, staff and volunteers stayed to help until one in the morning.

NACA has had success getting homeowners and banks together to work out
a deal to prevent foreclosure. But the big banks' return to the
government of the TARP bailout money with which we underwrote them over
the last 14 months is a mixed blessing -- great to have the cash
returned so quickly, terrible because any leverage Washington held over
the banks because of the loans virtually vanishes with the payback.
They're back in the saddle and not inclined to be of much assistance
helping anyone else out, especially those in mortgage trouble.

As Andrew Ross Sorkin of The New York Times
wrote in the wake of President Obama's Monday meeting with Wall
Street's top guns (three of whom failed to show up because of airport
delays), "Executive compensation, leverage limits and lending standards
were all issues that Washington said it planned to change -- and when
the taxpayers were the shareholders of these firms, it probably could
have done so. But now the White House has been left in the position of
extending invitations, rather than exercising its clout. And in the
figurative and literal sense, it is getting stood up."

After the meeting, Obama said, "The problem is there's a big gap
between what I'm hearing here in the White House and the activities of
lobbyists on behalf of these institutions or associations of which
they're a member up on Capitol Hill."

That's putting it mildly. This week, the American Bankers Association
sent out an update and "call to action" memorandum crowing over its
success watering down the bank reform bill that was approved by the
House and urging its members to beat back similar legislation in the
Senate. Self-righteously, it concludes, "As one of your New Year's
resolutions, please vow to do everything in your power to show, and to
have your colleagues in your bank show, your Senators the right path to
true reform."

It helps when the right path is paved with silver and gold. As
"Crossing Wall Street," a November report from the Center for
Responsive Politics notes, "The finance, insurance and real estate
sector has given $2.3 billion to candidates, leadership PACs and party
committees since 1989, which eclipses every other sector...

"The financial sector has also been a voracious lobbying force,
spending an unprecedented $3.8 billion since 1998, while sending an
army of lobbyists to Capitol Hill to make its case. That's more money
than any other sector has spent on influence peddling. Not even the
health care sector, which spun up a lobbying frenzy this year over
health reform, has spent more."

The banks are making a list and checking it twice. And lest we forget,
during his run for the White House, the finance sector filled Barack
Obama's stocking with $39.5 million dollars worth of campaign
contributions, more than any other presidential candidate.

God bless us, every one!