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Greedwashing on Wall Street
Jan 12, 2010
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.
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Mary Bottari
Mary Bottari is the Chief of Staff to Madison, Wisconsin Mayor Satya Rhodes-Conway. Previously, she was the Director of the Center for Media and Democracy's Real Economy Project.
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.
Mary Bottari
Mary Bottari is the Chief of Staff to Madison, Wisconsin Mayor Satya Rhodes-Conway. Previously, she was the Director of the Center for Media and Democracy's Real Economy Project.
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.
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