There are good reasons why the American people are angry at the big bankers on Wall Street. The latest news is the revelation by way of Bloomberg that the Federal Reserve Bank discretely lent up to $1.2 trillion to United States banks at below-market interest rates during the height of the financial meltdown, a gift that translated into roughly $13 billion of income. There was no transparency to the action, and no accountability. This subsidy came on top of the subsidies made available through the Troubled Assets Relief Program.
With their purses thus padded by public intervention, executives in the financial sector went on to pay themselves obscene compensation packages. (The New York Times estimated pay packages averaged $595,000 per employee at Goldman Sachs and $463,000 for JPMorgan Chase.) While millions of Americans were losing their jobs, scrimping by on part-time work and coping with wage cutbacks, they were also paying for the privilege of enriching the masters of the universe whose great claim to business acumen was the ability to borrow and risk extraordinary sums of money, pocket the gains when they won their bets, and socialize their losses when they lost.
This is not free-market capitalism. This is heads-I-win-tails-you-lose crony capitalism. Wall Street does provide a legitimate and valuable function for society in allocating capital. But it was a party to a grotesque mis-allocation of hundreds of billions, if not trillions, of dollars in the 2000s, and the Attilas and Tamerlanes in pinstripes who pillaged the nation should be prostrating themselves in gratitude that they live in a country where the peasants don’t string up their oppressors by the gibbet.
Of course, the mercy bestowed upon these wealth destroyers may have something to do with the fact that the financial sector has donated $130 million so far in 2011-2012 to Congressional and presidential candidates of both parties, including President Obama. Donate millions to the politicians, reap billions in ill-gotten gains. That’s a pretty good Return on Investment.
— JAB
