October 31, 2008
Horrors for Halloween
All of us here at Dakota thought we'd put on a little horror show for Halloween
Naomi Klein headlines the horror in, of course, a British newspaper:
The Bush gang's parting gift: a final, frantic looting of public wealth
The US bail-out amounts to a strings-free, public-funded windfall for big business. Welcome to no-risk capitalism
Wall Street's chief executives will hunker down and pay bonuses this year in the face of the worst financial crisis since the Great Depression, a taxpayer bailout and mounting political outcry, industry veterans say.Odds that Wall Street will forgo the payouts are "slim to none,'' said John Gutfreund, 79, president of New York-based Gutfreund & Co. and the former chief executive officer of Salomon Brothers Inc. ``They're going to have to be a little bit sensitive because politicians, whether they like it or not, are part of their lives now.''
Year-end payments at the nine banks that received $125 billion from the U.S. Treasury are under investigation by U.S. Representative Henry Waxman and New York Attorney General Andrew Cuomo, who are demanding details on the companies' compensation plans. Three of the firms, Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co., have already set aside $20 billion to pay bonuses this year.
If nothing else, at least someone is watching. - from Ameriblog
The first salvos were fired late Tuesday when Rep. Henry Waxman, who chairs the House Committee on Oversight and Government Reform, disclosed that he sent letters to the first nine major banks set to receive a capital injection from the government, seeking information on their compensation and bonus plans for 2008 and other years....Rep. Waxman's letter cited reports about billions in bonuses and quotes an unnamed analyst as saying: "Had it not been for the government’s help in refinancing their debt, they [the companies] may not have had the cash to pay bonuses."
And there's an even larger problem -From NY Times editorial
According to Treasury Secretary Henry Paulson, the chief proponent of the big bank bailout, flooding the banks with taxpayers’ money was supposed to get them to start lending freely again. And that, in turn, was supposed to stabilize the markets and prevent the downturn from being worse than it otherwise would be.....Now, lo and behold, with $250 billion in bailout funds committed to dozens of large and regional banks, it turns out that many of the recipients of this investment from taxpayers are not all that interested in making loans. And it appears that Mr. Paulson is not so bothered by their reluctance.
As Joe Nocera comments in the New York Times:
It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction.
furthermore
Late Thursday afternoon, I caught up with Senator Dodd, and asked him what he was going to do if the loan situation didn’t improve. “All I can tell you is that we are going to have the bankers up here, probably in another couple of weeks and we are going to have a very blunt conversation,” he replied.He continued: “If it turns out that they are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay.”
Let’s hope so.
Which is precisely why we're writing this for your edification.
Photo note: A recycle from Halloween 2006. which we consider too creepy not to republish every other year
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