Black People : Welfare for the Wealthy

Discussion in 'Black People Open Forum' started by Ankhur, Oct 16, 2009.

  1. Ankhur

    Ankhur Well-Known Member MEMBER

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    Rewarding Failure: The Bail-Out Bonuses on Wall Street Continue

    Prepare for a new firestorm of completely justified populist outrage. Some of the country's largest Wall Street firms have set aside billions of dollars for bonuses to executives and traders -- many of whom are the same people whose reckless risk-taking led to the current recession.

    Amazingly, giant insurance conglomerate AIG is currently scheduled to pay another $198 million in bonuses next March.

    Remember that AIG's sale of unregulated "credit default swaps" helped trigger the financial collapse that led to the recession. "Credit default swaps" were essentially insurance policies that, if the underlying financial instrument fell below a certain price, AIG would insure the loss. Only problem was, that since the "credit default" business was completely unregulated, AIG had no capital requirements to guarantee that they could pay off.

    To prevent what they thought might be a world-wide systemic meltdown, the Government was ultimately forced to invest $180 billion of taxpayer money, and now owns 80% of the company.

    But earlier this year AIG actually paid $168 million in bonuses to executives and traders in the company's Financial Products Division that had run the "credit default swap" program, causing universal outrage.

    Does it make any sense at all to give even more financial rewards to the very people who have helped put millions of Americans out of work and caused the worst economic downturn since the Great Depression? Of course not, but that is exactly what AIG management is poised to do.

    One of the problems the company's management says it confronts is that they are "contractually bound" to make these payments. Apparently contractual obligations mean more when it comes to stock speculators than it does when it comes to labor agreements where companies constantly demand changes if "economic circumstances" warrant. At the very least, they should make the people who helped bring us the recession sue the company in open court and tell a jury why they deserve millions of dollars in bonus money for the brilliant job they did.

    Kenneth Feinberg, the U.S. Treasury's point man on compensation for bailed out firms, has advised the company to scale back its payments to avoid another public firestorm. He is dead on.

    But AIG is only the tip of the iceberg. According to the Washington Post, J.P. Morgan Chase has set aside $2.78 billion in compensation for its investment bankers for the third quarter - a 28% increase over the same period last year.

    J.P. Morgan Chase is able to pay those kinds of bonuses because the financial bailout by the taxpayers has put it - and the other big Wall Street Banks -- in a position where they will generate very strong profits in the third quarter. J.P. Morgan Chase itself will generate profits of $3.59 billion - the strongest results in two years.

    Community and Regional banks, on the other hand, are in deep trouble. The difference is that the Wall Street banks are making money on investment banking activities - on underwriting equity plays and speculative trades - exactly the activities that sent the financial sector into a tailspin. The Community and Regional banks, on the other hand, are restricted to traditional banking activities - receiving deposits and making loans. But the recession has caused demand for loans to drop and delinquencies on loans to increase.

    So the Community and Regional banks that didn't have anything to do with causing the recession are paying the price -- along with the rest of America. But the big Wall Street banks that actually caused this catastrophe are rolling in money and handing it out in huge chunks to the brilliant young speculators that drove the process.

    That ain't right. It's not right morally and it certainly isn't right economically. If the economic incentives continue to encourage reckless speculation and penalize sound banking, we're going to get reckless speculation.

    The Obama Administration has made regulatory reform proposals that are the first step down the road to changing these economic incentives - and reining in the massive power of the financial sector as a whole. This package includes regulation of so called "derivatives" -- essentially bets on the direction of underlying investment instruments -- including the "credit default swaps" that sunk AIG. Their passage is not just a matter of "good policy" - it is a matter of national economic security



    Read more at: http://www.huffingtonpost.com/robert-creamer/bailed-out-wall-street-fi_b_323480.html?view=print
     
  2. Ankhur

    Ankhur Well-Known Member MEMBER

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    The Rich Have Stolen The Economy

    By Paul Craig Roberts

    October 16, 2009 "Information Clearing House" -- Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg reports that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.

    The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.

    JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.

    Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each with the highest paid as much as 10 million pounds ($16 million).“

    In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine--”How To Spend It.” New York City’s retailers are praying for some of it, suffering a 15.3% vacancy rate on Fifth Avenue. Statistician John Williams (shadowstats.com) reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”

    Meanwhile, New York City’s homeless shelters have reached the all time high of 39,000, 16,000 of whom are children.

    New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city and charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.

    Long-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10% to 20%. Now hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. High unemployment has made 2009 a banner year for military recruitment.

    A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall. According to Jay Brinkmann of the Mortgage Bankers Association, job losses have spread the problem from subprime loans to prime fixed-rate loans. On a Wise, Virginia, fairgrounds, 2,000 people waited in lines for free dental and health care.

    While the US speeds plans for the ultimate bunker buster bomb and President Obama prepares to send another 45,000 troops into Afghanistan, 44,789 Americans die every year from lack of medical treatment. National Guardsmen say they would rather face the Taliban than the US economy.

    Little wonder. In the midst of the worst unemployment since the Great Depression, US corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas.

    The offshoring of jobs, the bailout of rich banksters, and war deficits are destroying the value of the US dollar. Since last spring the US dollar has been rapidly losing value. The currency of the hegemonic superpower has declined 14% against the Botswana pula, 22% against Brazil’s real, and 11% against the Russian ruble. Once the dollar loses its reserve currency status, the US will be unable to pay for its imports or to finance its government budget deficits.


    full article
    http://www.informationclearinghouse.info/article23739.htm
     
  3. Ankhur

    Ankhur Well-Known Member MEMBER

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    At rescued banks, perks keep rolling
    Bosses benefit after bailout Fringe compensation rose 4 percent last year
    By Tomoeh Murakami Tse

    Tuesday, October 20, 2009

    NEW YORK -- Even as the nation's biggest financial firms were struggling and the federal government was spending hundreds of billions of dollars to save many of them, the companies as a group were boosting the perks and benefits they pay their chief executives.
    The firms, accounting for more $350 billion in federal bailout funds, increased these perks and benefits 4 percent on average last year, according to an analysis of corporate disclosures filed in recent months.
    Some chief executives, such as Kenneth D. Lewis of Bank of America and Jeffrey M. Peek of CIT Group, the major small-business lender now on the brink of bankruptcy, each received about $100,000 more than a year earlier for personal use of corporate jets. Others saw an increase in the value of chauffeured services, parking or personal security.
    Ralph W. Babb Jr., chief executive of Dallas-based lender Comerica, was compensated for a new country club membership, with an initiation fee and dues of more than $200,000. GMAC Financial Services chief executive Alvaro de Molina benefited from a $2.5 million payment from his company to help cover his personal tax bill.
    Government scrutiny
    "You would have thought that this would be the moment when everyone said, 'Okay, the perks have got to stop -- at least while we're indebted to the government,' " said Paul Hodgson, senior research associate at the Corporate Library. "But that didn't happen."
    This year may turn out to be different. In June, the Treasury Department prohibited companies receiving bailout funds from reimbursing senior executives for their personal tax payments.
    In the meantime, Kenneth R. Feinberg, the Obama administration official assigned to set pay for top executives at seven of the companies receiving the most help, plans to curtail perks such as country club fees when he rules on compensation later this month, according to people familiar with the matter. Perks worth more than $25,000 are getting particular scrutiny from Feinberg.
    On average, the chief executives at 29 of the largest public financial companies that have taken bailout funds received perks and benefits worth more than $380,000 in 2008, according to compensation figures included in annual proxy statements and supplied by Equilar, a compensation data services firm. Individually, about half the banks increased their fringe benefits to the top executives. The figures do not include relocation costs and related taxes, typically one-time fees that can skew year-over-year comparisons.
    In contrast to the 4 percent average increase in perks and benefits at these companies, the average awarded to top executives at non-financial companies in the Fortune 100 declined by more than 7 percent over the same period, according to Equilar.
    Personal use of corporate aircraft and "gross-ups" -- when the company pays taxes due on bonuses or other benefits -- represented more than half of the $11 million in non-cash pay awarded to the 29 chief executives in 2008. Among the more common perks were company cars and drivers, as well as personal financial and tax-planning services.
    Although perks represent a relatively small portion of an executive's overall compensation package, they have been targeted some shareholders who argue that these fringe benefits are meant largely to stroke the egos of top company brass.
    "These executives are already well compensated," said Daniel Pedrotty, director of the AFL-CIO's office of investment. "The notion that some of these folks can't even leave a nickel on the floor, that they want to take every last dime and put it on the company card really rubs people the wrong way but points to a larger problem of lack of independence at the board."
    Fewer perks, more pay
    Some banks, mindful of the popular resentment over the government's $700 billion bailout of banks and other financial companies, have eliminated certain perks. And a few executives have voluntarily given up benefits that lawmakers have criticized as excessive. At Bank of America, for instance, senior executives will no longer use corporate jets for personal travel starting this year, a bank spokesman said.
    Still, some companies that have taken away perks are making it up to executives by boosting their pay. SunTrust Banks eliminated most executive perks in 2008, including financial planning services, club memberships and payment of taxes on the perks, according to a corporate filing. But the bank also noted that "base pay increases were made in 2008 to offset this reduction in perks."
    A spokesman for SunTrust, a recipient of $4.9 billion in government funds, said in an e-mail that the bank seeks to "maintain an executive compensation framework that is competitive, appropriate and consistent with industry practice, and we periodically make adjustments in line with that goal."
    Corporations have long defended perks as necessary for attracting and retaining talented executives. They also say some perks -- corporate jets and chauffeured drivers, for example -- are provided for security and to ensure that executives can work efficiently. In fact, it is not uncommon for companies to mandate that their chief executive use the corporate jet and car for all travel. American Express is one such company. Last year, it provided its chief executive, Kenneth I. Chenault, with $415,000 in corporate jet travel for personal reasons, as well as $201,000 for a home security system and $46,000 for security during personal trips.

    full article;
    http://www.washingtonpost.com/wp-dyn/content/article/2009/10/19/AR2009101903546_pf.html
     
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