Wall Street on the offensive

[Hannah Bell]

This week, the Federal Reserve Board and the Treasury Department are expected to give the OK for many of the biggest banks to pay back the billions of dollars in cash infusions they received last October under the $700 billion Troubled Asset Relief Program (TARP).

...They are eager to repay the money in order to escape restrictions on executive pay as well as other requirements, such as limits on dividends and stock repurchases...

The TARP cash comprises only a relatively small part of the government subsidies that have flowed to Wall Street. These include hundreds of billions of dollars in government guarantees on the banks’ debt, virtually interest-free loans from the Federal Reserve, Fed purchases of mortgage-backed securities, and other government programs designed to prop up the financial markets. The total commitment in public funds for these efforts runs into the trillions of dollars.

Among the firms expected to receive approval to repay their TARP funds are...JPMorgan Chase, Goldman Sachs, American Express, US Bancorp, State Street, and Bank of New York Mellon.

The stress tests were rigged by the Fed and the Treasury to give the 19 largest banks and financial firms a clean bill of health...to justify keeping them in private hands, boost investor confidence and the banks’ share prices, and provide a rationale for foregoing tougher bank regulation.

...The result has been a run-up of stock prices, 34 percent overall since early March, with financial stocks surging even higher. One key index shows large-bank stocks rising 87 percent.

JP Morgan stock has jumped 118 percent. Bank of America shares are up 263 percent. Its CEO, Kenneth Lewis, has made a tidy profit of over $2 million on 400,000 shares he bought earlier this year.

...What is the basis for this surge in investor enthusiasm for bank stocks? It is the government’s assurance that it will cover the banks’ bad gambling debts, dollar for dollar.

Despite having plunged the US and world economy into the deepest recession since the 1930s, the banks are demonstrating their controlling influence over Congress and the federal government more openly than ever. As a result, their stock is soaring, their profits are mounting, and top executives are relishing the prospect of salaries and bonuses that will exceed the huge compensation packages that preceded the financial crash.

The diametrically opposed trajectory of Wall Street’s fortunes and those of the broad mass of the people, who are reeling from depression levels of unemployment, home foreclosures and wage cuts, exposes the class divide that dominates all aspects of American social and political life.

http://www.wsws.org/articles/2009/jun2009/wall-j08.shtml

[Skidmore]

1. Return the money. And, guess what, you greedy SOBs,

you are still gonna get regulated. How's that for corporate raiding?

[aquart]

2. More offensive than they have been? Hard to top.

I think my favorite moment was the article explaining how impossible it was to live on a mere $500,000 a year.

[AndyA]

3. Too big to fail, too big to exist.

Pay the money back, you SOBs. Your holiday is over. Congress needs to break up these big banks into smaller ones with diverse ownership. That will bring competition back into the banking industry, and it will do away with multi-million dollar CEO bonuses and perks. None of the banks will then be able to charge 25% interest on credit cards, if they try they'll be laughed out of business by their customers.

It has to be done. They cannot be trusted to do the right thing for consumers. It has now been proven.