Banksters Pay Issue Not Going Away

Today the first of the bonus and pay packets made by the major, “Too Big To Be Allowed To Fail” banks will go “on record”. The banksters are hoping the fury over this will tamp down in the next few weeks and go away. Here are some reports that say it will not:
Christian Science Monitor – Obama can put brakes on big bank bonuses

Obama has taken no decisive action to restrain Wall Street from handing its executives and other employees pay packages that easily could match those of the boom years. Many Americans blame the financial industry for the crisis that brought on the “great recession.” White House economic adviser Christina Romer recently called the bonuses “ridiculous.”….Wall Street compensation this year, says Morici, threatens to exceed the entire growth of the economy in the fourth quarter of 2009 and reach a huge 1 percent of gross domestic product. Such largess is taken away from the rest of us, including retirees who get less income from low-interest certificates of deposit. Top White House officials “are taxing grandma to subsidize” Wall Street with its big paydays, he charges. One explanation for Washington lethargy on the pay issue could be the huge amounts of campaign contributions by the financial industry to both parties – nearly $500 million in 2008 alone.

Wall Street Journal – describes how the bankster are bracing for pay fury. Read the ‘troubles’ they have:

Compensation levels and the mix of cash and stock vary widely by job title and seniority. At Goldman, there has been some talk that the stock component of some bonuses could jump by 20 percentage points. That means a Goldman executive whose $3 million in total compensation for 2008 included about $900,000 in stock could get $1.5 million in stock for 2009, representing a $600,000 reduction in cash (assuming the person’s overall compensation remained the same[but in fact, Goldmans pay packets/bonuses are expected to increase by 15-25% in 2009).

Financial Times – London banksters furious over bonus taxes – threaten to leave

Angela Knight, chief executive of the British Bankers Association, said: “Viewed from abroad, London may well look now like a significantly less attractive place to build a business.” Stressing the importance of maintaining a level international playing field in financial regulation and taxation, John Varley, chief executive of Barclays, the British bank, said: “Getting that balance right is vitally important to supporting London’s position as a leading financial centre and the UK’s position in the global banking industry.”

But the bonus tax won a broad endorsement from Nicolas Sarkozy on Wednesday night, although the French president has yet to unveil any similar plans. In a piece co-written with Mr Brown in the Wall Street Journal, Mr Sarkozy said a one-off levy on 2009 bonuses deserved examination and “should be considered a priority”.

But an earlier Financial Times article identified 5 potential financial mega centers: London, Geneva/Zurich, Dubai, and Shanghai/HongKong. But Dubai has just gone into bankruptcy, Switzerland has lost its secret Swiss bank account advantage with disclosures to various Tax authorities, and China has absolutely blown its ‘rule of law’ and good business partner reputation with its cyber-spy attacks on the US intellectual property and defense secrets with its incursions through Google and thirty other US corporates. So if the US taxes bonuses, banksters will have nowhere to go to.
NYTimes – Big Bank Bonuses and Public Wrath inevitable

Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.

“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”

CNN Money – 22 Big banks drop small business loans by another $1Billion in November

The 22 banks that got the most help from the Treasury’s bailout programs have cut their small business loan balances $12.5 billion since April, when the Treasury began requiring them to file monthly reports on the tally. The banks’ total lending has fallen 4.6% in that seven-month period, to $256.8 billion.

These trends say that the pay packet fury is going to continue to percolate as long as jobs and unemployment and stagflating salaries and extra work and declining benefits are pawned off on an ever shrinking work force.

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