Wednesday, August 12, 2009

Being Bank of America and Merrill Lynch

Kenneth Lewis, CEO of Bank of America, and John Thain, former CEO of Merrill Lynch, are not new to this blog. I have written of both of them here before. Perhaps now justice will be served for the apparent unethical dealings that both of these men seemed to have been engaged in. According to the New York Times federal judge, Jed. S. Rakoff, "on Monday sharply criticized the bonuses that Merrill Lynch hurriedly paid out before it was acquired by Bank of America last year and pointedly questioned a federal settlement that had seemed to put the issue to rest."

Is it not high time that Wall Street be held accountable for its unethical business practices with the money taxpayers gave them which was used to pay out big executive bonuses of $3.6 billion? Obviously Judge Rakoff thought so. He "was scathing about the settlement, in which the S.E.C. accused Bank of America of misleading its shareholders...Bank of America and Merrill Lynch...'effectively lied to their shareholders.' The $3.6 billion in bonuses paid by Merrill as the ailing brokerage giant was taken over by the bank was effectively 'from Uncle Sam.'"

Congress and the American people spoke out against the bonuses. But is Congress not culpable? Why didn't they restrict these bonuses before a bailout was given or the acquisition by Bank of America allowed? Merrill Lynch "lost $27 billion dollars" the year before the bonuses and bailout were given. By the way, Bank of America made off like bandits with two portions instead of one of the multi-billion dollar bailout at low government interest rate while not changing the interest rates of its customers. The yield curve is great.

Instead of limiting bonuses, we heard a lot about the important of maintaining previous contracts, as if as without a bailout and merger Merrill Lynch such contracts would have even been significant. With such loses, Merrill Lynch would have been no more. Plus, who gets a bonus in the real world for bankrupting their company? Judge Rakoff asked a very pertinent question. "Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?"


Shalom P. Hamou said...


Bernanke was the only cause, I proved, of the Great Recession and probably acted on purpose. He had the knowledge (Bernanke is a renown specialist of The Great Depression he even wrote a book on the subject: Essays on the Great Depression.), the means, motive (The vast increase of personal powers he earned thanks to The Great Recession.), and opportunity.

Worse, in light of the exercise of the central bank extraordinary power by Bernanke, I argue that he poses a real immediate threat to democracy, peace, privacy and individual freedom.

Given the immediate dangers that are evoked in these lines I strongly suggest that you revoke Bernanke.

"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.

Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.

However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."

Prof. Ben Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For Presentation at the ASSA Meetings,
Boston MA,
January 9th, 2000.

"The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October.

In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it.

Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930."

Governor Ben S. Bernanke
Money, Gold, and the Great Depression.
At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University,
Lexington, Virginia.
March 2nd, 2004

Revoke Bernanke: Sign the Petition to Request from President Barack Obama That Ben 'Systemic Risk' Bernanke be Removed From Office.


Judith Ellis said...

Thanks, Shalom. I will read your links and perhaps return with my thoughts.