Being a Wall Street Executive

For those sensitive to such language and graphics excuse me, but I think the message is quite clear: "You put Lloyd Blankfein in a pound-me-in-the-ass-prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide in a Rolling Stone interview. "That's all it would take. Just once." Here is the complete article, Why Isn't Wall Street in Jail? I think it is pretty clear. Wall Street is essentially the government if you look in the case of Bill Clinton's Treasury Secretary who went to Citigroup or Goldman Sach's Hank Paulson who became Treasury Secretary under George Bush.

Being Barack Obama XIX

In his weekly address President Obama addressed the new fees that will be assessed to Wall Street banks:

"Those who oppose this fee have also had the audacity to suggest that it is somehow unfair. That's because these firms have already returned what they borrowed directly, their obligation is fulfilled. But this willfully ignores the fact that the entire industry benefited not only from the bailout, but from the assistance extended to AIG and homeowners, and from the many unprecedented emergency actions taken by the Federal Reserve, the FDIC, and others to prevent a financial collapse. And it ignores a far greater unfairness: sticking the American taxpayer with the bill."



"That is unacceptable to me, and to the American people. We're not going to let Wall Street take the money and run. We're going to pass this fee into law. And I'm going to continue to work with Congress on common-sense financial reforms to protect people and the economy from the kind of costly and painful crisis we've just been through. Because after a very tough two years, after a crisis that has caused so much havoc, if there is one lesson that we can learn, it's this: we cannot return to business as usual."

Amen! In the meantime, Move Your Money!

Being Built on Debt

Andrew Ross Sorkin wrote a great piece in the New York Times, "A Financial Mirage in the Desert", where he writes that "for the last couple of years, the running joke on Wall Street was 'Dubai, Mumbai, Shanghai or goodbye.' If you were the C.E.O. of a troubled investment bank desperately looking for cash, you made a pilgrimage to one of those three cities with hat in hand. They were the places most likely to write a quick billion-dollar check; their eagerness should have also been a tip-off. Now you have to wonder about Mumbai and Shanghai, too. Are they next in line to take a fall?"

I'm wondering if debt and the service economy go hand in hand and if our new economy is all a big mirage, for where there is decreasing production what is the basis for service? What's there to service? The mirage seems not only relevant to Dubai, but to our own economy if we are not careful. It seems to me that businesses, small and large, have to largely build and people need to work in order for there to be stability in the economy. This is how our middle class was built. How these Wall Street banks are currently investing can't be the bedrock of the economy if we are going to be viable, not to mention that they will undoubtedly need a hundred billion dollar bailout out again, perhaps this time over multiple trillions.

Citigroup lent Dubai $8 billion on December 14, 2008 after being bailed out by taxpayers for $25 billion and then another infusion of $20 billion the month before. Do you think they'll need another bailout? It seems that Citgroup hasn’t learned its lesson on structuring risky derivatives even though the government (you and I) has a large stake in this bank. While Dubai is building, largely on the backs of slave labor, it seems like a capitalist city built on debt that has gone amuck. David Rubenstein, the co-founder of the private equity giant Carlyle Group pointed out in the article, "You know, they don't have any oil."

Is our economy being built on debt which is in this case a risky derivative? Investments banks hold 6 trillion in financial assets while commercial banks hold 4 trillion. (The distinction is actually murky as Wall St. banks are acting as commercial banks with backing by the FDIC although they hold no deposits.) Is an economy built largely on service a "mirage?" Is service based on debt where there is decreasing production, in essence, a risky derivative?

Being for Main Street

Robert Reich, former Secretary of Labor, made three excellent suggestions on what to do for Main Street. He contends that Wall Street has no shame. While the people bailed them out to the sum of over $700 billion, they refuse to assist Americans who are underwater on their mortgages and lend to small businesses, instead setting aside multiple billions for executives and traders. Goldman Sachs set aside $17 billion and JP Morgan Chase around $5 billion.

To assist Main Street, Reich proposes the following:

Congress and the Obama administration should give homeowners the right to go to a bankruptcy judge and have their mortgages modified.

And while they're at it, resurrect the Glass-Steagall Act that used to separate investment from commercial banking, so Wall Street can't continue to use other people's money to gamble.

Finally, before Goldman hands out $17 billion in bonuses, claw back the $13 billion Goldman took from AIG and the rest of us and add it to the pool of money going for mortgage relief.

I would also like to see a real program that targets lending for small businesses during this crisis. Goldman has set "up a crudely conceived $500 million PR program to help Main Street." But a "PR program" is hardly one that will be most beneficial to small businesses, although I'm sure likely recipients would not turn it down. Small businesses are really hurting.

Might Reich's proposal work better in relief for Main Street?

Being Goldman Sachs XI

Astute readers of this blog and another whose focus is business have commented that we should move on instead of continually writing about Goldman Sachs. We should not dwell on this crisis they have insisted. They believe that the country doesn't benefit from evoking the past and that anger doesn't have a place in this crisis. We need to simply get on with the business of fixing the problem. The problem, however, includes the past and without it a viable present is not possible. Goldman Sachs should not only be held accountable for their role in the crisis but they need to do something about it. They have benefited at the front end in fees and the back end in bailouts.

Last week, the Chairman and CEO of Goldman Sachs, Lloyd C. Blankfein, gave a half-ass apology for Goldman's significant role in the crisis by engaging in collateralized debt obligations (CDOs) and securing these bogus derivatives with AIG. The government bailed AIG out for $90 billion of which Goldman Sachs got $12.9 billion on top of the $10 billion received by the government. Blankfein said that his company "participated in things that were clearly wrong," but did not say what it did nor offer an acceptable solution to repair the damage. Americans are suffering.

Goldman Sachs seems blinded by greed and engulfed in a particular elitism that enabled it to not as Blankfein said to do "God's work" but to be the beneficiary of an unjust god who rewards executive failure with billions and makes the people bear it. Goldman Sachs recently announced a $500 million token to small business. (It set aside $16.7 billion this year for bonuses to those who brought on the crisis.) "The money will be welcomed by recipients, but if Goldman wants to make a meaningful contribution, it would have to be in the billions and aimed more directly at taxpayers," said the New York Times.

This unjust God allows Brian Griffiths, a Goldman Sachs international adviser, to make statements to excuse billions in bonuses by saying "We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all...'To whom much is given much is required,'"as if the aggregate of the people did not bailout Goldman Sachs for billions while they suffered. Without the billions in bailout, Goldman Sachs would be sacked.

Being Goldman Sachs X

In response to Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs, that he was doing "God's work," Andy Stern says two words, "get real." Mr. Stern breaks it down very simply in a post on the Huffington Post:

The reality is, Goldman Sachs continues to profit off the home foreclosure of families who are struggling to make ends meet.

The reality is, Lloyd Blankfein and his fellow executives continue rewarding themselves for their bad behavior - paying out $16.7 billion in compensation and bonuses in the first nine months of 2009 alone.

The reality is, Wall Street firms like Goldman Sachs continue to engage in the same risky behaviors the drove us to financial collapse.

So, when Lloyd Blankfein issues his press release saying Goldman Sachs has suddenly seen the light - they're suddenly making a commitment to small businesses with a $500 million donation over the next five years - my response is simple: get real.

Do read the entire article. It's worth it. The question remains what are we going to do about it? I am a big proponent of clawbacks.

Being Goldman Sachs IX

"A blue ribbon commission with subpoena powers should be established."

Hank Greenberg, the former chairman and CEO of AIG, made this comment in a panel discussion on C-Span, "Government Aid to Private Industry." The eye-opener was that AIG had worked out a discount of 40% with its counterparties before the bailout. As a private company, AIG was doing exactly what it needed to do to stay viable, to stay in business. Otherwise, it would have had to file for bankruptcy. Some were allowed to fail others weren't. I wonder why?

When the bailout occurred AIG's counterparties received 100 percent. I do not think that it was an accident that Henry Paulson, the former chairman and CEO of Goldman Sachs was the Treasury Secretary when the bailout occurred. Goldman Sachs received not only $10 billion dollars from the government but an additional $12.9 billion, but not before eliminating its competition, Bear Stearns and Lehmann Brothers. Under Paulson, these two investments banks were allowed to fail.

I agree with Hank Greenberg completely that a commission with subpoena powers should be established" and that if it is determined that there is wrongdoing that these should be help responsible for their actions. Below are a list of AIG counterparties that received 100 percent instead of the 40 percent discount that AIG had negotiated. The New York Times listed the banks that received bailout fund via AIG. $38.8 billion went to US banks, $50.2 billion went to foreign banks, $12.0 billion went to municipal bonds and $84.0 billion is still unaccounted for.

Here is the list of banks that received TARP funds via AIG:

$12.9B Goldman Sachs
$12.0B Bank of America/Merrill Lynch
$5.2B Bank of America
$6.8B Merrill Lynch
$11.9B Societe Generale
$11.8B Deutsche Bank
$8.5B Barclays
$5.0B UBS
$4.9B BNP Paribas
$3.5B HSBC Bank
$3.3B Calyon
$2.3B Citigroup
$2.2B Dresdner Kleinwort
$1.6B JPMorgan/Morgman Stanley
$0.4B JPMorgan
$1.2B Morgan Stanley
$1.5B Wachovia
$1.5B ING
$1.1B Bank of Montreal
$1.0B Deutsche Zentral-Genossenschaftsbank
$0.8B Rabobank
$0.7B Royal Bank of Scotland
$0.7B DZ Bank
$0.5B KFW
$0.3B Banco Santander
$0.4B Dresdner Bank AG
$0.4B Credit Suisse
$0.2B Citidel

The "blue-ribbon commission" Henry Greenberg suggests will hopefully get to the bottom of this. Although I must admit to wondering about the impact of work currently being done by the Congressional Oversight Panel charged with figuring out exactly what happened to the TARP funds. I have yet to hear what happened to the $84 billion still unaccounted for.

Being Goldman Sachs V

Brian Griffths, Goldman Sachs International Adviser, explains the outrageous multiple billion dollar compensation of Goldman Sachs in a conference on "morality and markets" in London:

"I'm not a person of despair but I'm a person of hope and I think that we have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all."

What is this guy smoking? He even quoted the Bible to justify Goldman Sachs' record bonuses:

"To whom much is given much is required."

Mr. Griffiths needs a good whipping with a wet noodle repeatedly for perverting this scripture. He seems deeply warped, far removed from reality. Isn't it something that Goldman Sachs used our money to make these billion dollar bonuses and then talk about us as if we are the charity cases? Sick! Maybe a few lashes will wake Mr. Griffiths up. The disgusting thing is that Goldman Sachs thinks that we are fools! But I'll settle for the lashes in the form of what Dylan Ratigan suggests:

1. Take your money out of big banks and move it to small banks and credit unions
2. Use cash and not credit cards
3. Call and email your Congress person and demand a hearing. (Why was our money used with no strings attached?)

Plus, I'd add:

4. Demand clawbacks. (This is the giving that I'm expecting! This should be the requirement!)

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Being Unethical

While I appreciate much of what Suzie Orman advocates, her style for my taste in finacial matters is not altogether pleasing. Not that those in this profession have to boring, it's just that I'm not really into high drama-over-the-top-financial advisers whose business is show business, even if they're making solid points. Jim Cramer is definitely not among my favorites, not only for his style but for his lack of substance.

Orman makes a great point here about ethical Americans, taxpayers who bailed out banks--by the way, who have paid their credit cards on time and still banks have increased their interest rate to 30%, revoked their credit cards, reduced their credit limit, and increased their minimum monthly payments from 2% to 5%. This seems highly unethical when ethical people are responding ethically to the uphold their end of the deal. They stick it to the banks by themselves becoming unethical in refusing to pay their credit card bills.



Orman is tacitly advocating a "debotors' revolt," a refusal by policy credit card holders to pay their credit card. But does unethical behavior still breed unethical behavior? When people respond unethically to an unethical problem does the situation get worse or better? After all, these people are under contract and the banks are not breaking the law. But what is a person suppose to do?

It appears that some people are having some immediate success in revolting against the banks. Their terms are being re-negotiated. But what does that say about our society? Does it say that we can only fight bad ethics by being unethical ourselves? What are we really advocating here? Is there a better way?

Being Goldman Sachs IV

Having written repeatedly about Goldman Sachs as being a moral hazard in the clinical business sense, I was heartened to see more scrutiny of this mammoth bailout bank where the once former CEO, Henry Paulson, became the Treasury Secretary and allowed its competitors Bears Stearns and Lehman Brothers to fail and allowed AIG with its connection to billions as a counter party be bailed out. Goldman Sachs got a total of $70 billion dollars from taxpayers.

Dylan Ratigan of Morning Meeting explains how Goldman Sachs made 3.4 billion dollars in 3 months. But the interesting thing is that Wall Street banks are still not lending to Americans, including small businesses, refuse to renegotiate the loans before homes are foreclosed upon, and continue to raise credit card interest rates. Goldman Sachs is getting rich on on the dime of the American taxpayers without reinvesting in America. They are creating no real value, only profit for themselves. But without us they would have gone bankrupt. Goldman Sachs would not exist.

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As a taxpayer, how does this make you feel? Goldman Sachs has all the money, profit and power. The taxpayer has not benefited. What should be done? Nassim Nicholas Taleb has long advocated clawbacks. Americans need to demand clawbacks from Goldman Sachs and all of the other Wall Street Banks.

Let's demand that our government work for our best interest. We must demand clawbacks. Henry Paulson gave the banks a blank check without the interest of the American people and Timothy Geithner seems to be continuing the plan. Let's demand clawbacks now! Join Nassim Nicholas Taleb's Facebook Group, Make Banks Accountable, and let's figure out how to do this thing! Can you think of what billions could do? It could help pay for health care reform while not increasing the deficit.

Being Goldman Sachs III

My disgust with Goldman Sachs is not new. I have written about it more than once. It continues as I read a New York Times article today which analysts estimate that their bonuses will "swell to $23 BILLION dollars." Yes, Goldman Sachs repaid the taxpayers for the $10 BILLION bailout given, creating beforehand a nice spread with the same faulty derivatives and practices that brought us to near financial collapse only a year ago and doing nothing at a low interest government rate that enable such bonuses.

Honestly, tell me please. How can it even be estimated that in this economy that bonuses of $23 BILLION dollars will be given if it were not for the same disgusting practices that nearly brought the global economy to a screeching halt? The CEO of Goldman Sachs, Lloyd Blankfein, agrees that "compensation continues to generate controversy and anger. And, in many respects, much of it is understandable and appropriate."

Yet, Goldman Sachs continues with the same practices that will undoubtedly bring us right back to the crisis where we found ourselves only one year ago, near global financial collapse. Astonishing, eh? Wall Street banks benefited on the front-end and back-end, while retirees and non-profits lost big as they were paid 100 percent on the dollar for toxic assets while homeowners continue to lose their homes and credit card interest rates are jacked up.

What does President Obama and Congress need before demanding banking regulation and reform of Wall Street banks--an outright taxpayer revolt? What means are left to the taxpayer, if those who we have elected will not act on our behalf? First of all, taxpayers need to demand answers from the government, like right now! Flood your senators and congresspersons' mailboxes (remember those?) and include your return address so they know where you're writing from their districts. While you're at it, send another letter to the White House.

Without a demand there will simply be no change and this word "change" will simply be a hollow jingle played again and again and what is heralded as democracy will essentially be a lie, for we will have allowed the democratic process to be hijacked by lobbyists paid by Goldman Sachs and the rest to win at our expenses, yet again. The $23 BILLION dollars in bonuses for Goldman Sachs employees is an outrage!

Being Outraged II

Reuters reports, according to the Wall Street Journal, that with the bailout of AIG "Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group Inc to help manage and break apart the insurer."

Is this simply outrageous in a company where the government, you and me, has an ownership stake of 80%, having already received some $180 billion dollars from taxpayers? Among those who could collect these big fees (people, in banking, in case you didn't know, it's all about the fees)...

"Morgan Stanley could collect as much as $250 million, the newspaper said, citing banking experts and documents released by the New York Fed. Bank of America Corp, private equity firm Blackstone Group LP, law firm Davis Polk & Wardwell LLP, accounting firm Ernst & Young, Goldman Sachs Group Inc and JPMorgan Chase & Co are among others that have or could get big paydays for helping dismantle AIG."

Call me a conspiracy theorist if you want, but once you have been head of the New York Fed as, Timothy Geithner has, developing close relationships with these bankers and allowing poor oversight of the same, I wonder if there is a conflict of interest as the chief spokesperson on behalf of the People as the Treasury Secretary.

Not only did Timothy Geithner allow these banks to fly below the radar while engaging in activities that by any standard outside of Wall Street would be bogus as the head of the New York Fed, but with the breakup up AIG the fees that will be given are doubled than any other breakup in our history--this at a time where the country has been at the brink of financial collapse and in serious debt.

AIG seems to have been the distribution center for Goldman Sachs, J.P. Morgan Chase, Citibank, and Banks of America. All have gotten assignment to assist in the dismantling of AIG, not to mention that many of these have already gotten bailout money having been insured by AIG. The Wall Street journal reports that the AIG breakup will be four times the fees paid to break up AT&T Corp. in 1996, and nearly double those paid for Visa USA's 2008 initial public offering, the largest U.S. IPO ever. Is this not outrageous?

Being Outraged

Paul Krugman has a great article in the New York Times, "Rewarding Bad Actors" which begins with...

Americans are angry at Wall Street, and rightly so. First the financial industry plunged us into economic crisis, then it was bailed out at taxpayer expense. And now, with the economy still deeply depressed, the industry is paying itself gigantic bonuses. If you aren’t outraged, you haven’t been paying attention.

Are you outraged? I am! So, what are we going to do about it? Do read the whole article. I'd like to read your comments on it.

Being a Pundit, Newscaster and Analyst

I have written here about pundits, newscasters and financial analysts, the likes of Santelli and Cramer, who often enrage me with their arrogance and ignorance. Here Jon Stewart pokes fun at them:

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

But is he dead serious?

Being Nassim Nicholas Taleb VI

"Scandalous! Why do they keep their bonuses," Taleb asks? He makes the significant point that executives like Stanley O'Neal, after tanking Merrill Lynch, has kept his bonus--not to mention those who got bonuses of $18 BILLION just last year while their hands were out and small businesses were closing all over America. With the Bank of America bailout, we have essentially bailed out Merrill Lynch and not held O'Neal accountable. This is Taleb's point.



Stanley O'Neal is now on the board of Alcoa, Inc, "one of the world's largest producer of primary aluminum, fabricated aluminum, and alumina," according to its website, after having served on the board of General Motors from 2001 - 2006. Did General Motors not just receive a massive bailout? Are these board members rewarded for inefficiency?

What's the matter with these large companies? Tank a company, run away with billions, and reward these with board positions where they are likely to allow more of the same. No wonder nothing changes. But we can change. Let's hold the board members responsible and give no more money to companies who seat the likes of these on their boards.

Being President Barack Obama II

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When have you heard a president candidly speak with such clarity about the "restraint, discipline, and responsibility" needed in such crises?"

Now, let's demand policies that will hold CEOs and executives responsible when our money is used to bail them out.

Being Held Accountable

After receiving a bailout, "nine out of ten bank executives are still running the show," according to NBC. Here's a simple question: If you mismanaged the company that you worked for as these men (and they are all men), would you have been fired immediately? What's up with the board? What's up with holding these people responsible for their actions, especially when taxpayer money has been used to bail these institutions out?

Being John Thain II

Mr. Thain offered some lame excuse for why his office was redecorated last year to the tune of $1.22 million citing that the financial crisis was not as bad at the time. He also intimated that this is just what they do.

In his contrition Thain failed to mention the $2 billion to $3 billion dollars in employee bonuses while Merrill lynch was reporting loses last year. Yes, he said that he was "sorry" and would pay back the $1.22 million (mere chump change for this guy) for the redecoration costs. Is that enough?

Thain seems to be simply on a mission to rehabilitate his image. He wants another job. But has he learned anything? If board of directors look at this guy as viable, let them rehire him somewhere else. But anywhere he goes his bad behavior is likely to follow and any bailout money given to a company he leads should be made to be repaid immediately.

Being Ken Lewis

Ken Lewis, CEO of Bank of America, came to Detroit last year and before the Detroit Economic Club said, "I think there's one too many" automakers. (Are others thinking the same of banks right now?) After the speech, Mr. Lewis also said, in a rather pedantic self-righteous tone, "I think the American people are suspect of just giving more money and buying more time. They want to see that the companies have in fact changed and the strategies have changed."

After the original bailout of $25 billion, Bank of America was recently back to the Treasury Department for an additional $20 billion. Do you think someone needs to remind Mr. Lewis of his own words? Should Treasury have withheld the additional $20 billion? Speaking of accountability, where did the original $25 billion go? Bank of America got the additional $20 billion without being held accountable for the first $25 billion. This is insanity.

Being John Thain

The arrogance, disrespect, and dishonor of people such as John Thain, former CEO of Merrill Lynch now with Bank of America, is mind-boggling. But the reality is those in his industry have operated in an alternative universe for so long that their actions are simply a matter of course for them. This is business as usual and one of the main reasons that we are in such a financial crisis.

Recently, it was discovered that Thain spent some $1.22 million dollar redecorating his office after Bank of America, which acquired Merrill Lynch, had received a bailout from the government to the tune of $45 billion dollars. First Bank of America received $25 billion and then it recently returned to the Treasury Department seeking an additional $20 billion. They got it.

Thain's spending was reminiscent of leaders of another large financial institution upon receiving welfare. Remember that AIG spending $440,000 on spa services after receiving $85 billion of welfare from the government. Here is how a portion of the bailout was spent according to The Daily Beast :

One Area Rug: $87,000
Another Area Rug: $44,000
Curtains: $28,000
Chairs: $87,000
Fabric: $11,000
Table: $25,000
Cadenza: $68,000
Sofa: $15,000
Desk: $18,000
Coffee Table: $16,000
Chandelier: $13,000

While some have called the infusion of government money into private industry a bailout, or a life-line in the above cases, I like to call it welfare. We only associate welfare negatively with certain sectors of the population who cannot care for themselves, even when children are concerned.

Bank of America and AIG receive welfare for mismanagement, greed, and wasteful spending. The ugliness of this all, while perhaps more than a few employees released last year received some sort of government benefit, is disheartening, quite disgusting, to say the least.

Should John Thain be fired immediately?