by Mark Johnson
for HUSTLER Magazine – July 2010
Just a year after sucking in over $700billion in taxpayer-funded bailouts, the Wall Street banks have again posted record profits and paid out huge bonuses.
Defending the latest free-for-all, banks say that they have paid back most of the money from the Troubled Assets Relief Program with interest. But the TARP bailout sum of $700 billion represents only a small fraction of the trillions of dollars in federal funds made available to rescue the U.S. financial system. According to TARP’s own special inspector general, estimates of how much the total aid package will cost reach as high as $23.7 trillion.
After the 2008 bailouts, Wall Street’s biggest banks doled out bonuses that far exceeded their profits. These bonuses are enshrined in contracts, so it doesn’t matter whether the banks are making money or losing it; the bankers still get rewarded. This blatant profiteering is sanctioned by bank boards, which are run by the same executives who enrich themselves with bonus income.
Wall Street firms currently account for35% of all U.S. corporate profits, and investment bankers typically pull in bonuses worth up to ten times their six-figure base salaries. The 38 largest Wall Street financial institutions paid out over $145 billion in employee compensation for 2009. That’s 18% more than for 2008. By comparison, average personal earnings for the nation as a whole rose only 2.2%.
A glaring example of Wall Street greed is Goldman Sachs. The investment bank raked in$45.2 billion in revenue for 2009, made a profit of $13 billion and paid out $16.19 billion to employees. That included stock bonuses worth $45 million for its top executives, with CEO Lloyd Blankfein pocketing $9 million. Insurance and investment giant AIG, which got slammed for its huge 2008 bonuses, paid out bonuses totaling $100 million for 2009.AIG received a $180-billion rescue package in late 2008 and still hasn’t paid it all back.
JPMorgan Chase reported profits of $11.7billion for 2009 and paid out $26.9 billion, a major chunk of it in the form of bonuses. Bank of America raked in $119.6 billion in2009, paid out $31.5 billion to employees and awarded its investment bankers $4.4 billion in bonuses. BofA also boosted the base salaries of its top executives.
Despite their profits and bonus payouts, Wall Street banks are still drawing on the trillions of dollars made available to them by the U.S. government. Worse still, economists are projecting fresh foreclosure waves to hit Wall Street, giving the banks more excuses to line their pockets with taxpayer dollars.
The same banks profiting from taxpayer dollars are also making sure no one clamps down on their con game. Wall Street’s biggest banks are increasing political contributions and boosting budgets and manpower in their Capitol Hill lobbying corps to block any meaningful banking regulation.
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