Wall Street is the poster child for corruption. There is no level of the financial services industry, except maybe the Credit Unions, that has remained untouched by the Financial Culture Of Corruption. As Paul Krugman noted today:
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it.
I submit that virtually an entire class of people in the business world are guilty of corruption. For all the Wall Street traders and executives living in Greenwich, Darien, and other tony East Coast communities, and anyone else across the country who raked in the big bonuses when times were good, I want the day of reckoning to come. It's time to claw those bonuses and severance packages back.
When times were "good," and companies like Goldman Sachs and Merrill Lynch were making billions of dollars in profits per quarter, where did those profits go? Not into a rainy-day fund. Not into the investors' pockets in the form of dividends. No. The vast bulk of these paper "profits" went into the packets of executives and traders as bonuses. Once the "profits" were reported, an average of three-fourths of them were immediately flipped around and poured into Wall Street welfare kings' pockets.
Routinely, multi-million-dollar bonuses. And worse. Krugman:
Let’s start with those paychecks. Last year, the average salary of employees in "securities, commodity contracts, and investments" was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation...
I wrote about related issues here and here and in several other diaries in the past. I want to further develop a theme, which is this: an entire class of American businessmen has been raised, educated and veritably soaked in a culture of greed and corruption, and taught from their very earliest days that this sort of behavior was not only accepted, it was encouraged and expected of them.
As a result, an entire class of Americans has been raised on an ideology of greed, recklessness and entitlement all the way up through business school. And what do we wind up with in the end?
We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.
A large part of the financial industry needs to be thrown in prison, their bank accounts garnished, their foreign account holdings frozen, and their records blackened so that they can never come in contact with peoples' money ever again.
And it's time for a permanent crackdown on bonuses on Wall Street. Who cares if they can't attract "the best and brightest?" It's precisely those people who looted and pillaged our financial system, aided and abetted by many politicians of both parties. While Republicans embody the reckless anti-regulatory spirit of untrammelled greed, there is plenty of blame to go around:
From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.
It's those "best and brightest" who more or less single-handedly wrecked our economy. Along with their handmaidens the politicians from both sides of the aisle. If those are the best and the brightest, give me the middling and the slow-and-steady types instead. They could not possibly do a worse job than their predecessors.
Those billions of paid-out bonuses are the phony profits disingenuously reported by Goldman, Merrill, Lehman, Morgan and the rest, which were in all cases promptly funnelled into their employees' and executives' pockets. One bad quarter, and these companies' balance sheets melted like a chocolate truffle in the seventh circle of Hell. But the entire Wall Street class? Not a peep about those missing billions.
It's a bigger scam than the dot-com-era IPOs, which of course the same people played a major role in.
Pack the prisons with these people. Freeze their accounts. Track down every single foreign account and freeze those too. Confiscate all future earnings except for a bare middle-class competency. And take ALL their bonus money back to help cover the cost of the bailout. Starting, of course, with Mr. Madoff and working all the way down.
There is no free lunch. These guys still seem to think there is. It's over.
Here's one place to start hunting.