THIS WEEK IN AMERICA: July 19, 2013
National Nurses United, 7/19/13
A survey out this week and reported in the New York Times makes clear that the culture of greed is alive and well on Wall Street: “…the insidious culture of greed is back — or maybe it never left,” concluded business writer Andrew Ross Sorkin.
A sample of 250 industry insiders from dozens of financial companies was questioned for the report. These included traders, portfolio managers, investment bankers, hedge fund professionals, financial analysts, investment advisers and others. Of this sample, reported the Times, 24 percent said they would “’engage in insider trading to make $10 million if they could get away with it.’”
“Flooded in Profits”. Banks racked up a whopping $23 billion in profits in the second quarter of 2013. “Flooded in Profits,” was the phrase invoked by New York Times reportage this week. Citigroup profits were above $4 billion for the quarter, a 42% increase. Bank of America reported a 63% rise in profit for the period, its shares now up 80% in the last year. Investment bank Goldman Sachs announced a doubling of quarterly profits, “fueled by strong trading and investment banking results,” said the Times separately.
Six large banks now dominate the industry, holding more than half the sector’s assets. Their second-quarter profits were up 40 percent compared with those in the period a year earlier. Over the last 12 months, their combined profits were more than $70 billion
Treasury Secretary Jacob Lew used these numbers to call for an end to “too big to fail” financial policies, in which the U.S. government continues to underwrite the big banks. Bloomberg News estimates the size of the subsidies at $83 billion a year
“If we get to the end of this year, and cannot, with an honest, straight face, say that we’ve ended ‘too big to fail,’ we’re going to have to look at other options because … the policy of the administration is to end ‘too big to fail,’ ” Lew is quoted as saying in the Times
We are still awaiting a change of course from Lew on the all-important Robin Hood Tax. His support of the Ellison bill, H.R. 1579, could jumpstart Main Street, where a promised recovery has never arrived
Lew should take note that since the crisis, the six largest banks have paid out compensation of $41 billion. That would include his former employer, Citigroup.
Doubly Whammy: Mega-Exec Pay = Mega-Write Offs. The banks are not alone in paying out huge compensation packages to top execs. Last year, the typical CEO made more than $15 million in the U.S., a 16% increase over the previous years.
“Meanwhile, the median wage continued to drop, adjusted for inflation.,” reminded Robert Reich in his Nation of Change blog.
Reich also pointed out that corporations deduct these huge compensation pay outs from their income taxes, “causing the rest of us to pay more in taxes to make up the difference.”
Between 2007 and 2010, a total of $121.5 billion in executive compensation was deducted from corporate earnings, according to the Economic Policy Institute.
Detroit In Ruins. While Wall Street tallies its profits in the tens of billions, and deducts billions in comp packages, Detroit, once the nation’s fourth-most-populous city and home to the auto industry, entered a new era of demise, filing for bankruptcy this week. It is, wrote the New York Times, “the largest American city ever to take such a course.”
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