Holly Sklar on "The Great Rip-Off"

"Times are tough: Only $140B for Wall St. banksters"
By Holly Sklar, Sunday, November 8, 2009 - www.bostonherald.com - Columnists

Taxpayer bailouts saved Wall Street from choking on its own greed. Now, as the Wall Street Journal reports, “Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year - a record high.”

Folks, $140 billion is more than the combined budgets of the U.S. departments of Commerce, Education, Energy, Housing and Urban Development, the National Science Foundation and the Environmental Protection Agency.

Typical workers, meanwhile, make less today adjusting for inflation than they did in the 1970s. Wall Street rewarded CEOs who cut employee wages and benefits and offshore manufacturing, services and research and development; turned mortgages into loan sharking; and sucked home equity, college funds, retirement funds and other private and public investments into their rigged casino.

Goldman Sachs, for example, “peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst,” McClatchy News Service reports in a new investigative series.

The Great Depression gave way to the New Deal. The Great Recession has become the Great Ripoff.

Believe it or not, oversight officials say “the firms that were ‘too big to fail’ are in many cases bigger still, many as a result of government-supported and sponsored mergers and acquisitions.”

Enabled by the Bush and Obama administrations, the megabanks are lending less and gambling more - using taxpayer money to pay bonuses, float a new stock market bubble and make even riskier bets. The Treasury and Federal Reserve have become Wall Street’s ATMs, while unemployment, foreclosures and homelessness rise, states slash services, average citizens are priced out of health care, and small businesses are starved of credit.

Trillions of dollars are flowing to the banksters in the form of near-zero interest loans, bond guarantees and extreme leverage for toxic assets. You can follow the money at nomiprins.com. (Nomi Prins, a former managing director at Goldman Sachs, is author of “It Takes a Pillage.”)

The megabanks are not too big to fail. They’re too big and irresponsible to exist. By 2002, the four major bank holding companies - Bank of America, JP Morgan Chase, Wells Fargo and Citigroup - had 27 percent of FDIC-insured bank assets. Now, reports the Economic Policy Institute, they have half. They overlap with derivatives dealers JP Morgan, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup.

The government heavily subsidizes the megabanks, but it’s the small banks that provide higher savings interest, lower fees, lower loan and credit card rates, and do much of the lending to small business, who create most new jobs.

Behind their Main Street rhetoric, Congress and the Obama administration have been the nonchange Wall Street can believe in.

Make your voices heard. We need to enact tough regulations and bust the banks who busted our economy before they do it again.