The results of the Treasury Department’s touted "stress tests" are out – and so far the result is a call for massive new capital for banks. It adds up to a needed $100 billion for Wells Fargo, Bank of America and the rest. Sooner or later we’ll be looking at TARP Three, I bet.
It’s hard not to feel bilked. Even when they were running short of cash, the banks looked after their own. According to a recent academic study they paid out a staggering $400 billion to investors in 2007 and 2008 even as the worst banking crisis since the Great Depression broke. With the value of their portfolios shrinking and common equity drying up, Lehman Brothers dividends went up 13% in January 2008. TARP recipients JPMorgan and Wells Fargo cut dividends only in February and March 2009, and as of late last month, Goldman Sachs and Morgan Stanley had yet to do so, despite urging from the Fed.
Watching their own backs is what these banks do best. Now they’re doing it by lobbying to beat back bankruptcy reform.(See a pretty furious discussion on GRITtv this week.) At the banks, public money goes in the front and out the back.
Meanwhile, while the government’s doing somersaults to keep owners and top bank managers in place and in the black, many Americans are choosing between food and home and gas.
It’s not only unfair, it’s not smart.
There is no fair rationale for allocating trillions of US dollars to protect bankers’ hedge funds and well-paid execs while tens of millions of working Americans go belly up.
Societies dominated by finance (as ours has been,) have always collapsed. The only way the US gets back on track is with good paying jobs in solid communities that work. In New York, Wall Street’s cheering up – but libraries are going broke. Just imagine if you took the trillions and kept teachers on the job, built roads, gave people grants to re-do homes, issue fair mortgages, and provide quality childcare.
Let’s not kid ourselves: filtering trillions through banks and investment houses won’t do the job — they built their billions by cutting labor and keeping down pay – and rewarding companies that did the same — especially their execs. If we do not rebuild the US workforce there’s no way this country’s going back up. Are we "all in this together?" — Hardly. You just have to look at Main Street to know that.
Laura Flanders is the host of GRITtv which broadcasts weekdays on Free Speech TV (Dish Network Ch. 9415) on cable (8 pm ET on Channel 67 in Manhattan and other cities) and online daily at GRITtv.org and TheNation.com. Carl Ginsburg co-wrote this piece.