Friday, August 7, 2009

The Culture of Greed on Wall Street

As sure as the sun rises in the east and sets in the west every day, the Greed culture continues unabated on Wall Street.

And why not? If something goes wrong, Uncle Sam will force taxpayers to bail them out.

New York Attorney General Andrew Cuomo recently issued a scathing report on Wall Street bonuses. He said employee pay "has become unmoored from the banks' financial performance."

No kidding.

Here are some examples of banks which received billions in TARP money from US taxpayers last year and the enormous bonuses they paid to employees: JP Morgan Chase earned $5.6 billion and paid $8.69 billion in bonuses, while Morgan Stanley earned $1.7 billion and paid $4.475 billion in bonuses.

Here are two even more outrageous examples: While Citigroup and Merill Lynch (bought by Bank of America)lost more than $27 billion each, Citigroup paid $5.33 billion in bonuses and Merill Lynch paid $3.6 billion in bonuses. The two banks combined received over $55 billion in taxpayer-funded TARP money.

Attorney General Cuomo summed it up nicely stating "When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well."

Amazing - huge money paid for failure. Only in America and only on Wall Street.


The poster child for greed and what is wrong with economic policies in this country has to be Goldman Sachs.

In my previous article - "Goldman Sach(s) America" - I spoke about the company's trading programs which I believe are nothing more than what is called in the industry "frontrunning" and which is illegal.

The "saching" by Goldman continues unabated, aided and abetted by the US government. Not only did the government save Goldman from possible bankruptcy with TARP money and the AIG bailout, but they are intentionally ignoring possible illicit behavior.

Goldman Sachs' trading activity numbers from the 2nd quarter were beyond belief. In the 2nd quarter, Goldman Sachs made over $100 MILLION on 46 of the 65 trading days, 70% of the total! Goldman made over $50 MILLION on 58 of the 65 trading days, 89.2% of the total! And they only had 2 trading days where they lost money!

Sorry, but fair markets do NOT work that way and no one is that good at trading. Not without a lot of "help" - like having the government look away while you are frontrunning the Federal Reserve in the bond market and frontrunning stock trades from large pension funds like Calpers (with the help of the stock exchanges)using your software trading program.

Heck, you don't even see baseball players hitting .700 with the extra "help" of steroids and other illicit drugs!

But I guess that is the type of markets you get when Goldman Sachs alumni have been in the halls of government for decades running economic policy.

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