8 Reasons Wall Street Greed Is the Cause, and the Solution, To Phony Fiscal Cliff Crisis
Wall Street, which caused the economic crash that drove up the debt and gave politicians an excuse for this fiscal cliff debacle, is once again getting a free pass. Given Wall Street's greed, this should be a national disgrace. There is no debt crisis. Rather there is a crisis in courage -- no one has the guts to make Wall Street pay for the damage it has done.
1. The Wall Street Crash Lies at the Heart of the Problem
Once again our politicians and pundits are showing signs of financial Alzheimer's. They just can't remember that Wall Street's insatiable greed caused the Great Crash of 2008 -- not poor people buying homes, not the government's interference, not the auto-industry, not the debt. In a matter of months, 8 million American lost their jobs. Business and personal tax revenues plummeted, as expenditures rose to assist the unemployed. That's why deficits rose.
2. Wall Street Never Paid For the Bailouts
Finance is the bloodstream of capitalist production. The crash was like a heart attack, crippling the vital organs of the economy (and the saturated fats in the bloodstream were all those glutinous financial innovations). The bailouts and stimulus programs were designed to prevent the patient -- the economy -- from dying. Giving Wall Street all that money and debt guarantees should have been accompanied with immediate reforms, including removal and punishment of top management. Instead it was treated as part of the bonus pool for those who pushed the economy over the cliff. All that free money pushed up government deficits.
3. Wall Street Is Still Collecting Obscene Bonuses
While the rest of America suffers, Wall Street bonuses continue like nothing happened at all. Just look at this revolting chart below on Wall Street bonuses in New York. And total compensation is heading even higher according to recent reports:
New York State Comptroller Thomas DiNapoli reports that total compensation at Wall Street firms rose 4% last year to more than $60 billion, near pre-crash levels—and the third highest level ever.
Source: NY State Comptroller
Think about that for a moment: The folks who took down the economy and then got bailed out, are getting bonuses like they had nothing at all to do with the crash. And they are the first to call for "fiscal responsibility" and the cutting of "entitlements.
4: Wall Street Was Never Held Accountable
Not one Wall Street executive was indicted for crashing the economy. Sure, about 50 hedge fund honchos have been nailed for insider trading, but none of those trades had anything to do with the crash. Those who deliberately puffed up the housing bubble and who pedaled junk securities were not personally punished. Few even lost their jobs. Had they been running small banks instead of too-big-to-fail behemoths, the FDIC at least would have taken away their toys. Even the finance-friendly Reagan administration jailed over 1,000 savings-and-loan crooks.
5. Wall Street Hedge and Equity Funds Pay Only 15 Percent in Taxes on Their Incomes
All this talk about raising the top tax bracket from 35 percent to 39 percent is a joke for Wall Street, and a cruel one for the rest of us. That's because much of the trillion-dollar hedge fund and private equity syndicates pay themselves with something called "carried interest." Instead of getting an income, they get this special version of capital gains so that their income is capped at 15 percent. If this loophole isn't eliminated during these fiscal negotiations, you'll know that Wall Street owns both parties.