Guess How Much More Wall St. Spends on Bonuses Than on Penalties for Torpedoing the Economy?
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Then, there’s the matter of Dimon’s 2010 $17 million stock bonus.
There are those who perpetuate the myth that the bailout program was a success. They dogmatically equate the entire multi-trillion-dollar bailout, to just the $700 billion TARP part, as if the trillions of dollars of extra securities still bloating the Fed’s balance sheet, among other items, don’t exist. These people tend to either run the Fed, Treasury Department, any Administration, work for the Wall Street Journal, or are Andrew Ross Sorkin.
Yes, most banks repaid that TARP money -- with interest. But, that’s pretty easy to do when you get to borrow from the Fed at zero percent.
Banks want us to believe that this widespread, prolonged economic depression has nothing to do with them, that they were innocent participants in an unforeseen situation that spiraled out of control. A perfect storm. Many mainstream economists concur. Sure, banks made some mistakes, but who didn’t? It’s not like banks had access to more information and shady techniques than regular people. What about that guy in Vegas who took out a double mortgage on his devalued home? – it was his fault, too.
Leaving aside the tepid characterization implied by the term "misconduct" instead of say, "racketeering," these fines don't, and won't, change the banking landscape. They won’t halt the manufacturing of potentially toxic securities crafter from the droppings on the dirty floor of banks’ books. They don’t stop banks from legally taking multiple sides of any trade in the name of "market making."
The SEC seems fine with that. The SEC was founded in conjunction with the Glass-Steagall Act that separated banks that dealt with the public's deposit and financing needs, from those that created and traded speculative securities for profit. It would be prudent to suggest a modern equivalent of that act. It might help the SEC do its job of protecting the public before devastation, or at the very least, untangle the web of fraud and debt at the core of these complex giants.
But, that won’t happen. Not as long as small fines, absent any attached probation, stringent monitoring or cease-and-desist requirements, can slowly make the issue go away. It takes longer to argue a traffic ticket than the three months it took Goldman Sachs to "agree" to a $550 million settlement on July 15, 2010. People caught with minor amounts of pot undergo stricter punishments.
In total, the SEC charged 66 entities and individuals with misconduct, imposed bans to becoming a board or company director on 19 people, and levied $1.5 billion of fines. Millions of homes and jobs lost. An economy in shambles. And that’s it.
Put that in perspective with the $ 28 billion in bonuses that JPM Chase scooped up for just 2010, or the $424 billion in total bonuses the top six banks bagged between the crisis book-end years of 2007-2009, or the $128 billion of bonuses Wall Street got last year. Now, consider that not only is the penalty amount a pittance, but the impact of these fines is even smaller. This, amongst a host of regulatory misfires, including the tepid Dodd-Frank "reform" act, leaves us worse off from a stability perspective, than we were before the crisis.
And no one, from any party, said a damn thing about it.