I read the news today, oh boy. Start with Goldman Sachs' first
quarter profit of $1.8 billion, about twice what "analysts" thought it
would be. Then add in the good Wall Street Journal roundup
on the many creative ways that the big banks are gouging their
customers, particularly with stratospheric credit card fees. It's usury
and robbery wrapped in doubletalk. But watch--they'll act all shocked
and offended when taxpayers demand the heads of CEOs.
Goldman, which says it will use the good profit news to raise the money
to pay off its $10 billion in taxpayer loans through the troubled
Troubled Asset Relief Program. The aims of a quick payoff would be to
shed government oversight and restrictions on stratospheric bonuses,
and to make Goldman look more sound than other troubled companies.
how does Goldman's $12-billion payoff from taxpayer-financed AIG figure
in? Goldman and others got 100% of what they were owed, rather than
being forced to negotiate a "haircut," a percentage discount, on those
The Journal story is another part of the deafness epidemic:
Since the Troubled Asset Relief Program was launched last October,
banks bolstered by capital infusions have boosted charges on a wide
range of routine transactions, hiked rates on credit cards and
continued making loans criticized as predatory by consumer advocates.
Banks say that raising fees and rates, even on low-risk customers, is a
legitimate way to recoup some of the costs of the bad loans still on
their books. They also say taxpayers have a financial interest in
seeing the industry quickly return to profitability. Any revolt over
price hikes could intensify the crisis by depriving institutions of a
key income source, say banks.
Ah. So if you're thinking like a banker, taxpayers should shell out
hundreds of billions of dollars to Citibank, B of A and their brethren,
then shell out billions more to make sure that their profits will
please Wall Street. And the TARP money intended to jump-start business
and consumer lending should be lent out at 30% interest. And government
shouldn't even think of regulating these 20% credit cards and 30%
short-term loan rates, because it might keep profits from zooming.
Banks are thus forcing consumers to jump-start their corporate
economies twice, while back in the real economy, middle-class workers
are still being laid off in droves, losing their homes and getting
their food from stressed-out charities. Where's the bailout for the food banks?
A bump in Goldman's stock price isn't going to restore retirees' hollowed-out 401Ks, either.
Some in Congress, including Vermont Rep. Bernie Sanders, are trying to cap credit card rates. Sanders probably really wants to do it, but his colleagues are likely to fall off the bandwagon when it comes to a vote.
The big-bank spokesmouths keep saying taxpayers' ire is misdirected,
and that we should all be happy that their stock price is going up. It
only shows the disconnect between corporate ears and mouths.
The bailout rules as well as banking laws need to change. First,
tell the banks to shut up about taxpayer "whining." Then make every
executive who got a bonus last year adopt a food bank so at least a
mother who's praying to snag a frozen chicken for her kids has a fighting chance.