What part of this financial crisis does Wall Street not understand?
How much longer will Congress use billions in public money to bail out the nation’s biggest banks, then let the top executives remain in charge, feeding lavish lifestyles, tossing workers out on the street and turning their backs on desperate homeowners facing foreclosure?
One outrageous example of Wall Street out of control is the $35,000 a top executive spent early last year for a "commode on legs" and the $25,000 he spent for a "mahogany pedestal table."
The items were part of a $1.2 million redecoration that John Thain, former head of Merrill Lynch, ordered for executive offices in lower Manhattan.
Thain also spent $87,000 for an area rug, $1,400 for a trash can, $37,000 for six chairs in his private dining room and $11,000 for a "Roman shade."
Or how about Citigroup’s new $50 million luxury jet? Only weeks after receiving billions in taxpayer money to stay afloat, Citigroup was all set to buy a new 12-seat, French-built Dassault Falcon 7X for its top executives. Word of the deal leaked out and the bank was forced to cancel it.
Then there’s Richard Fuld’s mysterious house sale.
Fuld, the disgraced former CEO of bankrupt Lehman Brothers, quietly sold his $13.3 million mansion in Florida to his wife in November. The sale price – $100.
Fuld, notorious for his hard-nosed management style, consummated the transaction two months after Lehman’s stunning collapse. It’s a good bet he was trying to shield the property from the reach of furious Lehman shareholders.
Still, the prize for heartless action goes to Thain and Bank of America, the company that saved Merrill Lynch from collapse when it bought the storied firm last fall with government help.
Ken Lewis, CEO of the merged company, suddenly ousted Thain last week. This was after his embarrassing office decoration expenditures became public and after Merrill Lynch reported a $15 billion loss for the fourth quarter – far greater than expected.
On Dec. 11, Bank of America announced that as part of its takeover of Merrill Lynch, the new combined company would cut up to 35,000 jobs over the next three years. By then, the bank had gotten $25 billion in federal bailout money.
The same week the layoffs were announced, Thain rushed to dole out $4 billion in bonuses to Merrill Lynch’s top executives. He did so even though he knew of the firm’s enormous losses for that quarter.
The bonuses were dispensed weeks before Bank of America’s Jan. 1 takeover – a month before Wall Street firms typically give out bonuses.
Now it turns out that Bank of America’s directors were aware last month of the Thain bonuses. They knew about them when they requested an additional $20 billion in federal assistance – money the bank received this month.
Taxpayer money, in other words, paid for huge executive bonuses at Merrill Lynch.
State Attorney General Andrew Cuomo has rightfully opened a criminal investigation.
Over the past two years, 100,000 bank employees have lost their jobs, yet The Associated Press reported yesterday that nearly 90% of the top executives at 200 banks that received federal bailout money are still on the job.
The guys who screwed up the entire financial system are the ones being bailed out; ordinary workers get pink slips.
"When you deal with the same dogs, you’re going to end up with the same fleas," warned Jamie Court, president of the California-based group Consumer Watchdog.