Greetings!
Before I begin on what Mr. Greenspan had to say this week, there is other news which is just too disturbing to ignore.
Three weeks ago was the most recent time I spoke of Big Banks. I have written extensively about Big Banks over the past few months and about my views that they are not "too big to fail" but rather should be shut down and forever removed off the face of this earth. I do not wish to belabor this point but this week's news on bank employee compensation sent me spinning.
The Wall Street Journal is reporting record level numbers for bank employee compensation for 2009. Almost one year to the date of the financial crisis which started because Big Bank executives were too greedy, this week's report indicates that major U.S. banks and large securities firms are on the brink of paying their employees close to $140 billion in salary this year. The last time compensation figures were this high was in 2007. So despite the crisis, this means that Bank Executives, who usually garner the largest portion of payroll, will get big bucks once again.
What is it about corporate Boards and shareholders that they continually vote for and allow obscene executive compensation? Have they no decency in essentially throwing salt over American consumers who are badly wounded by a financial crisis that has left gaping holes in their retirement plans? All this at a time when the largest segment of the population will be retirees. Does anyone care? How can we in this country put up with business as usual when it comes to the ability of Big Banks to continue doing what they have always done; namely take advantage of the American consumer over and over again?
I have included a link for you to view the entire chart showing each institution and the total dollars earmarked for wages this year.
On the same topic, Ralph Nader this week spoke out about how the American Consumer Is Under Siege by Big Banks. At least someone is trying to raise consumer awareness.
I am certain that you along with me are angered, deeply angered, by the conduct of Big Banks especially when we all know that they pocketed taxpayer bailout money. Yet now we hear that Big Banks are planning on raising banking fees to consumers. Some banks, like Wells Fargo, are hurrying to raise their fees before congress can vote on a bill to regulate bank fees. Last year we Americans paid over $23 billion in bank overdraft fees which was a 35% increase from years past.
Ralph Nader, a man who needs no introduction, spoke out this week in support of federal measures to protect consumers by implementing what he called federal "prudent standards" for banking fees, mortgages, and credit cards. The next time you receive one of those credit card letters with announcements of changes to your contract (i.e. interest rates going up and other fees), I suggest you this time read it before throwing it away, and then call the company to immediately cancel your card.
A bill to create a new consumer financial protection agency faces its first congressional vote this week.
"It's basically putting a federal cop on fraudulent mortgage, consumer credit cards and other shenanigans that the financial industry has been getting away with, and demonstrating that fraud and crime pays -- as long as it comes from corporate misbehavior," Nader said. Mr. Nader further called for someone other than federal bank regulators to act as the watchdogs, citing that "The Federal Reserve is the worst agency to do that, they don't know how to spell 'consumer protection'."
Our biggest challenge as we try to come out of this bank-led mortgage financial crisis is to reconcile the opposing positions of on the one hand those who decry more federal regulation, and on the other, those who decry allowing people in power to continue to raid the kitty at our expense.
Where do you stand?
Hot Off The Press - Mr. Greenspan Speaks Out
Alan Greenspan on Thursday ventured the talk circuit with the following:
Referring to big banks, Mr. Greenspan implored U.S. regulators to seriously consider breaking up large financial institutions considered "too big to fail."
My of my! I don't know quite what to thinkk at the thought that Mr. Greenspan is agreeing with what we have been saying for quite some time now.
"If they're too big to fail, they're too big," Greenspan added. "In 1911 we broke up Standard Oil -- so what happened? The individual parts became more valuable than the whole. Maybe that's what we need to do."
While Congress and regulators are considering numerous measures to monitor these large banks, Mr. Greenspan shrugged off a possible solution of imposing a tax or requiring higher capital ratios on these larger banks by saying, "I don't think merely raising the fees or capital on large institutions or taxing them is enough. I think they'll absorb that, they'll work with that, and it's totally inefficient and they'll still be using the savings."
In a reference to his own political bent as a staunch Republican, Mr. Greenspan said, that while arbitrarily breaking up companies goes against his philosophical leanings, he emphasized that something has to be done to solve this too-big-to-fail issue.
