Begrudging Wealth – Again!

It’s not that Americans generally begrudge those who have truly earned riches their wealth. It is the American “rags to riches” paradigm, or, more probably, “not-too-bad-rags to oh-wow riches” model. We all want to grab that brass ring, and those whose ring-grabbing has soared like an eagle often become role models, celebrities (some with reality television nastily tucked under their belt) and sought-after speakers.

But what galls most of us it where a particular group of individuals’ behavior has wreaked havoc with our entire economy, destroying the lives of millions of people through irresponsible and what, in my opinion, were often unethical (if not illegal) choices, where the government has – out what I believe was a sense of “blackmail out of necessity” bailout of the system for the nation to “make it through” – invested untold billions of dollars to resuscitate that (financial) sector…. and as the Titanic sinks (housing prices have begun to fall again), Rome burns (unemployment shows no signs of abating anytime soon), they buy new luxury yachts, waiving at the victims floating out to sea, and build a new city of gold to get a better view of the flames!

The emotion that many Americans feel at wealth garnered from taxpayer sacrifices is not admiration or envy, it is rage mixed with an unpleasant quantity of down-and-dirty lust-for-revenge. As these black souls rail at the thought of being regulated – sending lobbyists with reminders of campaign contributions of old to the Hill for the less-than-subtle pressure – wanting to be able to recreate future bubbles (the only way to amass big fortunes, they freely admit, in a relatively short time) and take advantage of their automated and exceptionally complex computer trading programs that unlevel the playing fields to their exceptional benefit, the rest of us can only stand in horror as they “do it to us again” with taxpayer money at the lowest point in the lives of millions of Americans.

We are about to witness the release of what some say will be an aggregate of $50 billion dollars of aggregate “Wall Street bonuses” and, as the calculations are updated, we get a pretty good idea of what is about to come in the next week or two: “Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.” January 10^th New York Times. And since that money isn’t exactly being allocated to favor secretaries, messengers, clerks and non-professional staff, we know that translates into vastly larger bonuses for those in the direct path of revenue-generating, still a significant number of thousands of employees in each large company who will see seven figure or near-seven figure bonuses soon.

But these boys and girls are smart… they sense the public rage. “Some bankers worry that the United States, like Britain, might create an extra tax on bank bonuses, and Representative Dennis J. Kucinich, Democrat of Ohio, is proposing legislation to do so… Those worries aside, few banks are taking immediate steps to reduce bonuses substantially. Instead, Wall Street is confronting a dilemma of riches: How to wrap its eye-popping paychecks in a mantle of moderation. Because of the potential blowback, some major banks are adjusting their pay practices, paring or even eliminating some cash bonuses in favor of stock awards and reducing the portion of their revenue earmarked for pay.” The Times.

The compensation structures at these financial mega-structures are built primarily around bonuses – although they mostly get sizeable six figure minimum annual salaries. Since large teams of professionals work on each large transaction, giving a fixed percentage of transactions to specific performers is rarely feasible. The big banks are scaling down, in reaction to the public outcry, but there is no easy way to compensate these denizens of financial irresponsibility, even at “reduced rates” (which still drops the jaws of most Americans), without drawing the ire of the rest of the nation. We’re still waiting to see how the government addresses the fact that these overpaid players caused this financial debacle which plagues the rest of us but have yet to suffer any serious consequences for their actions.

Paying the bonuses with stock appreciation rights or option or restricted stock in lieu of cash doesn’t assuage the electorate. We want the money that they are paying themselves to go from point A (their pockets) to point B (where the money can be used to fix the damage they caused). While Wall Street claims to be the engine that creates new jobs and finances efficient new industries – they’re doing God’s work according to Goldman CEO Lloyd Bankfein – it is very, very clear that their recent trading (and lack of lending) activities have most definitely had the opposite effect. Pressing for increased corporate efficiency has resulted in massive layoffs, and using the credit provided virtually for free by the Federal Reserve for their own internal purposes and not to enable small and mid-level businesses to operate has further erode the economic reality for most Americans. The general lay consensus is that they don’t “make anything of value,” but just “make” money by moving assets and numbers around.

Wall Street needs to address the massive payback they truly owe to the American people. They need to pay for the excesses that led to our financial fall. They are not going to do that voluntarily; we need to regulate their bubble practices out of existence and tax their current financial gains as payback for their most recent sins. We need to stop this de facto subsidy/ amnesty program we seem to have created to bless Wall Street. They can no longer be a separate and sacred stratum of society, exempt from the rules of being responsible for the damage they caused.

I’m Peter Dekom, and I approve this message.