Will Wall Street Ever Learn?

By Mark Riley
As the pushing back and forth on President Barack Obama's economic stimulus plan continues, questions abound about whether big executives on Wall St. are really tightening their belts. Juan Gonzalez writes a column in today's NY Daily News that indicates the answer is "absolutely not!"

Sometimes you have to pull together various strands of fabric to make a quilt. Consider the following financial strands, and ask yourself what kind of quilt it makes. Keep in mind that Monday alone, somewhere on the order of 70,000 Americans lost their jobs.

John Thain, former boss at Merrill Lynch, spent $1.2 million dollars on redecorating his office in lower Manhattan.



The redo included $35,000 for a "commode on legs", $25,000 for a "mahogany pedestal table" $87,000 for an area rug, and $1400 bucks for a trash can. That's right, a trash can.

It gets worse. Bank of America, the company that took over Merrill Lynch, announced it would cut 35,000 jobs over three years. That was on Dec. 11th. That same week, John Thain doled out $4 billion (with a B) dollars in bonuses to top execs at Merrill. According to Gonzalez' column, Thain knew Merrill Lynch would show a fourth quarter loss of $15 billion dollars.

So too did the bosses at Bank of America, which was busy asking for $20 billion dollars in government assistance on top of the $25 billion they've already received. The upshot is that Thain was forced out just last week, but the damage had already been done.

The quilt from just these strands of fabric? Taxpayers paid for Merrill Lynch bonuses! If this was the only example of a clueless Wall St. it would be bad enough. Combine it with Citigroup's $50 million dollar jet (it had to cancel the order after it was made public), and the sale of former Lehman Brothers boss Richard Fuld's sale of his $13 million dollar mansion to his wife for $100 bucks, and you get the picture.

These sorts of outrages demand quick action from our new president. Never mind lobbying on Capitol Hill.

He needs to get the titans of American finance in a room, and read them the riot act.

His first question ought to be how it is that 100,000 bank employees have lost their jobs in the past two years, but nearly 90% of the top executives at 200 banks that have gotten federal money are still on the job.

In his inaugural address, the president talked about responsibility. Were America's bankers listening? Apparently not. It's time for Obama to make them pay attention.

What do you think?

Transparency, Anyone?

By Mark Riley

NB: From now on, this blog will be updated daily. I thought (silly me) I needed to concentrate on doing longer pieces fewer times a week. I now know better.

If there's been one single news item that should outrage hard working Americans, it's the one that says banks can't or won't tell anyone what they've done with the first chunk of the federal bailout money. We were told this was central to keeping the economy afloat. Yet nobody seems to know where the money went. As is the case with a lot that goes on inside the Beltway, there's plenty of blame to go around on this one.



Imagine for a moment you, a person working every day to make ends meet, complete the mountain of paperwork needed to actually get a loan from your financial institution. Then imagine what would happen if you couldn't (or refused) to tell the bank what you did with the money. It's called fraud if you do it, but US financial institutions seem to be getting away with just that.

You may remember last fall Treasury Secretary Hank Paulson told us the sky would fall if our financial institutions didn't get help to the tune of $700 billion dollars.



He managed to scare the Congress into giving it to him to dole out without oversight. And that's just what we've got: No oversight whatsoever. I'm not saying this. A GAO report says Treasury doesn't even know.

The banks aren't the only ones to blame here. To them, this money must seem like a windfall. Congress itself must bear some of the responsibility for this mess. They, after all, said yes to the the bailout request. Now, after the fact, they seem to be concerned. Now they want answers.

They should have demanded them before releasing the first half of the money. Now the incoming Obama Administration wants to free up the other $350 billion dollars. Unlike Bush, Obama has sense enough to demand some sort of accountability this time around. Yet even that shouldn't suffice. What about the first outlay. Are we ready to watch hundreds of billions of dollars float away without demanding answers?

Millions of Americans lost their jobs last year. Not only are homeowners facing default, renters are looking at increases they have no means to pay. It's ordinary Americans who are catching hell! "I dunno" isn't good enough when it comes to taxpayer dollars. Obama should demand a full accounting of all monies spent since last fall by the financial institutions that got help. Any hesitancy on their part should be met with the threat of criminal prosecution.

It's time to stop playing with the Masters of the Universe. They got us into this mess. They shouldn't be able to escape their responsibility to at least be transparent. Should they?