On Jan. 25, the executive director of MassPIRG (the Massachusetts Public Interest Research Group), Janet Domenitz, announced a new campaign to demand that banks that were assisted by government bailouts a little over a year ago pay taxpayers back before paying bonuses to their top executives.
MassPIRG offers some compelling math, noting that "Chase is giving out $27 billion in bonuses. Goldman Sachs is expected to declare $23 billion and Citibank—which lost over $7.5 billion last quarter—is expected to dish out $24.9 billion. … To put that into some context, just six banks are giving out enough bonuses to nearly cover every state's estimated budget shortfall this year."
The group cites a recent report from the Center on Budget and Policy Priorities which estimated that state shortfalls will total $194 billion this year. (Massachusetts, they report, will be $600 million short in taxes, Connecticut $513 million, Rhode Island $400 million, Vermont $28 million, New Hampshire $38 million.)
"[Wall Street bankers] drove their institutions and our economy to the brink of collapse," Domenitz writes. "And when we—the taxpayers and consumers—rushed to their rescue and gave them the resources to pull back from the edge, did they stop the dangerous and deceptive practices that cost us jobs and our savings? Did they start making loans to small businesses to get the economy back on track? No, they took our money and made record profits, and gave themselves big bonuses to celebrate."
On Wednesday, Jan. 13, bankers from Goldman Sachs, JPMorgan Chase, Morgan Stanley and Bank of America sat before the Financial Crisis Inquiry Commission, headed by Phil Angelides, a Californian Democrat who was once that state's treasurer. According to the New York Times, though these banks had mostly paid back what they had taken in assistance, in describing what happened, they "spoke in details so technical that they were numbing at times. None apologized, though some expressed sentiments close to contrition."
Angelides did not accept a comparison offered by Lloyd C. Blankfein, chairman and chief executive of Goldman Sachs, that likened the crisis to multiple hurricanes hitting the country at once or other "acts of God."
"These were acts of men and women," Angelides said. Later he added, "I'm troubled by your inability to accept the probability or certainty that your firm would not have made it through the storm but for the vast array of federal assistance."
MassPIRG has made available on its site an easy-to-send form letter to congressmen (http://www.masspirg.org/action/financial-privacy/pay-us-back). It urges Congress to support the Obama administration's proposal to levy a fee "on the big banks who took taxpayer funds and used them to make massive profits and declare massive bonuses" instead of using the funds for reinvestment in new business and industry.
