Oct. 15, 2009
Wall Street Mocks America; Compensation Estimates Highlight Need for Reforms
Statement of Robert Weissman, President, Public Citizen
Note: U.S. banks and securities firms are on track to pay a record $140 billion in compensation to staff - more than at the peak of 2007, according to a recent Wall Street Journal analysis.
Wall Street is mocking us. The giant Wall Street firms likely would be out of business had taxpayers not provided trillions of dollars in bailout money and supports. Now, within a year of these unfathomable bailouts, Wall Street has the gall to siphon off record sums in salary and bonuses. As troubling as the scale and audacity of these payments may be, what is most appalling is that they are, in large measure, the result of Wall Street resuming exactly the same speculative gambling and consumer rip-off strategies that crashed the financial system in the first place.
The obscene Wall Street payments should shake Congress out of its lethargy and drive it to adopt strong financial regulatory rules. These should include a Consumer Financial Protection Agency empowered to crack down on consumer rip-offs; tough limits on bonus payments (including a requirement that bonus payments be based on long-term performance, to remove the incentive for dangerous, short-term betting); and meaningful controls and restrictions on the trade in derivatives and other exotic financial instruments.
Today, the House Financial Services Committee is considering legislation related to the derivatives market. Unfortunately, the legislation being considered will do almost nothing to curb the speculative frenzy on Wall Street.