Wall Street is giving outrageous a bad name.
We are just 16 months past the Wall Street crash of 2008. Forget profitability – Wall Street firms exist only because they have benefited from trillions of dollars in public supports. These supports extend far beyond the $700 billion for the Troubled Assets Relief Program, commonly referred to as the bank bailout, and are ongoing. The billions that Wall Street is now preparing to pay itself in unconscionable bonuses come, in a very real sense, out of the pockets of We, The People.
The rationale for rescuing the financial sector from itself was never to enable Wall Street executives and traders to pull down eight-figure bonuses. These bonuses do not reflect a return to prudent lending to the real economy, but a return to the worst speculative excesses of the past. We, The People – and our government – do not need to sit idly and watch this Wall Street pillage. Now is the time for the Congress, with White House support, to impose a bonus tax on Wall Street. Public Citizen for months has urged adoption of a Wall Street bonus tax. The United Kingdom has now adopted such a measure, and the idea is quickly gaining support in the United States. Its our money that Wall Street is trying to siphon from the system; our government needs to take it back.
A bonus tax is only the first step in reforming Wall Street pay abuses, and pay reform is only one component of needed financial regulatory reform. Wall Streets readiness to pay itself outlandish bonuses underscores the need for very aggressive reform measures. This industry, above all, is one that cannot regulate or restrain itself. Left to its own devices – as it was throughout the previous decade – it will return to exactly the same destructive practices that have drained the public treasury, led to millions of foreclosures and thrown the economy into a tailspin.
Robert Weissman is president of Public Citizen.