Earlier this week, President Obama was asked about the huge bonuses for the heads of Goldman Sachs and CitiGroup. His response was astounding and revealing: "Well, look, first of all, I know both those guys. They're very savvy businessmen. And I, like most of the American people, don't begrudge people success or wealth. That's part of the free market system." The President went on to compare the Wall Street bonuses to the extraordinary salaries of baseball players don't perform well.
His solution? Give shareholders a chance to ". . . scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay."
Hello? Did Goldman Sachs earn its wealth and success? Is torpedoing the economy no more serious than a ballplayer who had a bad season? And last, does anyone really believe that "scrutinizing" CEO pay will somehow stop Wall Street bankers from awarding themselves obscene bonuses?
I wish this were only a matter of tone deafness, as Frank Rich suggested in this week's column. Would it were so. Sadly, after one year of this administration, there is no escaping the conclusion that, despite the soaring rhetoric, President Obama is continuing many of the practices of the previous administration:
His solution? Give shareholders a chance to ". . . scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay."
Hello? Did Goldman Sachs earn its wealth and success? Is torpedoing the economy no more serious than a ballplayer who had a bad season? And last, does anyone really believe that "scrutinizing" CEO pay will somehow stop Wall Street bankers from awarding themselves obscene bonuses?
I wish this were only a matter of tone deafness, as Frank Rich suggested in this week's column. Would it were so. Sadly, after one year of this administration, there is no escaping the conclusion that, despite the soaring rhetoric, President Obama is continuing many of the practices of the previous administration:
- The election was barely over when he hired several of the architects of the global economic meltdown, from Larry Summers, who dismantled Glass-Steagall protections, to Tim Geithner who presided over the meltdown from his perch at the NY Federal Reserve. Mr. Geithner's instincts are always to protect the interests of the monied elite. He cleared every obstacle that might have stopped Goldman Sachs from receiving $20 billion in taxpayers' funds from a bankrupt AIG. Goldman then had the astonishing chutzpah to grant those same billions as bonuses while claiming to be doing "God's work", as Lloyd Blankfein put it.
- This administration's affinity to Wall Street is reflected in its foreclosure policies. "Protect the bankers at any cost (to the taxpayer)" seems to be White House policy. The administration's efforts to avert foreclosures have been a sad failure. Banks have lowered payments for a few months for a few customers. And, only 7% of that select group have had their mortgages permanently lowered. Meanwhile the pace of foreclosures is quickening - nearly $1.5 trillion in mortgage loans are scheduled to recast in the next two years. Soon the wave will become a tsunami unless aggressive action is taken. The Fed must require banks to re-value their real estate portfolios to current prices and then require them to adjust the principal owed to reflect the new, lower value. This would reduce the volume of foreclosures and investors would have greater confidence in valuations.
