Someone should tell AIG CEO Robert Benmosche that unless he’s hanging from the end of a rope, he’s not being lynched. Americans are at the end of their ropes, because the wealthy got bailed out while the rest of us got left out.
Benmosche recently told the Wall Street Journal that:
The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitchforks and their hangman nooses, and all that — sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.”
I started to write about how offensive it is for Benmosche to compare lynching — the torture and murder of 5,000 black Americans from the 1800s to 1955 — to public anger the over multimillion dollar bonuses paid by bailed-out Wall Street firms. But I don’t need to. That history speaks for itself.
Yes, Americans still hate Wall Street. According to a recent Reuters/Ipsos poll, 44 percent of Americans believe that the government shouldn’t have bailed out financial institutions. As many as 30 percent think Wall Street banks and traders do nothing to help grow the economy and create jobs. (Only 26 percent believe the financial sector is good for the economy.) Fifty-one percent believe Silicon Valley is better at creating jobs than Wall Street. (Only 10 percent think Wall Street does better.) Only 14 percent of Americans have a positive view of Wall Street.
A majority of Americans in the Reuters poll also said Wall Street bankers, traders, and CEOs are still paid too much. Maybe they’re asking themselves the question that Barney Frank asked a couple of CNBC anchors: Why is it that “poor, beleaguered bankers” can afford to pay themselves huge bonuses, but couldn’t’ manage to pay their debts without a government bailout?
A majority of Americans in that Reuters poll also wanted the government to do more to punish those responsible for the financial crisis — and with good reason.
- Five years after the financial collapse, not one Wall Street Executive has been prosecuted. Once “deregulated,” banks ran wild, and loaded up on toxic debt without “sufficient capital.” Bear Stearns had about $25 in debt for every $1 it actually had. Some, like JPMorgan (which bought Bear Stearns, while the government guaranteed Bear Stearns debts to the tune of $30 billion), Bank of America, and AIG behaved like criminal enterprises.
- Wall Street CEOs made out like bandits. Their shenanigans brought the country to the brink of financial disaster, but Wall Street CEOs had very soft landings. One former Bear Stearns CEO walked away with over $300 million, and now passes the time in retirement playing “high stakes bridge.” Merrill Lynch’s Stan O’Neal, Citigroup’s Charles Prince, and former Bank of America CEO Ken Lewis got “golden parachutes” worth a total of $272 million. All three of their firms were bailed out by taxpayers.
- Some of the worst CEOs are living quite large. Former Lehman Brothers CEO Dick Fuld divides his time between a Greenwich, CT mansion, as well as a 40 acre ranch in Idaho, and a home in Florida, since running his 158-year-old firm into the ground — and selling his Park Ave apartment for $25.87 million in 2009. Charles Prince has a 3,839 square-foot home in Nantucket, MA, and Park Avenue digs. O’Neal held on to his Park Avenue address, too. Ken Lewis is cooling his well-heeled heels in a Naples, FL home overlooking the Gulf of Mexico.
This is happening in the context of a huge economic recovery for the rich.
- The rich just keep getting richer. The wealthiest ten percent took home more than half of all the income earned in 2012 — the highest percentage recorded in 96 years of collecting income data.
- The government hands more than $1 trillion per year to wealthy in the form of tax breaks. Ten major tax breaks amounting to more than $750 billion in tax savings are tilted heavily towards the already-wealthy; 17 percent of those tax breaks go to the wealthiest one percent. Nearly 1.7 million tax payers in the top 1 percent will owe no taxes at all, because tax breaks reduced their tax liability to zero.
- The average CEO makes more in one day than the average worker makes in one year. In 1965 the average CEO earned 20 times what the average worker made. Today the salaries of CEOs have grown so much that the average CEO earns 237 times what the average American worker earns, or as much money in one day as a worker makes in one year.
Meanwhile, the most Americans are stuck in the recession that’s officially “over.”
- Over 21 million Americans are still in need of full-time work. The percentage of people in the workforce has dropped nearly 3 percent since the beginning of the Great Recession. The drop represents millions who have lost hope in this economy.
- The average American has lost $7,490 in annual income since 2000. Corporate profits have continued to rise, while wages decline. Less money going into wages means more money going into corporate profits, which increases the personal income of the wealthy.
- The average American family pays $6,000 a year in subsidies to big business. Federal, state, and local government subsidies handed to corporations adds up to an average of $6,000 a year paid by the average American family — and more for middle-class families — to corporations that have doubled their profits and cut their taxes in half, while also cutting jobs and wages.
- Four years after the recession officially ended, many Americans are still struggling. In the past year, about one in five adults have not had enough money to buy food for themselves and their families at times. According to a Gallup poll, Americans’ overall access to necessities like food, housing, and health care remain at the record lows seen at the beginning of the recession.
- The national poverty rate remains stuck 15 percent for six straight years. The Census Bureau reports that 46.5 million Americans were living in poverty last year. Child poverty stood at 21.8 percent, and poverty among people 65 and older held at 9.1 percent. The lack of progress in reducing poverty shows that improvements in the economy are not being shared by all.
If Americans are angry about inequality and Wall Street bonuses, it’s not due to anything like the racist hatred that fueled lynching. Americans have plenty of legitimate reasons to be angry about Wall Street bonuses and CEO compensation. Mr. Benmosche just gave them another one.