First quarter 2010 earnings reports have been rolling in from the big Wall Street banks, and thus far the combined profits from the four largest topped $15 billion.
With its results, Goldman became the fourth major bank to report this quarter, all benefiting from hefty trading profits. JPMorgan reported a profit of $3.3 billion, Bank of America earned $4.2 billion and Citigroup $4.4 billion. (emphasis added)
“Hefty trading profits” indeed. The New York Timesreports:
In the first quarter, the bank’s bond, commodities and currency trading once again bolstered the results.
In addition, Goldman said it had set aside 43 percent of revenue in the first quarter for employee salaries and bonuses, down from 50 percent for the period a year ago.
In a statement, the chief executive, Lloyd C. Blankfein said that the results reflected “more signs of growth across the economy and the strength of our client franchise.”
Like I said, business as usual. Need I add that these are the same firms that were allowed to run amok, building a house of cards on top of asset bubbles which, when it all came down, tossed 8 million Americans out of work, 7 million out of their homes and virtually destroyed the income security of generations of Americans?
And just what “signs of growth” does Mr. Lloyd C. Blankfein see “reflected” in these “earnings”? I’d venture to say it’s the growth in what’s lining his and his fellow bankers’ pockets.
Credit card company CEOs and top executives have joined the ranks of the big bonus boys at Wall Street’s biggest banks, raking in bonuses and annual compensation for 2009 in excess of $10 million each.
Leaders in the pay sweepstakes include the heads of the credit card giants Visa, Mastercard Worldwide, Capital One Financial and American Express. Joseph W. Saunders, who runs Visa, was paid about $15.5 million
Mastercard president Ajay Banga took in $13.5 million. Hans Morris, former president of Visa, got $10.7 million while the CEOs of Capital One Financial and American Express each took in $10.6 million.
The head of Wells Fargo, the bank that became bigger than ever when it took over failing Wachovia at the end of 2008, became the highest paid big bank executive.
Topping the list is John G. Stumpf, head of Wells Fargo, the bank based in San Francisco, according to an analysis of 2009 compensation in the industry. Mr. Stumpf was paid a personal best of $18.7 million in cash and stock for 2009 — up 64 percent from 2007, just before the financial crisis struck.
The bonus package given to Jamie Dimon, CEO of JPMorgan Chase, is reportedly worth $17 million, while James P. Gorman, CEO of Morgan Stanley, got an $8 million bonus despite the bank having posted the first loss in its 74-year history.
If you’re having trouble wrapping your head around such huge sums, believe me you’re not alone. Just what is an annual pay package of, say $10 million equivalent to? It’s about $192,300 a week or a mere $4,800 an hour.
Other than driving the economy into the deepest recession since the Great Depression, throwing millions of people out of work, millions more out of their homes, jacking up credit card rates and fees and forcing millions more into bankruptcy — exactly what have these elite financial executives actually done to make that kind of money?
One thing they’ve done is to take hundreds of billions of tax dollars in bailout money.
Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress.
The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.
“I have never seen such a scrum of bank lobbyists as I have in the last year — and I’ve worked on quite a few bank issues over the years,” said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. “It seems like everybody is out of work except for bank lobbyists.”
Americans for Financial Reform is a new national coalition of more than 200 organizations including Working America — groups that are fighting back against the big banks, credit card companies and their lobbyists. A new ad from several coalition partners is being aired:
It’s time to send a message to the big banks and the credit card bonus crowd. Tell them it’s their Final Notice – Payment Past Due. Your message will tell the Senate it’s time to enact a financial crisis responsibility fee on the biggest banks and establish a Consumer Financial Protection Agency to hold Wall Street accountable.
The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.
Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years. The haul, in cash and stock, will run into many billions of dollars.
Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.
Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history.
Is that what Goldman’s Chairman and CEO Lloyd Blankfein calls “doing God’s work”?
The Sunday Times piece continues:
Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.
Some Wall Street executives may be envious of the compensation being handed out at one of the banks on Main Street: Wells Fargo. Its chief executive, John G. Stumpf, is set to make as much as $18.4 million for his service in 2009, even though his bank took $25 billion in government aid (which was repaid at the end of the year) and it had to write down billions of dollars in bad loans made during the boom years.
Major US banks are gearing up to announce annual bonuses for top executives while bracing for a political firestorm over compensation practices that critics say fueled the global financial crisis.
John Coffee, a Columbia University law professor and corporate governance specialist who has testified before Congress on executive pay issues, said many banks scrambled to repay government bailout funds before the end of 2009 to be free from limits on bonus payments.
“There are some (executives) who did not receive bonuses they thought they were entitled to last year, and now want to be compensated” with larger bonuses, Coffee said. “The culture has not changed.”
Perhaps we could learn a thing or two from Europe, where some countries, including the UK and France, are imposing one-time taxes on financial industry bonuses.
The French government intends to raise €360m from its proposed windfall levy on bonuses paid out by banks based in France, according to Christine Lagarde, finance minister.
The figure is slightly higher than expected and reflects the predictions of French banks that they are likely to pay out bonuses in full – and absorb the cost of the tax – if that is what banks in London do.
But, according to reporting this morning from UPI, the U.S. isn’t likely to follow Europe’s lead by taxing bonuses:
Administration officials said President Barack Obama is considering a fee for large U.S. banks to make up for losses in the $700 billion bank bailout program.
Reportedly, Obama’s team has already rejected a tax targeting bank bonus checks and a tax on bank transactions.
