Wall Street Socialism from CommonDreams.org
So now the Bush administration proposes to make the federal guarantee explicit and even to offer taxpayer money to help recapitalize the two banks if needed. Everything has been nationalized -- except the profits and the pay scales of the bank's executives.
That's right. If the guarantees work, private speculators, having driven the stock down, will clean up on the upside. And the bank's CEO's will continue to pocket the multi-million dollar salaries that are de rigueur on Wall Street. Call it Wall Street socialism. Their losses are socialized; their profits are pocketed. You and I will pay for their failures. And if conservatives have their way, their families will pocket their successes, without even having to pay a tax for the transfer of the estates we've helped to create.
Wall Street's Just Deserts from the Washington Post
At the risk of speaking ill of the dead, what good was Lehman Brothers, anyway? And if Merrill Lynch was so bullish on America, why is it that, despite the torrent of foreign investment that flowed in to Lehman, Merrill and their Wall Street peers over the past half-decade, so few jobs were created in America during that period of "recovery"?
During the late, lamented Wall Street boom, America's leading investment institutions were plenty bullish on China's economy, on exotic financial devices built atop millions of bad loans, and, above all -- judging by the unprecedented amount of wealth they showered on the Street -- on themselves. The last thing our financial community was bullish on was America -- that is, the America where the vast majority of Americans live and work.
The Joys of Ownership from the New York Times
So, ladies and gentlemen, how does it feel to be the new owner of those two big and banged-up mortgage companies, Fannie Mae and Freddie Mac? Not exactly the kind of real estate you were looking to buy, you say? Felt you had swallowed enough garbage after the Bear Stearns bailout tapped you for $29 billion?
Make no mistake: we, the American taxpayers, are amassing quite a portfolio of flotsam and jetsam in the mortgage bust. It certainly brings new meaning to the notion of an ownership society, doesn’t it?
To be sure, the terms of the Mac ’n’ Mae rescue deal are still sinking in. And it will be years before we know how much taxpayers will have to pay for the privilege of backing these out-of-control entities. But in the meantime, here are some of the joys that ownership in Mac ’n’ Mae might bring.
The proud new owners — the taxpayers — could be asked to cover such niceties as the pay packages awarded to the chief executives, Daniel H. Mudd at Fannie Mae and Richard F. Syron at Freddie Mac, as they exit the accident scene. Estimates for what these arrangements might cost: $24 million in severance, retirement benefits and deferred compensation for both men.
That’s not all. When the inevitable shareholder lawsuits are filed against Mac ’n’ Mae’s executives, who professed until the bitter end that their companies were in fine financial shape, who might cover the costs of defending those suits?
Why, you and I, the taxpayers, silly.
Wall Street and Washington: How the Rules of the Game Have Changed from CommonDreams.org
The undoing of that New Deal regulatory regime, and its replacement, largely under Republican administrations (although Glass-Steagall was repealed on Clinton's watch), with what some have called the "socialization of risk" has contributed in a major way to the mess we're in today. Beginning most emphatically with the massive bail-out of the savings and loan industry in the late 1980s, Washington committed itself, at least under conditions of acute crisis, to off-loading the risks taken by major financial institutions, no matter how irrationally speculative and wasteful, onto the backs of the American taxpaying public.
Despite free market/anti-big-government rhetoric, real-life Washington has tacitly acknowledged the degree to which our national economy has become dependent on the financial sector (Finance, Insurance, and Real Estate -- or FIRE). It will do whatever it takes to keep it afloat.