Why Street Pay Packages Keep Exploding No Matter What
The stock market is swinging wildly in light of Putin’s aggression in Ukraine, but Wall Street traders are doing very well. Bad news is good news for traders who make money from volatility.
After all, in the year of Delta and Omicron, climate chaos, Trump’s Republican attacks on democracy, bitter division, a calamitous exit from Afghanistan and accelerating inflation, the biggest high street banks reaped record profits. The bonuses go through the front Porsche. Hundreds of merchants racked up seven and eight figure bargains. Morgan Stanley paid $35 million to its CEO, James Gorman. Goldman Sachs, $35 million to David Solomon. Bank of America, $32 million to Brian Moynihan. Citigroup, $22.5 million to Jane Fraser. And, not least, JPMorgan, which paid Jamie Dimon $34.5 million, plus a $50 million retention bonus.
Dimon became a street spokesperson and one of Capitol Hill’s most influential CEOs. His public statements are a barometer of what the American financial oligarchs think.
They are not worried about what the Fed’s nascent fight against inflation is likely to have on jobs and wages. They are not worried about the shrinking American middle class or the precariousness of the working class and the poor. They are troubled by what they see as creeping socialism. In an annual letter to JPMorgan shareholders, Dimon warned that socialism would be a “disaster for our country” because it produces “stagnation, corruption and often worse.”
It’s worth recalling that Dimon was at the helm in 2008 when JPMorgan received a $25 billion socialist-style bailout after it and other Wall Street banks nearly went under because of their reckless lending. Instead of letting the market punish the banks (which is what capitalism is supposed to do), the Obama administration bailed them out and eventually imposed paltry fines that the banks treated as the cost of doing business. According to the Justice Department, JPMorgan has admitted to regularly and knowingly selling mortgages that should never have been sold. (Presumably, this is where “stagnation, corruption, and often worse” comes in.)
Millions of Americans lost their homes, savings and jobs during the financial crisis. But neither Dimon nor any other senior Wall Street executive was held responsible. If this isn’t socialism for rich bankers, what is?
The five largest US banks, including Dimon’s JPMorgan, now control nearly half of all deposits, up from 12% in the early 1990s. Due to their size, these banks are now considered “too big to do.” bankruptcy “. This translates into a hidden subsidy of some $83 billion per year – the estimated total discount that creditors and depositors give to banks whose solvency is effectively guaranteed by the government. More socialism for rich bankers.
Dimon was instrumental in getting Trump’s major tax cuts through Congress. So far, they’ve saved JPMorgan and other major banks more than $50 billion.
But Dimon and JPMorgan are doing their part to ensure that average Americans suffer the full consequences of hardline capitalism. Although federal regulators waived overdraft fees for big banks when the economy plunged in 2020, Dimon and JPMorgan refused to waive overdraft fees for borrowers struggling to make ends meet amid the pandemic closures. Dimon and JPMorgan took in $1.46 billion in overdraft fees – the most of any major bank.
Dimon is a registered Democrat and a major fundraiser for the Democratic Party. He warns that income inequality is dividing America and laments that a “hunk” of Americans have been left behind. Announcing a $350 million program to train workers for the jobs of the future, he expressed concern that 40% of Americans were earning less than $15 an hour.
If Dimon were serious about the problem of widening inequality, he would likely use his lobbying prowess to help raise the federal minimum wage and make the refundable child tax credit permanent. He would also try to make it easier for workers to unionize and raise taxes on the super-rich like him. Do not hold your breath.
Dimon isn’t really concerned about widening inequality. He’s not really concerned with socialism either. Nor on any of the other crises gripping America, which expose Americans to more economic uncertainty and insecurity than the citizens of any other advanced economy. His real concern is that one day America will end the kind of socialism he and others on Wall Street depend on – bailouts, regulatory loopholes, subsidies and tax breaks.
Crossposted with permission from Robert Reich’s Bulletin.