Wall Street Bonuses Keep Rising
Wall Street will pay out record compensation to its employees this year this year. You knew it was coming, didn't you?
It's quite amazing if you think about it. It wasn't that long ago that Bear Sterns and Lehman Brothers died. And recently, the Fed talked about how most big banks - with the possible exception of JP Morgan, were a hair's breath from going under in 2008. (That was why they needed to be bailed out, according to the Fed.)
Now, barely three years later, the money's gushing out of the banks and into the pockets of the bankers. And it's not like times have been tough either. Last year was a record year too.
So what's happened?
Well, certainly things have improved. At least economic indicators look a lot better. But it seems something's slipped through the cracks.
If you remember, one of the things the Fed did in 2008 was take a lot of the bad mortgage products that banks were holding onto its balance sheet and exchange that crap for treasuries. That helped restore confidence in banks. Now, the thing is, that crap is still on the Fed's balance sheet.
If you think about it, this is somewhat similar to the GM situation. GM seems to have had a good year last year. Sales are up; profits are up. But, if you remember, in 2008, the government "rescued" GM. GM had far too much debt. Between that and the liabilities for future pension and health care benefits, the company was essentially bankrupt with no hope of recovery. It was doomed.
So the government stepped in and wiped away the debt.
Now, if you had a ton of debt and someone just paid it off for you, you'd be in better shape too, right? (That someone, by the way was the taxpayer: you and me.)
And with the banks, it's similar. It wasn't debt, but it was assets that had gone bad. If those assets were left on the banks' books, then at some point the banks would have been bankrupt too.
Of course, the taxpayer stood behind that rescue too. You and I helped the banks! Don't you feel good now?
Well, let's all raise a glass to "us" the taxpayer. What, you want the Fed or the government to do the same for you? Hey, don't be so selfish!
Anyway, at least the bankers are making money, right?
It's quite amazing if you think about it. It wasn't that long ago that Bear Sterns and Lehman Brothers died. And recently, the Fed talked about how most big banks - with the possible exception of JP Morgan, were a hair's breath from going under in 2008. (That was why they needed to be bailed out, according to the Fed.)
Now, barely three years later, the money's gushing out of the banks and into the pockets of the bankers. And it's not like times have been tough either. Last year was a record year too.
So what's happened?
Well, certainly things have improved. At least economic indicators look a lot better. But it seems something's slipped through the cracks.
If you remember, one of the things the Fed did in 2008 was take a lot of the bad mortgage products that banks were holding onto its balance sheet and exchange that crap for treasuries. That helped restore confidence in banks. Now, the thing is, that crap is still on the Fed's balance sheet.
If you think about it, this is somewhat similar to the GM situation. GM seems to have had a good year last year. Sales are up; profits are up. But, if you remember, in 2008, the government "rescued" GM. GM had far too much debt. Between that and the liabilities for future pension and health care benefits, the company was essentially bankrupt with no hope of recovery. It was doomed.
So the government stepped in and wiped away the debt.
Now, if you had a ton of debt and someone just paid it off for you, you'd be in better shape too, right? (That someone, by the way was the taxpayer: you and me.)
And with the banks, it's similar. It wasn't debt, but it was assets that had gone bad. If those assets were left on the banks' books, then at some point the banks would have been bankrupt too.
Of course, the taxpayer stood behind that rescue too. You and I helped the banks! Don't you feel good now?
Well, let's all raise a glass to "us" the taxpayer. What, you want the Fed or the government to do the same for you? Hey, don't be so selfish!
Anyway, at least the bankers are making money, right?
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