Thursday, March 19, 2009

AIG Bonuses: Schumer's Phony Outrage


"If you don't return it on your own, we will do it for you," Senator Charles E. Schumer warned the AIG bonus recipients, as he joined in the public outrage against AIG's executive bonuses of $165 million. After receiving $170b in US taxpayer money, AIG announced these scandalous bonuses for their executives in the financial products unit which sold derivatives that cratered the company and the entire financial system.

The grandstanding by the senator from Wall Street, as Mr. Schumer is known because of his close links to the financial services industry, seems to be designed to deflect public anger and scrutiny from the real scandal and the main culprits of collapse of AIG and other financial institutions--the politicians in Washington. For years, as the Wall Street cheerleader on Capitol Hill, the senator joined his other corrupt colleagues in preventing any regulation of the financial weapons of mass destruction such as credit default swaps (CDS) and collaterlized debt obligations (CDO) in exchange for millions of dollars in campaign contribution from Wall Street.

Mr. Schumer led the Democratic Senatorial Campaign Committee for the last four years, raising a record $240 million while increasing donations from Wall Street by 50 percent, according to the New York Times. That money helped the Democrats gain power in Congress, elevated Mr. Schumer’s standing in his party and increased the industry’s clout in the capital.

Schumer gathered support and donations by embracing the industry’s free-market, deregulatory agenda more than almost any other Democrat in Congress, even backing measures now blamed for contributing to the financial crisis.

While other lawmakers took the lead on efforts like deregulating the complicated financial instruments called derivatives, it was Mr. Schumer, a member of the Banking and Finance Committees, who repeatedly took other steps to protect industry players from government oversight and tougher rules, a review of his record shows. Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees, according to the New York Times.

On the nature of deregulated credit default swaps (CDS) that caused the collapse of AIG and financial markets, a recent CBS 60 Minutes segment explained, "In retrospect, giving Wall Street immunity from state gambling laws and legalizing activity that had been banned for most of the 20th century should have given lawmakers pause, but on the last day and the last vote of the lame duck 106th Congress, Wall Street got what it wanted when the Senate passed the bill unanimously." Though CNN has only picked Senator Phil Gramm as one its top 10 Culprits of Collapse, the entire US Congress shares responsibility for it.

The American people need to put the AIG bonus issue in proper perspective to channelize their genuine and deep anger and resentment against the corrupt political-industrial elite who are the real culprits of collapse. The bonus amount of $165m is an extremely tiny fraction of the trillions of dollars of losses in retirement savings and home values suffered by Americans because of the Wall Street misdeeds, committed with the collaboration of Schumer and his fellow politicians in Washington. It's also a small fraction of the tens of billions of dollars of US aid for Israel, the biggest recipient of US aid, that Sen. Schumer continues to champion as a staunch supporter of Israel on the Hill. The anger of the nation in severe distress should be used to force reforms in Washington. The first steps toward serious reform should include a grassroots campaign for major curbs on political campaign contributions by the lobbyists followed by an open, public trial of Senators Charles Schumer, Chris Dodds, Phil Gram and their Democratic and Republican colleagues on the US Senate's Finance and Banking Committees to hold them to account.

Related Links:

Buffet Warns of Financial weapons of Mass Destruction

Who Rules America?

Will American Capitalism Survive?

China's Nuclear Option

Senator Schumer: The Champion of Wall Street on the Hill

Pay to Play is the Name of the Game in Washington

Are Jews Culprits of Collapse on Wall Street?

Keynes on Jews

Democrats and Republicans Share Blame for Financial Collapse

Jewish Network in US Congress

Jewish Power Dominates at Vanity Fair

Jewish Power Grows in US Congress

Did Schumer and Emanuel Sink Freeman?

3 comments:

Riaz Haq said...

In a recent book titled "Capitalism and the Jews", author Muller argues that it was Chrisitians' distaste and dis like of usury that left wide open the business of lending and capitalism to Jews in Europe:

"The unique historical relationship between capitalism and the Jews is crucial to understanding modern European and Jewish history. But the subject has been addressed less often by mainstream historians than by anti-Semites or apologists. In this book Jerry Muller, a leading historian of capitalism, separates myth from reality to explain why the Jewish experience with capitalism has been so important and complex--and so ambivalent.

Drawing on economic, social, political, and intellectual history from medieval Europe through contemporary America and Israel, Capitalism and the Jews examines the ways in which thinking about capitalism and thinking about the Jews have gone hand in hand in European thought, and why anticapitalism and anti-Semitism have frequently been linked. The book explains why Jews have tended to be disproportionately successful in capitalist societies, but also why Jews have numbered among the fiercest anticapitalists and Communists. The book shows how the ancient idea that money was unproductive led from the stigmatization of usury and the Jews to the stigmatization of finance and, ultimately, in Marxism, the stigmatization of capitalism itself. Finally, the book traces how the traditional status of the Jews as a diasporic merchant minority both encouraged their economic success and made them particularly vulnerable to the ethnic nationalism of the nineteenth and twentieth centuries.

Providing a fresh look at an important but frequently misunderstood subject, Capitalism and the Jews will interest anyone who wants to understand the Jewish role in the development of capitalism, the role of capitalism in the modern fate of the Jews, or the ways in which the story of capitalism and the Jews has affected the history of Europe and beyond, from the medieval period to our own."

Riaz Haq said...

Here's an excerpt from a story in the Guardian about growing wealth gap between whites and blacks in America:

"A huge wealth gap has opened up between black and white people in the US over the past quarter of a century – a difference sufficient to put two children through university – because of racial discrimination and economic policies that favour the affluent.

A typical white family is now five times richer than its African-American counterpart of the same class, according to a report released today by Brandeis University in Massachusetts.

White families typically have assets worth $100,000 (£69,000), up from $22,000 in the mid-1980s. African-American families' assets stand at just $5,000, up from around $2,000.

A quarter of black families have no assets at all. The study monitored more than 2,000 families since 1984.

"We walk that through essentially a generation and what we see is that the racial wealth gap has galloped, it's escalated to $95,000," said Tom Shapiro, one of the authors of the report by the university's Institute on Assets and Social Policy.

"That's primarily because the whites in the sample were able to accumulate financial assets from their $22,000 all the way to $100,000 and the African-Americans' wealth essentially flatlined."

The survey does not include housing equity, because it is not readily accessible and is rarely realised as cash. But if property were included it would further widen the wealth divide.

Shapiro says the gap remains wide even between blacks and whites of similar classes and with similar jobs and incomes.

"How do we explain the wealth gap among equally-achieving African-American and white families? The same ratio holds up even among low income groups. Finding ways to accumulate financial resources for all low and moderate income families in the United States has been a huge challenge and that challenge keeps getting steeper and steeper.

"But there are greater opportunities and less challenges for low and moderate income families if they're white in comparison to if they're African-American or Hispanic," he said.

America has long lived with vast inequality, although 40 years ago the disparity was lower than in Britain.

Today, the richest 1% of the US population owns close to 40% of its wealth. The top 25% of US households own 87%.

The rest is divided up among middle and low income Americans. In that competition white people come out far ahead.

Only one in 10 African-Americans owns any shares. A third do not have a pension plan, and among those who do the value is on average a fifth of plans held by whites.

The report shows that a typical white middle income family, earning
about $30,000 a year, has accumulated $74,000 in assets, five times that of a black family in the same class which has only about $14,000
in wealth.

The gap is even wider when it comes to families with an income above $50,000 a year."

Riaz Haq said...

Here are some excerpts from a piece by Michael Kinsley on Jewish investment bankers' role in US economic woes:

Goldman Sachs, the huge and hugely profitable investment bank, has become a symbol of the financial excesses that helped to bring on the current recession. Because Goldman is thought of as a "Jewish" firm, and because it dominates the financial industry, criticism of Goldman, or of bankers generally, is often accused of being anti-Semitic. Commentators including Rush Limbaugh and Maureen Dowd have been so accused. When, if ever, are such accusations fair?

If you believe that Goldman has done nothing wrong, then any criticisms of Goldman or use of the firm as a symbol of the crisis are obviously unfair to Goldman. Furthermore, they would raise the legitimate question of "Why pick on Goldman?" and the possibility that anti-Semitism is part of the explanation. Similarly, if you believe that anything Goldman did wrong was done wrong by lots of others, the question of "Why pick on Goldman" arises, as does the same obvious answer.

Unfortunately for Goldman, it is not obviously blameless in the crisis. It was never so reckless that it risked going under. It borrowed only [sic] ten billion dollars from the Federal government, even that under duress, and paid it back as soon as possible, with interest. But the firm engaged in complex transactions that amounted to betting against its clients. Throughout the crisis, it enjoyed an implicit government guarantee on the grounds of being "too big to fail." The government bailed out one of Goldman's biggest borrowers--the insurance company AIG--saving Goldman billions in losses. And its profits and executive bonuses revealed, at the least, a lack of sensitivity at a time when millions are losing their jobs.

Even if Goldman did nothing in particular wrong, its status as one of only two remaining huge investment banks on Wall Street (the other is Morgan Stanley) might make it a legitimate focus, especially given its reputation, even before the crisis, for ruthlessness.
----
Then there is this oft-quoted passage at the beginning of a lengthy rant against Goldman Sachs by Matt Taibbi last July in Rolling Stone: "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." This sentence, many have charged, goes beyond stereotypes about Jews and money, touches other classic anti-Semitic themes about Jews as foreign or inhuman elements poisoning humanity and society, and--to some critics-- even seems to reference the notorious "blood libel" that Jews use the blood of Christian babies to make matzoh.

Taibbi claims to have been utterly blindsided by accusations that his article was anti-Semitic. He says he finds the idea "ludicrous." He denies any relation between his words and classic anti-Semitic stereotypes. His critics find this impossible to believe. Could such a sophisticated writer (the article skewers Goldman with great skill and style) actually not know about the stereotypes and ancient lies that this passage echoes, and could he actually be surprised that there would be people calling his article, fairly or otherwise, anti-semitic? It may be possible to call Goldman Sachs a bloodsucker without being an anti-Semite. But is it possible to call Goldman Sachs a bloodsucker and then be surprised when you're called an anti-Semite?


http://www.theatlanticwire.com/national/2010/01/how-to-think-about-jewish-bankers/25689/

http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405