It’s aggravating to read about the Bankers making out like bandits after their poor decisions left so many jobless, homeless, and destitute. On the other hand, if the banks were all still facing nationalization or bankruptcy, we’d be even worse off. As for the politics, the Obama administration was wise to announce an accountability tax just before reporting day. Making it as painful as possible to accept these bonuses and providing a little momentum for the tax was an excellent idea.
About The Author
BooMan
Martin Longman a contributing editor at the Washington Monthly. He is also the founder of Booman Tribune and Progress Pond. He has a degree in philosophy from Western Michigan University.
Robert Reich says a lot more than an accountability tax should be done. last night i heard Bill Black (i think it was him) say they should tax the assets, to break up the big banks.
I thought Jamie Dimon’s response on that was interesting, but I only heard it second-hand. Dimon said that we have a problem with modern finance when governments or huge multinationals need to get giant loans, and only too-big-to-fail institutions have the kind of capital and risk tolerance that they need.
I’m not willing to say he’s flat-out wrong, but it’s something to think about. If that’s the case, then they really should have to buy insurance from the government.
Back when banks were not allowed to get so gigantic it was not uncommon for several banks to get together and share the funding of a giant loan. It splits up the risk and the rewards. Insurance companies would do it too on high cost, high risk policies.
I think on things like pipeline loans that are really, really big, there is still some of that. Jerome would know, since he works on deals like that.
I agree. There has been talk of dramatically increasing the insurance (FDIC) rates for banks over a certain size in order to cover the real risk of one of them failing. It would also discourage any from getting that big and incentivize them breaking themselves up into smaller banks to remain competitive. Imagine for example charging four times as much insurance for every dollar over X billion under management as is charged for the money under that threshold.
$145 billion in bonuses makes this group of priveleged people the 53rd largest economy in terms of national income. Just ahead of Kazakstan. If all of them kicked in 5 cents on the dollar, they could double the national income of pre-earthquake Haiti.
Words like “unbelievable” or “obscene” or any of the other cliches can’t come close to describing this outrage.