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More Bonus + Less Lending = The March on Wall Street

Submitted by Static Chaos on 05/02/2010 21:26 -0400

According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program (TARP). (Chart 1)

Excluding mortgage refinancings, consumer lending dropped by about one-third between October and February. Commercial lending slumped by about 40% over that period, the data indicates. All but three of the 19 largest TARP recipients originated fewer loans in February than they did at the time they received federal infusions.

Meanwhile, the average Wall Street bonus soared almost 14 times higher (by 2006); the average worker's salary has essentially been stagnant sine the mid-1980s. (Chart 2)

Wall Street bonuses paid to New York City securities industry employees rose by 17% to $20.3 billion in 2009, according to an estimate released in February by State Comptroller Thomas P. DiNapoli. (Click here for a chart showing bonuses paid from 1985-2009.)

Total compensation at the largest securities firms grew even faster and industry profits could exceed an unprecedented $55 billion in 2009, nearly three times greater than the previous all-time record. In 2008, the industry lost a record $42.6 billion.

Basically, after unloading their toxic assets onto the Fed / taxpayers' balance sheet, Wall Street is able to increase bonus partly through less lending, because with the free money from the government, banks have discovered that lending to businesses and consumers does not give them as high returns as other activities such as juicing up stock markets and commodities.

A 17% bonus increase in a recession year with a nationwide jobless rate of around 10%, coupled with a reduction in lending while receving TARP money - a sure fire recipe for becoming public enemy number 1.

So, no surprise here -- a video from WSJ.com dated Apr. 30 showing thousands of demonstrators rallied against big banks in New York's financial district, calling for accountability and job creation. Wonder if Goldman Sachs employees are still packing guns?

Static Chaos

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Mon, 05/03/2010 - 16:05 | 329571 Number 156

Even if bonuses were flat, hell is still coming. Watch it all blow up when people start getting hungry.

Mon, 05/03/2010 - 15:24 | 329495 Popo

.. if only the jobless rate were as low as 10%...

Mon, 05/03/2010 - 14:51 | 329446 Gimp

When the money men control the government and the mass media outlets they can spew any version of the truth that serves their interests.

Jospeh Stalin would be proud of how America has developed as a nation. Who needs nukes, money is the real weapon of mass destruction.

Mon, 05/03/2010 - 16:13 | 329583 Al Huxley

Goebbels would be very impressed by the propaganda as well.

Mon, 05/03/2010 - 14:50 | 329445 brown_hornet

I'll bet one of the banks that increased lending was Capital One

Mon, 05/03/2010 - 14:14 | 329359 akak

PLEASE do not give any credence, even by repetition, to the government's laughably and insultingly low reported "unemployment" number of around 10%, when anyone with an IQ larger than, well, the reported unemployment number knows that the REAL unemployment rate is much closer to 20%, if it has not reached or even exceeded that number by now. I find the 10% figure one of the more egregiously outrageous bits of Orwellian propaganda constantly thrown at us by the corrupt financial establishment in their fervent and desperate denial of reality.

Mon, 05/03/2010 - 13:23 | 329258 Commander Cody

The huge bonuses, apparently, constitute the trickle-down theory we're hearing about. Anyone benefit from the trickle-down? At least a few Italian sports car dealers and yacht brokers no doubt. Oh, and a few Hamptons real estate agents. All is well! Move along.

Mon, 05/03/2010 - 06:54 | 328838 williambanzai7