Wall Street: The good times are rolling again

Wall Street’s fortunes have always followed a crazy logic of

their own, said Jay Hancock in the Baltimore Sun. “But tell me the last time the gorge between plutocrats and ordinary Americans was this wide.” House foreclosures continue to soar, 15 million Americans are out of work, and millions more are nervously clinging to their jobs in downsizing industries. Now along comes Goldman Sachs, to announce that it earned profits of $3.19 billion for the quarter and plans to dispense $16.7 billion in annual bonuses—an average of $700,000 per employee. Bank of America and JPMorgan Chase may give out up to $30 billion in bonuses each. These are the very firms, mind you, that received trillions in loans from the U.S. Treasury so they could survive the economic collapse—which largely stemmed from their own reckless behavior. The big banks’ gall is beyond comprehension, said Derrick Jackson in The Boston Globe. Goldman CEO Lloyd Blankfein and other company chiefs say that without the whopping bonuses, top employees would flee to other firms. That’s a nice way of saying that banking big shots are a bunch of “professional spoiled brats.”

“Get over it,” said Rachel Beck in the Associated Press. Sure, it feels good to rail against greedy Wall Street, but forcing firms to pay employees less “won’t help a single unemployed American find a job” or pay their mortgage. “If you want something to make you really angry, though, consider this number: $224 million.” That’s how much financial firms spent lobbying in the first half of the year to water down proposed reforms, including tough regulations on derivatives—the complex instruments sold to investors without regard to their underlying value that helped fuel the collapse.

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Let’s not be naïve, said Nicole Gelinas in National Review Online. Wall Street is merely protecting its interests, which is what stockholders and investors rightfully expect companies to do. As for those huge paychecks, the firms “are acting perfectly rationally within the irrational regulatory and market environment Washington has created.” With TARP and other bailouts, Washington made it clear that certain firms were “too big to fail.” So they’re spending wildly and taking big risks looking for big returns. It’s called capitalism, said Jonathan Trugman in the New York Post. “If a trader makes their firm $1 billion profit, why shouldn’t they be compensated accordingly?”

The problem is how the banks are making those billions, said Frank Rich in The New York Times. We bailed out banks in order to unfreeze the credit markets and get loan money moving through the system. But Goldman, et al., aren’t investing in “the real economy,” they’re simply up to their old tricks—“the speculative buying and selling of companies and the concoction of ever more esoteric financial ‘instruments.’” Last week, Goldman’s Blankfein tried to pre-empt the angry backlash over the firm’s profits by announcing a $200 million donation to the company’s education foundation. It brought to mind John D. Rockefeller handing out spare coins to tattered street urchins. Rockefeller’s greed eventually backfired, leading to “Teddy Roosevelt’s trust-busting crusade,” which broke up Standard Oil. But Goldman has Washington wired with its friends, from Treasury Secretary Tim Geithner to the new head of enforcement at the Securities and Exchange Commission—a Goldman alum. In the new era of greed, the trusts and the government play for the same team.