Greedwashing on Wall Street

Submitted by Mary Bottari on

All eyes are on Wall Street this week as the big banks get ready to report their earnings and bonuses. Rebounding banks are preparing to pay out bonuses that rival those of the pre-crisis boom years.

During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation.

To avoid pitchforks and public outrage, most banks are tamping down on the cash payouts and beefing up long-term stock options. One bank is taking an even more novel approach. Dare we call it greedwashing?

Goldman Sachs is coming off one of its most profitable years in its 141-year history. This profitability was made possible through extraordinary government interventions. Goldman was given $10 billion in TARP funds, repaid with interest, but that was just the beginning. After the $182 billion taxpayer bailout of bankrupt AIG, Goldman received $12.9 billion, without having to take a discount. This was due directly to the intervention of the New York Fed, headed by Tim Geithner. The continuing drip, drip, drip of revelations of this deal threatens Geithner’s tenure as the Treasury Secretary. The Fed also allowed the investment firm to reorganize as a bank holding company, giving their investors the backing of FDIC insurance and access to the Fed’s discount window. Now Goldman can borrow at very low interest rates and lend at 10 percent or more. Even worse, it continues to act like an investment bank, but now its risky moves are backed by the American taxpayer.

As Goldman gets ready to announce bonuses anticipated to be worth around $595,000 per employee, the press team at Goldman Sachs has been working overtime to come up with clever ideas on how to defray public anger at firm. Remember when they announced their plan to mentor and loan to small businesses? Now they are thinking of creating a rule that would require all their top employees to engage in charitable giving.

According to the New York Times the idea would be similar to a program at the failed investment bank Bear Stearns, which required its top workers to give four percent of their pay to charity each year. The firm then checked their tax returns to make sure they did it. Can you feel the love?

Greenwashing is the unjustified adoption of environmental virtue by a firm or an industry to create a pro-environmental image. You remember British Petroleum’s multimillion dollar TV ad campaign trying to brand themselves as “Beyond Petroleum” with the cute little green flower?

Goldman and other banks are on the frontlines of greedwashing, masking their extraordinary paydays -- which were only made possible by taxpayer support -- in virtuous endeavors.

I have a better idea. Instead of asking top officers to sacrifice, let simply apply a tiny tax to every single Wall Street trade, and put that money to work rebuilding the real economy that Wall Street shattered. his would not only take the air out of the bonus bubble, but it would put Wall Street back to work serving Main Street -- a job description they have long neglected.

Banking
BanksterUSA
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Real Economy Project
Mary Bottari
Mary Bottari

Mary Bottari is a reporter for the Center for Media and Democracy (CMD). She helped launch CMD's award-winning ALEC Exposed investigation and is a two-time recipient of the Sidney Prize for public interest journalism from the Sidney Hillman Foundation.

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Comments

Anonymous replied on

The reqiurement of giving a certain portion of one's income to charity actually reminds me of a system I had thought up for taxes, that I call "de-bundling." It is an attempt to find a way to increase democratic participation while taking into consideration the capitalist sympathies of this country. The way it would work would be that each governmental office estimates and publicly publishes the cost of maintaining that function. The taxes paid would not go to a uniform pool but to the direct office that the taxpayer chooses. This way, the public votes with dollars. It might be tyrannical, but at least the public would bear responsibility for underfunded organs of the government. Also, (and this is where the de-bundling comes in) politicians would no longer be able to bundle issues and split votes the way they do for their campaigns because people would be deciding what to fund themselves. Ideally, institutions would spring up for the purpose of keeping the governmental offices from lying about their functions and their effect in the name of educating the taxpayer. These could become a powerful check against corporate media. Or would this system just be a corporatization of government in the first place?

EK replied on

Really interesting thought. Definitely worth mulling over a bit more and hashing out with friends. One potential big pitfall I see at first blush is the old "tyranny of the majority" problem. However, with a pool of money possibly being earmarked towards that, with the bulk being able to be freely allocated by the individual, this could potentially be partially avoided. Another issue would be corruption, such as bribery, etc. But this happens currently anyways, so not much difference there. I'll have to think about this idea a bit more. Thanks for putting it out there.

Deborah Boschman replied on

This is ALL simply NOT okay. I fear America is on the verge of economic COLLAPSE and RUIN of monumental proportions! This greed simply CANNOT continue. This reminds me of that song, "When will they ever learn?" I fear that America is on the verge of absolutely MONUMENTAL, CATASTROPHIC collapse. One of these other emerging world powers will then take over in world dominance. The Bible even predicts that these events will occur and you can "see" the writing on the wall with ALL of the greedy decisions that are repeatedly and continuously being made. All America needs yet is a natural disaster or two; a few earthquakes, etc. and then they will lose their power and position. There will be a shift then. I'm NOT looking forward to this, nor do I want to see this occur but I feel that it is ONLY a matter of time before we will see this happen.

EK replied on

Thanks for the article - Goldman in everyone's pockets ... as usual. One small point: I don't know if Wall Street's job description was ever to serve Main Street. The government is supposed to serve Main Street. That is the sole servant of the people - our one organ of the collective, however flawed and corrupted it may be. There' s a problem when people start to believe that Wall Street has some kind of mandate to serve "the people" as a whole (rather than just their shareholders). I still have no idea how people began believing this idea. There's simply no foundation for this. It's a problem because people lose sight of the fact that Wall Street needs to be watched closely and sceptically. Even the "invisible hand" theory never posits service on the part of economic powers or anyone else for that matter. Wall Street serves itself. The underlying problem with greenwashing is the incredible imbalance of economic power that allows those with resources to succeed in pulling these kinds of stunts off. Maddening stuff.