Report from the New Bottom Line shows that bonuses would go a long toward helping struggling homeowners.
READ THE FULL REPORT HERE:
PULLING BACK THE CURTAIN.PDF
While the rest of us continue to struggle to put food on the table and keep a roof over our head, Wall Street has once again handed out mammoth bonuses in 2011. The nation’s top six banks—Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs—paid out $144 billion in bonuses and compensation this year, making 2011’s payday the second highest on record for these six firms.
The New Bottom Line report, “Pulling Back The Curtain: The 1% Behind The Big Bank Bonuses” details this and more and is especially timely for two reasons:
1. The big banks are ballyhooing that their bonuses/compensation are way down and the press is buying the spin. They are still awarding themselves billions of dollars when they should be using that money for principal reduction, paying their fair share and providing good loans.
2. The Attorneys’ General and the White House are meeting today in Chicago to hammer out the final details of a settlement that will let the big banks get away with $20-$25 billion in principal reduction. This is nothing compared to the $700+billion of underwater homes right now.
Highlights of the report include:
- The nation’s top six banks — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs — paid out $144 billion in bonuses and compensation for 2011, second only to the record $147 billion they paid out in 2007 at the height of the economic boom.
- Just half of the banks’ bonus and compensation pools would be enough to begin writing down the principals on all underwater mortgages in the country.
- If the six banks took half of their bonus and compensation pool and put it directly into a public service jobs fund, they could create 1.8 million jobs, and still have enough money left over to pay the average employee $60,605.
- Just 72% of the $144 billion in bonuses and compensation at the top six banks would have been enough money to plug the $102.9 billion in budget holes for all 50 states for the current fiscal year.
- The report gives examples of how the money could be spent in California, Colorado, Florida, Illinois, Iowa, Minnesota, Missouri, Nevada, and Ohio. For example, just nine minutes of bonuses and compensation at Wells Fargo would be enough to restore $1.9 million in cuts to the Iowa DNR.
- The report states that average banker pay at the six biggest banks hit an all-time high in 2011. The average employee at these banks will take home $121,209 for 2011, more than twice the national median household income of $49,445. At pure investment banks such as Morgan Stanley and Goldman Sachs, average bonuses and compensation in 2011 were double and triple the $121,209 figure.
“Pulling Back The Curtain” also provides a behind the scenes look at why these bonus and compensations numbers are approved by profiling a cross-section of the six big bank boards of directors.
Given that the country is in an economic crisis triggered by the banks’ mortgage fraud, the report calls on Wall Street to reject these high bonuses and compensations and “start investing back in the 99%” by:
- writing down principals on underwater mortgages;
- doing fair and sustainable loan modifications to prevent foreclosures;
- increasing lending to small businesses;
- making affordable loans to families, states, and local governments; and
- paying their fair share of taxes.
Iowa CCI is a proud and active member of the New Bottom Line, a coalition of community, faith-based and labor organizing groups from across the country working to make life better for everyday people everywhere.
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