We’ve had enough warnings, so the Wall Street Journal’s estimates yesterday that the Banks are set for record pay comes really as no surprise.
But let’s juxtapose some figures.
President Obama is seeking to reclaim $90 billion from banks over 10 years.
The WSJ found that the 38 Wall St banks it studied made about $450 billion in this year alone.
The ten year tax – which equates to $9 billion per year for a group of 50 banks – is not even as much as the WSJ estimates the banks are going to pay out in compensation and benefits this year alone – around $146 billion.
And banks are already saying that it is going to hamper profits and crush the recovery?
How exactly?
Jamie Dimon, coming out of his interview with the Angelides Commission where, some commentators are saying, he underwent questioning that was much like being savaged by a dead sheep, as much as told the press that he would simply pass the extra cost onto customers. This is an act that President Obama, announcing the tax, said that he was keen to prevent, saying it should be creamed off the top of the bonuses. And let’s face it, it wouldn’t have that much effect on them if you spread it around.
Elsewhere in the WSJ, the paper reports that the banks have turned out en masse to provide relief for Haiti. It reprints a Financial News list of banks that have indicated that they will provide aid, most of it around the $1 million mark. Goldman Sachs is not listed as a donor, but that might be because they have not publicly disclosed their actions.
But let’s juxtapose some figures again.
Revenues of around $450 billion, that’s about $11.8 billion on average per bank, and they’re offering $1 million each? That’s about 0.00008 percent of their revenues. And President Obama wants them to shave a bit of their bonuses for the tax?
Just to bring it home a bit more, Goldman’s third quarter (that’s three months) 2009 revenues were $12.3 billion. The GDP of the entire island of Haiti in the whole of 2008 was about half that.
Elsewhere at the Angelides Commission where Jamie Dimon, Brian Moynihan, Lloyd Blankfein, and John Mack were being asked questions it was a case of:
Yes, it was our fault, kinda, but we’re not getting into specifics.
No, we’re not going to do anything about it.
No, we don’t need any more regulations because we got them already.
And, yes, we’re still going to pay massive bonuses otherwise all our employees will go and work for private equity, hedge funds and Swiss banks.
Do they get it?
Apparently not.
I’ll just have to reference my “Wall Street is beginning to resemble Clark Gable as Rhett Butler in the film Gone With the Wind. ‘Quite frankly, my dear, I don't give a damn.’” quotation again.
In fact I’ll say it again.
Wall Street is beginning to resemble Clark Gable as Rhett Butler in the film Gone With the Wind. “Quite frankly, my dear, I don't give a damn.”
Paul Hodgson - Senior Research Associate
