As White House and Attorneys General Decide on Big Bank Settlement Today, The New Bottom Line Presses President Obama Not to Accept “1% Settlement” that Lets Banks Off the Hook for Mortgage Fraud
Report details how big bank bonuses could be used to rebuild the economy and profiles web of connections of bank board members who benefit from keeping bonuses high
New York, New York—(ENEWSPF)—January 23, 2012. 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, according to a report released today by The New Bottom Line. Four banks – Bank of America, JPMorgan Chase, Wells Fargo, and Morgan Stanley – were awarded record high bonuses and compensation in 2011, despite their bleak stock performance during the year.
“Even though top bank executives have claimed that bonuses are down as much as 30 percent for 2011, total compensation has not decreased at all,” according to The New Bottom Line’s report, “Pulling Back The Curtain: The 1% Behind The 2011 Big Bank Bonuses.”
Many banks made up for smaller bonuses by increasing base salaries. For example, base salaries for named executive officers at Goldman Sachs more than tripled in 2011. At JPMorgan Chase, named executive officers saw salaries go up 50 percent.
These near-record bonuses come amidst the news that a settlement is near between Wall Street banks and a group of states Attorneys General, including a predicted $20-25 billion in loan modifications and principal reduction. While the big banks continue to profit off the loss of the 99%, this potential sweetheart deal could let the banks off the hook for their crimes and only pay a small drop in the bucket.
“Big banks can crash the economy, take billions of dollars in tax-payer funded bailouts, award themselves more than $140 billion in bonuses and compensation, but can’t afford the necessary principal reduction that would help millions of homeowner?” said Tracy Van Slyke, co-director of The New Bottom Line. “The settlement in its current form is a settlement for the one percent. President Obama must stand with the 99 percent and take the bold and necessary action to hold Wall Street and the big banks accountable. “
The New Bottom Line, which works with foreclosed families and underwater homeowners around the country, has called on President Obama to order a full investigation into the fraudulent and illegal activities of the big banks during the mortgage crisis. The New Bottom Line also maintains that a minimum of $300 billion in principal reduction for homeowners
Instead of going to bonuses and compensation, the report details how this money could used to rebuild the economy decimated by the Wall Street banks during the mortgage crisis. Specifically:
Just half of the banks’ bonus and compensation pools would be enough to write 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 four days of bonuses and compensation at the top six banks would be enough to restore $2.2 billion for local schools in Minnesota.
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” 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. By laying out their web of connections in government, corporate and public sectors as well as their financial rewards, the report demonstrates how it is in the self-interest of these board members to put their corporate cronies’ pocketbooks above the public interest.
These nine board members have also collectively spent more than $680,000 on political donations since 2000, trying to buy influence at both the state and federal levels. The board members examined include: Mukesh D. Ambani, Bank of America; Monica C. Lozano, Bank of America; Robert W. Scully, Bank of America; Stephen Burke at JPMorgan Chase; David C. Novak, JPMorgan Chase; William C. Weldon, JPMorgan Chase; Ernesto Zedillo, Citigroup; Erskine B. Bowles, Morgan Stanley; and William W. George, Goldman Sachs. Burke has spent more than $305,000 on state and federal political contributions since 2000, a figure that is more than six times the annual median household income in the U.S.
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.
The New Bottom Line (NBL) is a new and growing movement fueled by a coalition of community organizations, congregations, and individuals working together to challenge established big bank interests on behalf of struggling and middle-class communities. Together, we are working to restructure Wall Street to help American families build wealth, close the country’s growing income gap, and advance a vision for how our economy can better serve the many rather than the few. Coalition members include PICO National Network, National People’s Action (NPA), Alliance for a Just Society, and dozens of state and local organizations from around the country.