The nation's top six banks paid out $31.2 billion in 2008 bonuses this past winter, and in the first half of 2009 alone, they set aside another $74.4 billion for bonuses and compensation for their employees.
The top six banks posted $29.6 billion in profits in the first half of 2009, just months after accepting $160 billion in direct TARP infusions. However, as George Soros points out, their "profits come from the American taxpayer. http://www.reuters.com/article/businessNews/idUSTRE59M5K720091023?feedType=RSS&feedName=businessNews
The banks made these handsome profits by embracing the same kind of excessive risk-taking that caused the crisis in the first place: by trading highly-complex derivatives, by repackaging mortgage-backed securities, and by making predatory loans to low-income, high-risk consumers who typically cannot afford to pay them back.
Rising fees also contributed to the banks' bottom line. Americans will pay more than $38 billion in overdraft fees alone in 2009, more than $125 for every man, woman, and child in the United States.
Banks also raised credit card interest rates on American consumers in an effort to boost their profits before the new credit card reforms take effect next year.
Even as they continue lending to large corporations and private equity firms, the banks have drastically reduced their small business lending. Lending through the SBA's main program decreased 42% over the previous year in the first seven months following the bailout.
4. Banks Standing in the Way of Reform. Despite taking trillions in bailouts, the banks are now using our money to lobby against reforms that would protect us from their abuses. In the nine months following the bailout, companies in the financial, insurance, and real estate sector spent $321 million lobbying against federal reforms such as the creation of the Consumer Financial Protection Agency, limits on bonuses, overdraft fee regulation, credit card reform, loan modification proposals that could help keep millions of Americans in their homes, and a ban on payday lending.
This is not what we signed up for!
It's time for a real economic recovery. As Wall Street celebrates ˜green shoots' in the economy and points to signs of recovery, its dà jà vu. The market was celebrating signs of recovery last year too, just months before the Lehman Brothers collapse.
Meanwhile, Main Street is still hurting. We don't need bankers trying to convince us that happy days are here again. We need real regulatory reform now so that we can have a real economic recovery on Main Street.
A year ago, Lehman Brothers' collapse shook Wall Street to its core and set off an economic crisis that threatened the foundations of the entire global financial system. In the flurry of bank failures and near-failures that followed, household names like Merrill Lynch, Washington Mutual, and Wachovia either disappeared or got swallowed up by competitors. Within a week, there were no more big, independent investment banks on Wall Street.1
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