Wall Street's Top Three Banks to Receive $49.5 in Bonuses

Despite creating the worst financial crisis since the Great Depression with deceptive, potentially fraudulent trading practices that have left Main Street in ruins, the top three Wall Street banks will be handing out $49.5 billion in bonuses

Despite creating the worst financial crisis since the Great Depression and being bailed out by taxpayer dollars -- while millions of Americans are unemployed, living in poverty, hungry, facing utility cutoffs, homelessness, foreclosures and bankruptcy -- colossal $49.5 billion year-end cash and stock award bonuses for 2009 will reportedly be handed out by the top three major American banks and financial firms. In the last year Main Street has repeatedly gotten shafted while Wall Street has bounced back. Little mention has been made in the media about the brief article that was published on the inside pages of the January 1 New York Times entitled 'With Bigger Bonuses, An Upside for Banks.' The article cites an accounting and tax analyst in New York who estimates that U.S. banks will hand out $200 billion -- roughly equal to the annual median salary of 4 million American workers -- in total compensation. That figure does not include the hedge fund industry. Goldman Sachs, JPMorgan Chase and Morgan Stanley received $45 billion in cash after Congress passed the Troubled Asset Relief Program (TARP) in October of 2008. Goldman Sachs also received much of the TARP money that was given to AIG to be used to pay them back. Unsurprisingly, the TARP law allowed the bailed out banks to do what they wanted with the money without strings and without requiring that the banks tell the government how they were using taxpayer funds. Banks Have Continued Profiting at Taxpayer Expense Instead of regulating the speculative practices that caused the financial crash of 2008 and holding the perpetrators accountable, the U.S. government underwrote bank profits and egregious bonuses by pumping trillions of dollars in cheap credit and keeping interest rates at near-zero. A little over a year after the economic meltdown, under the guise of 'financial reform,' the House of Representatives has passed a bill that guarantees banks up to $4 trillion when their deceptive actions once again brings the economy to its knees. While the banks have continued profiting at taxpayer expense, the American people have lost $11 trillion in wealth. Most of the losses happened because Wall Street's housing bubble collapsed. Despite the misleading guarantees of the Bush administration and then-presidential candidate Barack Obama that the bailout would enable banks to resume lending, banks have virtually stopped lending since the economy came crashing down. As noted by WSWS, banks have played a major role in deepening and prolonging the recession by curtailing lending, despite making large profits through deceptive, potentially fraudulent trading practices. One major factor in the miraculous rebound of the financial markets was the fact that the government refused to impose any serious reform, which is hardly surprising since bank regulation is nothing more than a charade. According to the New York Times, the banks will reap $80 billion in tax savings from the $200 billion in compensation, since most employee compensation is a tax deductible expense under existing laws. Goldman Sachs, which expects to hand out $23 billion in bonuses, will get the biggest tax break. Because of the existing tax laws, Goldman Sachs will save about $9 billion in federal income taxes on the 2009 bonuses it pays out. Collectively, Goldman Sachs, JPMorgan Chase and Morgan Stanley will gain nearly $20 billion in tax breaks from the 2009 bonuses handed out. Too-Big-To-Fail Banks Have Grown Bigger While bank profits and bonuses have continued surging and the too-big-go-fail banks have grown bigger, the U.S. stock market has suspiciously recorded massive increases. The market cap has increased by more than $6 trillion since March 9 of last year, but the source of new money that pushed the stock prices up so far so fast is, as of yet, unidentifiable. As 2009 proved, the Wall Street bailout has not trickled down to Main Street. Wall Street is the only place that has a never-ending abundance of cash flow and the only place where pay is escalating. As noted by AlterNet, the real locus of the problem was on Main Street, in the real economy, not the bailout of Wall Street. Before the crash, America had fallen into deeply unsustainable debt because it had no other way to maintain its standard of living, primarily because for so many years almost all the gains of economic growth have been going to a relatively small number of people at the top, some of which hold -- and have held for too many years -- key positions in the Federal government. The great divide between working Main Street Americans and Wall Street's financial elites will continue widening as long as the concentration of wealth is at the top, and the Great Recession won't end in the real economy. The Obama administration and the Democrats, in keeping with the methods of the Bush administration and the Republicans, have made it abundantly clear that their chief mission is to rescue the vast personal fortunes of the Wall Street executives and the financial oligarchy that has bought and paid for them. The government has no intention of implementing genuine reform, let alone taking care of Main Street.