'Business as usual' approach simply insufficient for a future financial market
Alexander McDowell
Issue date: 11/10/09 Section: Opinion
The financial crisis that sent U.S., European, and Asian stock markets crashing marked a moment of panic the likes of which we have not had since the Great Depression.
For a short period, we were standing on the edge of the abyss.
Without the government's $700 billion investment in the banks in order to stabilize the market and revamp credit flow, a complete and total meltdown would have been the outcome.
I am not going to pretend I know what caused the financial crisis besides the simple answer of immeasurable greed. I am also not going to pretend that I know how to fix the problems that caused the crisis, besides the simple answer of tighter regulation.
However, I do know that the bailout of the banks cost the taxpayers an obscene amount of money -- money that companies such as Goldman Sachs used to balance their books and essentially use as a get-out-of-jail free card.
At this point, what we should not be saying is, "We bailed out the banks so let's be on our merry way, take a few steps back from the edge and pretend we never looked over in the first place."
Because we will head right back to the same spot and the next time there will be no get-out-of-jail-free card.
On October 15, Goldman Sachs reported quarterly profits of $3.15 billion.
The company set aside $5.35 billion for bonuses and compensation. But it is not us -- the taxpayers -- that the compensation and bonuses are for. It's for themselves. One might not see this as an issue; after all Goldman already repaid the $10 billion it had received from the government, so any profits it makes now should be theirs to keep.
The problem is that Goldman benefited from more than just the $10 billion given to them directly.
They benefited from the entire investment of $700 billion, which was a tremendous risk of taxpayer money.
How does Goldman repay the taxpayers for saving it?
By handing out lavish bonuses and returning to business as usual.
For a short period, we were standing on the edge of the abyss.
Without the government's $700 billion investment in the banks in order to stabilize the market and revamp credit flow, a complete and total meltdown would have been the outcome.
I am not going to pretend I know what caused the financial crisis besides the simple answer of immeasurable greed. I am also not going to pretend that I know how to fix the problems that caused the crisis, besides the simple answer of tighter regulation.
However, I do know that the bailout of the banks cost the taxpayers an obscene amount of money -- money that companies such as Goldman Sachs used to balance their books and essentially use as a get-out-of-jail free card.
At this point, what we should not be saying is, "We bailed out the banks so let's be on our merry way, take a few steps back from the edge and pretend we never looked over in the first place."
Because we will head right back to the same spot and the next time there will be no get-out-of-jail-free card.
On October 15, Goldman Sachs reported quarterly profits of $3.15 billion.
The company set aside $5.35 billion for bonuses and compensation. But it is not us -- the taxpayers -- that the compensation and bonuses are for. It's for themselves. One might not see this as an issue; after all Goldman already repaid the $10 billion it had received from the government, so any profits it makes now should be theirs to keep.
The problem is that Goldman benefited from more than just the $10 billion given to them directly.
They benefited from the entire investment of $700 billion, which was a tremendous risk of taxpayer money.
How does Goldman repay the taxpayers for saving it?
By handing out lavish bonuses and returning to business as usual.
Viewing Comments 1 - 1 of 1
CV writing
posted 1/02/10 @ 6:08 AM EST
I agree that the problem is that Goldman benefited from more than just the $10 billion given to them directly.
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