Matt Taibbi - Why Wall Street Should Stop Whining
Everybody on Wall Street is talking about the new piece by New York magazine’s Gabriel Sherman, entitled "The End of Wall Street as They Knew It."
The article argues that Barack Obama killed everything that was joyful about the banking industry through his suffocating Dodd-Frank reform bill, which forced banks to strip themselves of "the pistons that powered their profits: leverage and proprietary trading."
Having to say goodbye to excess borrowing and casino gambling, the argument goes, has cut into banking profits, leading to lower bonuses and more extreme decisions like Morgan Stanley’s recent dictum capping cash bonuses at $125,000. In response to that, Sherman quotes an unnamed banker:
"After tax, that’s like, what, $75,000?" an investment banker at a rival firm said as he contemplated Morgan Stanley’s decision. He ran the numbers, modeling the implications. "I’m not married and I take the subway and I watch what I spend very carefully. But my girlfriend likes to eat good food. It all adds up really quick. A taxi here, another taxi there. I just bought an apartment, so now I have a big old mortgage bill."
Quelle horreur! And who’s to blame? According to Sherman's interview subjects, it has nothing to do with the economy having been blown up several times over by these very bonus-deprived bankers, or with the fact that all conceivable public bailout money has essentially already been sucked up and converted into bonuses by that same crowd.
No, it instead apparently has everything to do with the Dodd-Frank bill, and specifically the Volcker rule banning proprietary trading, which incidentally hasn’t gone into effect yet.
He quotes Dick Bove, the noted analyst who last year downgraded Goldman Sachs. Bove’s quote on the bonus sadness:
"The government has strangled the financial system," banking analyst Dick Bove told me recently. "We’ve basically castrated these companies. They can’t borrow as much as they used to borrow."
When I read things like this I’m simultaneously amazed by two things. The first is the unbelievable tone-deafness of people who would complain out loud, during a time when millions of people around the country are literally losing their homes, that their bonuses – not their total compensation, mind you, but just their cash bonuses, paid in addition to their salaries and their stock packages – are barely enough to cover the mortgage payments for their new condos, the taxis they take when walking is too burdensome, and their girlfriends with expensive tastes.
Read more: http://www.rollingstone.com/politics/blogs/taibblog/why-wall-street-should-stop-whining-20120208#ixzz1lrR93tDc
