You Can’t Shame the Banks

They, meaning the White House and Wall Street, are at it again. Several banks including American International Group are planning to hand out hundreds of millions in bonuses. AIG bonuses alone amount to $198 million. Those bonuses will go, once again, to its financial products unit, the same unit that led to the financial crisis and forced taxpayers to shell out billions to the troubled financial giant.

And the Obama administration is once again trying to shame, as opposed to actually prevent, them from doing it. This is one moment where I agree with many of the administration’s critics, we need less talk and more action. We need the legislation that stalled last spring when the banks first got away with this crap. Let them object to taxing the bonsues up to 90 percent. Let the executives come out of the shadows and plead their case before the U.S. Supreme Court. If they win, so be it, but fight them every step of the way. And stop talking about how badly they are behaving.
Here’s just a few of White House Senior Adviser David Axelrod’s choice words:

“The American people have limited tolerance for this,” he told George Stephanopoulos on ABC’s This Week. “They don’t begrudge success, and we ought not be in the business of micromanaging how companies compensate. But they ought to do the things that they should to help this country, and that’s lending...and that’s standing down on financial regulatory reform, letting us move forward on the reforms we need."

The White House Chief of Staff Rahm Emanuel told John King on CNN’s ‘State of the Union that "the American people have a right to be frustrated and angry."

"As soon as stability was achieved and things had a sense of a normalcy, what do some of the titans of the financial industry do?… They’re literally going and fighting the very type of regulations and reforms that are necessary to prevent, again, a crisis like this happen[ing]…They assume everybody else has, basically, short-term memory problems around here.”

Harsh words. The problem is they are only words. They are meaningless. Think about the reality TV show Fear Factor, proof that positive people will endure many things for money. Think about Bernie Madoff, proof that people will pillage the retirement plans of senior citizens. These bank executives, whose identities are still hidden, can surely withstand a little shaming in the public square as long as they walk away with millions.

The reality is, you cannot shame the banks from taking millions of dollars of your money. If they con you out of your money twice, it’s your shame, not theirs.

You must legislate, understanding completely that this is America and money always wins out in the end.

Deja vu

This whole bonuses issue may sound familiar. That’s because it is. We were just outraged last spring. We already heard Obama say the bank’s behavior was inconceivable. We heard vague promises about executives giving the money back. Now its fall, and out of the $168 million in bonuses that were handed out by AIG, less than $10 million came back.

This unwarranted civility, when there is so much money at stake is inconceivable. When you have an unemployment rate of 10 percent, one out of five homeowners who owe more on their home than its worth, a record deficit and bank executives, who caused it all, taking home millions in bonuses, harsh words simply won’t suffice. This administration— as if Afghanistan, health care reform, the recession, the record deficit, gays in the military and right wing conspiracy theories weren’t enough— could be destroyed by legitimate populist rage.

Devona Walker is TheLoop21.com's senior financial/political reporter and blogger. She can be reached at devona@theloop21.com.