As we rebuild, let's remove control of wireless spectrum, cloud infrastructure, and broadband internet from corporate hands and put it under public, democratic control.
Federal regulators have actually been cracking down somewhat lately on financial industry fraud. But the power-suited executives responsible for that fraud are still paying no personal price.
What should we, as a society, be doing about all those reckless financial industry executives who helped trigger the Great Recession? Should we be putting these execs behind bars? Or should we forgive and forget and let them collect hundreds of millions of dollars in new rewards?
These questions now stand answered. The Equilar executive pay data firm reported last week that the five highest-ranking execs at 18 top U.S. financial firms together pocketed — in the worst 12 months after Wall Street’s 2008 meltdown — stock awards now worth nearly half a billion dollars.
Meanwhile, not one top financial exec has yet seen the inside of a jail cell, despite massive instances of fraud at the firms they’ve been running.
How widespread has this fraud been? The Securities and Exchange Commission, the federal watchdog over Wall Street, has so far “collected $2.2 billion in penalties, disgorgement, and other monetary relief from cases related to the crisis,” the New York Times reports.
And that total doesn’t count the $25 billion settlement with banks that the Justice Department announced last February — over fraudulent foreclosure practices — or any of the $536 million in refunds and penalties the new Consumer Financial Protection Bureau has won since July from three major credit card companies.
Not one cent of all these millions and billions has come directly out of the pockets of senior financial industry executives. Millions and billions have instead been pouring millions into the pockets of these executives.
Consider Capital One Bank, the “don’t-leave-home-without-it” credit card giant. This past summer, Capital One agreed to pay $210 million in refunds and fines after federal regulators caught bank staff misleading customers on credit scores and falsely claiming that paid add-on services came at no charge.[pullquote]Financial industry execs have parlayed a huge stock market rebound — fueled by taxpayer-financed bank bailouts — into immense personal windfalls.[/pullquote]
Capital One’s top five execs could pay a good chunk of that $210 million just from the pay they pocketed in the one year the new Equilar executive pay analysis has tracked. From mid 2008 to mid 2009, these five Capital One execs gobbled up stock and stock option awards then worth $19.9 million.
At the time of that award, Capital One shares were selling at bargain-basement prices. Since then, the entire stock market has rebounded, Capital One shares included. Equilar puts the current value of the $19.9 million in stock and options Cap One’s execs received four years ago at $114 million.
The five execs, insists a flack for Capital One, deserve every bit of that reward. They “delivered,” the flack explains, “solid results in 2009.”
Solid as smoke and mirrors. The five execs ran a company that bamboozled consumers. They parlayed a huge stock market rebound — fueled by taxpayer-financed bank bailouts — into immense personal windfalls.
But let’s not dwell on just Capital One. American Express last week agreed to pay $112.5 million in refunds and fines. The company, regulators found, has been charging illegal fees and reneging on discounts promised to consumers.
At the stock market low point in 2009, notes Equilar, American Express generously stuffed the pockets of its top five execs with options then worth a measly $7.6 million. The current value of these options: $91.2 million.[pullquote]In just one Great Recession year, 80 top financial execs grabbed stock and options now worth a stunning $457 million.[/pullquote]
All told, between July 1, 2008 and June 30, 2009, the 80 executives at the 18 U.S. financial firms that Equilar examined grabbed stock and options now worth a stunning $457 million.
Some of these execs, we now know, ran companies guilty of massive frauds. And why should we expect, asks consumer advocate Dennis Kelleher of Better Markets, anything but widespread fraud out of Wall Street’s finest?
“If you are an executive,” he notes, “you know that the chances of getting caught are infinitely small, and the chances of getting caught and prosecuted are even smaller.”
On Wall Street and elsewhere in Corporate America, crime clearly pays. Back in the Great Depression, curiously enough, we took a different tack toward Wall Street crime. The nastiest of America’s super-rich wheeler-dealers went to jail.
In 1938, for instance, prosecutors sent New York Stock Exchange president Richard Whitney upriver to Sing Sing. Six thousand people gathered at New York’s Grand Central Station to watch armed guards shuffle Whitney onto the prison-bound train.
We don’t, of course, do prison trains anymore. But planes would do.
Veteran labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, will appear this fall.