And before you say "Well, Goldman only got $10 billion in TARP funds and paid it back." What we seem to forget is that Goldman underwrote a lot of AIG debt, meaning if AIG defaults without government assistance, Goldman's $3 billion+ earnings this year turns into a multibillion dollar loss. Additionally, Goldman still has to buy back its warrants from the government, which it is shrewdly trying to do below market prices. Talk about appreciation for bailing them out.
Additionally, before we kid ourselves, Wall Street is back to its old ways, only this time it's not with people's mortgages; it's with their lives. They are packaging life insurance policies the same way they did with mortgages, and then hoping that the people they bought the policies from (the elderly and sick, to name two categories they are targeting) die quickly so they get a bigger return on the payout.
When I called Congressman Barney Frank's office and began asking questions about Mr. Frank's willingness to enter legislation to rein in firms that received TARP money but technically paid it back (again, the issue of warrants and AIG underwriting emerges here in terms of Goldman, at least), I was transferred to the House Finance Committee. The nice woman who picked up the phone explained to me that while the House has been working on shareholders' rights issues and corporate governance (where this executive pay cut seems to be stemming from), for firms like Goldman there is no recourse because of the TARP fund issue. When I asked if she knew if the Committee would be introducing legislation to rein in executive pay at firms like Goldman, she said she did not believe so. When I asked if it was even on their docket, she referred me back to the whole shareholder's rights issue and that they have done what they could. When I characterized it as a "Do what you can now, deal with others later"-type situation, she agreed. Going after a firm like Goldman would require a) a serious backbone (they have a lot of money, and C.R.E.A.M. is not just a Wu-Tang song) and b) hard work. Both seem to be in short supply right now in Washington.
I guess when you have Geithner's ear whenever you want it, you can get a lot done. So while most Americans toil and grind each day out at work for less than they used to get (granted they still have a job), the fat cats on Wall Street, who would have lost their McMansions had we, the taxpayer, not bailed them out of a problem that they created themselves, are living it up and will see massive profits and massive paychecks. I guess what's good for Wall Street is not necessarily good for Main Street.
Photo - Lloyd Blankfein, Goldman Sachs CEO (NY Mag)