Fighting Against Wall Street’s Greed

Obama finally pulls out the taxation weapon against the banks. It’s the simplest and most effective antidote against the greed of an industry that most Americans regard as a leech. But the birth of the “responsibility tax” was not easy.

In the past Washington had reacted with skepticism to the two proposals that came from Europe: the “Tobin tax” on all global financial transactions (recently vindicated by British Prime Minister Gordon Brown) and the tax on bankers’ salaries wanted by France and England.

The U.S. Treasury Secretary Timothy Geithner had discarded both because he believes that that kind of taxation would be immediately passed along by banks on their customers.

Now Obama has silenced all the objections by Geithner, who’s considered a bit too close to the interests of Wall Street.

The new tax on banks will help to recover a part of the bailout, reduce the public deficit and placate popular anger against Wall Street.

It isn’t a coincidence that the announcement comes on a “hot” week on the banks’ front. Even the New York State Attorney General Andrew Cuomo has prepared an offensive: he asked the eight banks that benefited from the bailout for data on 2009 salaries.

Also, yesterday a congressional committee began an investigation that should shed light on the responsibilities of lending institutes in the great crisis of 2007-2009.

And tomorrow the season of financial reports begins. This is destined to cause a scandal with the banks because salaries and bonuses will be announced. The combination of salaries and bonuses for some banks will exceed the record numbers set before the crisis.

Goldman Sachs will distribute $600,000 on average per employee. At J.P. Morgan Chase the average wage is expected to exceed $460,000. At Citigroup, the most ruined bank, the head of investment banking, John Havens, will receive $9 million. At a time when 10 percent of the American workforce is unemployed, this spectacle of greed in Wall Street stirs anger.

An editorial in the New York Times, which describes the arrogance of the bankers, evokes the image of Marie Antoinette on the eve of the French Revolution and her response to the people without bread: “Let them eat cake.” In the same newspaper, columnist Frank Rich indicates that Wall Street is as much of a danger to the stability of the United States as Al Qaeda.

Even a retired banker, the founder of Citigroup John Reed, is appalled: “The bankers have learned nothing from the crisis. They seem to live in another world.”

Indignation has been expressed even by the head of economic advisers to Barack Obama, Christina Romer. “The season of bonuses,” she said, “would be an insult to the American citizens. I personally feel offended.”

The banks have defended themselves, saying they returned nearly all the state aid. In reality, the Treasury estimated that the American taxpayers have lost $120 billion to save Wall Street.