The Federal Reserve, Bloomberg News reports, gave the biggest banks hundreds of billions in bailout dollars outside of the TARP bailout, and tried to keep it secret. Bailout defenders always say their Reverse Robin Hood policies were necessary to save the economy, and they deny these policies were about saving the Big Banks.
But this Bloomberg story has some telling details:
Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.
For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.”
Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.
The bailouts, combined with some of the regulation that followed, served to not only save big banks, but to make them bigger, consolidating the industry. The Big Banks were given the aura of “Too Big to Fail,” which allowed them to borrow at cheaper rates than they would have been able to get in a free market. This hurts the smaller banks, and strengthens the big banks, thus exacerbating the too-big-to-fail problem.
So, they’re big not because size provides a market-based advantage, but because size provides a government-based advantage. And this size makes our economy less stable.
Yet then-Sen. Judd Gregg, R-N.H., said of a post-TARP proposal to cap bank size: “What it says is if you’re successful … you’re going to break them up? I mean, where does this stop? Do we take McDonald’s on?”
But McDonalds never took bailout money. And, oh yeah, McDonalds didn’t hire Gregg when he retired — Goldman Sachs did.
