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July 16, 2009
Posted: 1913 GMT

First it was Goldman Sachs,  Now it's JP Morgan Chase. The banks are making billions of dollars again...and planning bonuses galore!

At one level we should,  of course, celebrate the survival of the banking system. Like it or not, we need banks to make the economy function. But it is a bit galling; just months after they had to be bailed out with hundreds of billions of dollars in cash, that they turn round, hand back the money and start raking it in hand over fist.

All at a time when they are still refusing to lend to consumers, and more and more people are losing their jobs. It is inevitable that we should feel perhaps bitter about this when the outlook is so grim. …the collateral damage as the military might say.

So I say to the Banks – remember,  you survived because of the taxpayer cash,  not in spite of it.

Nothing will enrage us more than having our noses rubbed in an orgy of bonuses and excesses while we dig ourselves out of the crises.  It is something that few of us will forgive. Will you ?

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Filed under: Banking •Business •Quest Means Business •recession

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@nougatine1   July 16th, 2009 7:28 pm ET

"and more and more people are losing their jobs.
So I say to the Banks – remember, you survived because of the taxpayer cash, not in spite of it."
these are the majors problems...they lie...and lie and lie again and we are in the big major "sh...t" we never been since the great depression...and they will renew with the same methods...
I suppose you will not make lot of friends with your article...but I think it's reality...and I think also there is Government for action...

Vic Benedicto   July 16th, 2009 8:34 pm ET

who are the bankowners? if we know their names, maybe we can shame them into giving up their disgusting bonuses and instead lend it out interest free to the jobless.

David   July 16th, 2009 8:43 pm ET

As with many other things the survivors of a market shakeout emerge stronger. The transactions and the profits flowing from them that used to be shared in a more competitive financial environment with the likes of Morgan Stanley, Merrill Lynch, and even offshore players like UBS and Deutsche are now subject to a TARP induced trade barrier. Some potential competitors are gone from the scene, and some, mostly foreign banks, who did not drink at the TARP well, will not get financing deals, new capital expansions, new structured products from the TARP recipients who are the major creators of these transactions.
Protectionism by stealth.

Rene Fernandez   July 16th, 2009 9:13 pm ET

Very well said, Richard. It is really amazing how these bankers behave.

Emerson Paiva   July 16th, 2009 9:38 pm ET

Richard, indeed the banking system is crucial for the economy and indeed banks must remember where the rescue cash came from. I am reading this latest blog post and comparing with the one "Coffee and a muffin, no more". Coffee Republic did not get taxpayers money and went out of buiness. Will banks continue to turn their back to others like Coffee Republic?

Dario S   July 16th, 2009 9:48 pm ET

It is easy for banks to forget from whom they got that money; too bad they do not have same attitude to their debtors.

Those new bonuses, which will be very quietly dispatched, must be part of their new enlightened policy that was expected after turmoil last year.

The worst thing is that this move is not anything unexpected and if this situation isn't this funny it would be sad. Very sad.

Bert Kerkhof   July 16th, 2009 10:01 pm ET

We need more diggers that dig us out of the crisis and positive attention inf the media about them. Tomorrow I send an example news item.

Anuradha Uduwage   July 16th, 2009 10:07 pm ET

"So I say to the Banks – remember, you survived because of the taxpayer cash, not in spite of it." Well said Richard, They all make money using our own money. I still cant get my APR down to single digit where it was before they decided to jack it up behind my back. Why bother trying to keep up the perfect credit scores when they act like this. I am sure they this small profit they made during the recession and use it as an excuse to give some bonus to some CEO. Where as shouldn't I be the one who getting the bonus for contributing my money for them to earn profit...?

Manuel Vilhena   July 16th, 2009 10:27 pm ET

Bankers and top managers that work in banks should have learnt the lesson and not be greedy any more.

Roger   July 17th, 2009 7:02 am ET

My dear Mr. Quest,

I share the antipathy for huge bonusses and overpaid CEO's (most of whom are really not worth their money, at least he ones I know). However, as long as the owners/shareholders and customers are ok with it, who are we to judge?

Regarding the bail-out money; I believe a distinction should be made between those companies that paid back their bail-out dollars in full and those that have not done so (yet). For those companies that paid back the government in full, bonusses are no reason for public anger. For the second group, of course it is inexcusable to pay big bonusses while still in debt to the government and I believe regulation is in place for this?

Jim   July 17th, 2009 8:49 am ET


Once again you miss the main point. Thank God that banks are doing well again! The whole economy hinges on the financial industry. If they are pulling out of the crisis, then the rest of country will follow in good order. If they are making profits, and they returned their TARP money, all the more power to them! Well done! Let them have their seems like they earned them.

nate   July 17th, 2009 10:23 am ET

I disagree.

JPM has paid back all TARP monies and I believe Goldman has as well, not sure about Goldman, and so they can do as they please.

Everything they do is to benefit the shareholders, that is the logic behind every corporation. JPM released a nice dividend this past quarter helping out many people...

Now, if they want reward their employees for working hard and doing well, that's fine. I they want to give bonuses, let them. You can't be jealous because your industry does not provide nice bonuses.

Fawad   July 17th, 2009 12:12 pm ET

You couldn't be "empathizing" with people still experiencing the impact of "economy in crisis." Your attitude is absolutely appropriate, so the bankers won't forget their mess - in the past - is still causing agony.

João Luiz Pasqual   July 17th, 2009 4:40 pm ET

Hello, Richard!

I wonder what was your response to Emerson Paiva, will banks continue to turn their back to others like Coffee Republic?

Blessings from Brazil

Felix Wingert   July 17th, 2009 5:28 pm ET

I think it's a positive signal to the whole economy, but we should also have a look from where does the money come from? Just a half year before, the banks like Goldman Sachs and JP Morgan had really big problems, and now? they make bumber profits. How does this work?
Is it just because of the new accounting policies, or is it a "real" profit and not just cutting away bad stocks,etc. from the balance sheet?

Wes   July 17th, 2009 5:43 pm ET

At first glance once would rightly assume (and cry out) GREED! ... and yes, perhaps some of these Bankers' earnings may seem to err on the side of exorbitance – but ...

Before we decree judgement – remember, it was not directly (I chose this word intentionally) the Banks (and Bankers') fault the economy collapse upon us. The much ballyhooed habit of American People

(Americans exemplify this trait most directly but let be fair – others around the world do so as well)

to consume, consume, and consume is the true perpetrator. The bankers were simply the facilitators, the enablers if you wish. If they did not act as such – I guarantee that many in the American public (private citizens as well as public servants and politicians and/or lobbyists) would have been up in arms about the "greedy bankers withholding liquidity and stifling progress".

If you think it is ok to pay ever-increasing ticket prices to football, basketball, and baseball games – only to see your hard earned dollars (in the millions) go to “undeserving” athletes who only seem to excel at spending it lavishly (and often times foolishly) ~ then you must stop and review the facts before decrying judgement on people who actually make your way of life possible (LeBron may be the King, but he won’t help you get that dream house you’ve always dreamed of!)

jane   July 18th, 2009 10:22 pm ET

i just want to say what an amazing show this is!
richard is such a good presenter – the best
keep up the great work
and keep ringing the bell – its really funny!

Leth   July 20th, 2009 1:14 am ET

Shareholders, shareholders, shareholders. They're the very reason why there's a financial turmoil today.

These shareholders have been the God's of all businesses. Please the shareholders, work for the shareholders, hit our targets for the shareholders, push our revenues higher for the shareholders, exceed the shareholders' expectations.

This is the very cycle that brought down the global economy to its knees:
-Shareholders push the Board
-The Board push the CEO and his executives
-The CEOs and the executives push the senior management
-The senior management push the middle management
-The middle management push those who do the real work, the front liners
-The front liners are forced to go beyond what is right: How? Sell more and more stuff that are beyond reason like these toxic debt instruments that lead to the crash. They are forced to meet unreasonable expectations that start all the way from the top: THE SHAREHOLDERS.

Onno Frowein   July 20th, 2009 9:56 am ET

Nobody and still nobody have explained in objective and economic terms why governments were in such a rush to bail out the banks at the expense of taxpayer's while they continue loosing their jobs and their homes.
My guess is that governments need the banks more than the people to support their massive spending to finance this debt. Who else would?
Washington has changed allright. Now the banks and the Harvard clique have taken over the Obama administration. A lot of words and rhetoric by the President, Bernanke, Geithner and Summers but no results.
Another example of discrimination appeared when the CEO's of the Big hree automakers were critisized for coming to Washington in their private jets for their hearings in December. Nobody even mentioned it when the CEO's of Wall Street come to Washington. On the contrary now the bankers are fighting the US Government regarding payback of the billions in bailouts. This is not only the typical Wall Street arrogance but bluntly a slap in the face of all American taxpayers.
Mr. Obama is responsible for bankrupting the USA and possibly weakening its worldwide economic leadership. China is most anxious to take over this role. China invested $ 600 billion directly in its industries and ordered its banks to invest. Result: economic growth first 6 months of 7.9%. President Lin Tao travels the world to strengthen China's supply of natural resources and oil not to hold empty speeches like Obama.
Obama's popularity in the meantime has dropped to the same level as Bush. The damage by Obama, however, will last for generations!

satish kaul   July 21st, 2009 3:34 am ET

All bonuses & fringe benefits must be taxed saperately.
In the era when Mr. Morarji Desai was our prime ministerin india,(in mid `70`s) all taxes including wealth & gift tax was a ROCKING 101%
of the income.
It can get that absurd.

John Elkass   July 21st, 2009 8:25 am ET

I am in favor of nationalizing all the banks in the USA for one simple reason: they are a conduit for the business corporations and community to get financing. They're not supposed to come up with all these imaginary schemes which could endanger the hard earned cash of every citizen which we unfortunately have seen in the last year or so. banks are not like corporations; they're entrusted with peoples' money and are fiduciary to them. Their task should be and should always be to do all they can to secure this money in the public's interest. Corporations on the otherhand are risk takers which drive our economy; these use their own money and if they lose, they only use their money. Now, you might say that these subsist on loans from the banks; that's true. But, banks shouid be very cautious in lending them. They should demand greater transparency than ususal.

I am happy for these banks to leap back on teh profit scene but not at all with them going back to the status quo that cost us millions of jobs and depleted our pensions coffers.

It's time something more effective be tried and tested so that we never again relive the tragedies of the past years.

mahantesh   July 21st, 2009 2:21 pm ET

Hello Richard,

I like your show very much. I did not know much about economics and learning a lot by watching your show. Keep knowledging people like me.


requiredreading   July 21st, 2009 3:30 pm ET

How exactly did they make the profits? "capital raising"? What does that mean? And does it mean that, now that their profits are up again, they can raise interest rates again, so that now the government can borrow money from the banks again in order to finance their other bail-outs? At higher interest rates? So that in the end, instead of paying interest back to the people, actually it is again the people that will be paying interest to the banks? As well as having lost jobs and all before? I do hope that my reasoning is faulty.

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