Another Day, Another Bank Getting Rich Off Your Money
Bank of America posted a $3.2 billion profit last quarter, and Citigroup earned $4.3 billion. The friend you lent $50 last week so he could afford groceries is showing you his new iPhone. Punch him in the face.
Both companies are still pleading poverty, and the New York Times notes that absent one-time gains—in BofA's case, the sale of shares in a Chinese bank, and in Citigroup's a joint venture with Smith Barney—both banks "would have lost billions."
They also would have lost billions if they hadn't taken somewhere northward of a combined $438 billion in taxpayer funds via TARP. The federal government has bailed out these banks with billions in taxpayer dollars while the number of Americans on food stamps skyrockets and we thrash about trying to find a way to pay for universal health care, and the banks are still saying they are in dire straits but are some how able to squeak out record profits but just this once.
So who's getting that money? Well, the federal government is getting some of it, because it owns a good chunk of both banks. Also getting it will be Bryan Weadock, the bond salesman that Bank of America recently hired at $6 million a year. Citigroup recently tried to lure one executive with a $2 million offer, according to the Wall Street Journal. And come December, both banks will almost certainly pay out billions in bonuses.
As we noted yesterday, this is nothing short of harvesting the money of poor and middle-class Americans so that banking executives can maintain the lifestyles to which they have become accustomed. We should have nationalized the fuckers.
The long-term weaknesses facing both firms are related to their consumer credit divisions—default rates on credit cards are rising because people are too poor to pay their bills, and both banks are heavily exposed. So the guy who's calling you and hassling you to pay your bills works for a company that is profiting handsomely off the money the federal government forcibly removes from your paycheck. When you stop paying those bills because you can't afford them, and your credit is destroyed, burdening you with limited access to credit and higher interest rates for the next seven years, that company, which is paying some bond salesman $6 million a year, will use that failure as an excuse to ask the federal government for more money from your paycheck, if your lucky enough to get one. Even if you can afford to pay your credit card bill, Citigroup and Bank of American are both aggressively raising interest rates and cutting back on credit limits, tightening your budget. Why? Because they're not making enough fucking money.
The fact that our taxes will be going up to pay for all this crap makes us kind of want to agree with the New York Post, which is an awful, awful feeling.