Don't Cry For Me Bank Of America Stockholders

My bank's CEO will step down at the end of the year, a fitting end for someone with a role in nearly destroying the world financial markets, as well as nearly toppling his own company after the purchase of Merrill Lynch, with shares down 50% year over year. When someone intimately involved with such bad performance steps down in the real world, they are lucky if no tomatoes hit them on the way out the door. Because this is Wall Street fantasy land, Lewis will collect $53 million dollars.

Ken Lewis doesn't have a golden parachute, but he's all set for a comfortable landing -- unlike his long-suffering shareholders.

The Bank of America (BAC, Fortune 500) chief executive officer said Wednesday he'll step aside at year-end after eight years at the helm. Based on the company's most recent proxy statement, he will have $53 million in pension benefits waiting for him when he leaves.

That should give him about $3.5 million a year in pension payouts for the rest of his life -- at a time when people who bought the stock when he took the reins in 2001 are underwater on their investments.

Although the bank swore off employment contracts and eliminated golden parachutes seven years ago, Lewis can thank a pension plan that dates back decades for his rich retirement rewards.

I'd say that parachute is golden enough, thanks.

I don't want to start railing against pensions, because most people pay into them and earn what they get. But I think a cap slightly below $53 million dollars is probably sufficient. Especially for people like Ken Lewis.

Dick Durbin's Searing Indictment of Banksters On The Senate Floor

Dick Durbin is speaking about the destructive greed of the banksters right now, the ones who torpedoed his amendment to allow bankruptcy judges to modify loan terms on primary residences the way they can on second homes, yachts, cars, and other pieces of property. He was unsparing and did not shy away from the statement he made on local radio in Illinois recently, that the bankers "own the place". He set the needs of regular homeowners, who "don't have any paid lobbyists," against the desires of banks who took hundreds of billions of dollars of taxpayer money and face seemingly no consequence for their bad decisions.

Durbin is a close ally of the President and I feel he wouldn't make a statement like this if he thought it too embarrassing to the Administration. He is trying to spark the American people to demand some change. Obama has done this too, albeit with more subtlety. We need to get their backs.

Here are a couple of excerpts (I'm transcribing):

One other argument that I think takes the cake: "Senator, you understand the moral hazard here. People have to be held responsible for their wrongdoing. If you make a mistake, darn it, you've gotta pay the price. That's what America is all about." Really, Mr. Banker on Wall Street? That's what America is all about? What price did Wall Street pay for their miserable decisions creating rotten portfolios, destroying the credit of America and its businesses? Oh, they paid a pretty heavy price. Hundreds of billions of dollars of taxpayer's money sent to them to bail them out, to put them back in business, even to fund executive bonuses for those guilty of mismanaging. Moral hazard, huh? How can they argue that with a straight face? [...]

At the end of the day, this is a real test of where we're going in this country. Next up, after mortgages, credit cards. Next week, the same bankers get to come in and see how much might and power they have in the Senate when it comes to credit card reform. And the question we're going to face, is whether or not this Senate is going to listen to the families facing foreclosure, the families facing job loss and bills they can't pay, or whether they're going to listen to the American Bankers Association, which has folded its arms and walked out of the room. Well, I hope that we have the courage to stand up to them. I hope this is the beginning of a new day in the Senate, a new dialogue in the Senate, that says to the bankers across America that your business as usual has put us in a terrible mess, and we're not going to allow that to continue. We want America to be strong, but if it's going to be strong, you should be respectful, Mr. Banker, of the people who live in the communities where your banks are located. You should be respectful of those families who are doing their best to make ends meet in the toughest recession that they've ever seen. You should be respectful of the people that you want to sign up for checking accounts and savings accounts, and make sure that they have decent neighborhoods to live in. Show a little loyalty to this great nation instead of just your bottom line when it comes to profitability. Take a little consideration of what it takes to make America strong...

I'll offer this Durbin amendment as I did last year. When I offered it last year, they said, "Not a big problem, only two million foreclosures coming up." They were wrong. It turned out to be eight million. And if the bankers prevail today, and we can't get something through conference committee to deal with this issue, I'll be back. I'm not going to quit on this [...] At some point, the Senators in this chamber will decide, the bankers shouldn't write the agenda in the United States Senate.

There's really not much to add to that. Especially when you see the Senate vote, which is happening right now, surely a defeat for the Durbin amendment. The Senators against this bill have lined up with the banksters, and for good reasons - they fund the campaigns, they throw the best parties, they share the interests and perspective of those disproportionately wealthy politicians. Last night, at Obama's press conference, he offered another hint of how the federal government is so immense that he cannot wield the power to "get the banks to do what I want them to do." Today he lashed out at the small group of hedge funds who forced Chrysler into bankruptcy, not just because they thought they could get a better deal from the bankruptcy judge, but because they'll get paid off on their credit default swaps due to the bankruptcy.

The Obama budget, mostly laudatory, stripped out those elements which would have taxed wealth, instead protecting it in many instances. The system of government in this country has become a system of fealty to oligarchs. Democrats like Durbin made one concession after another on the bankruptcy bill, and still couldn't get enough members of the Senate on board.

We have a major problem in this country, when the banksters hold this much control in the corridors of power. Dick Durbin is opening the window and showing the sick, decayed underbelly inside. Actions like the shareholder revolt ousting Ken Lewis from the chairmanship of Bank of America need to happen more and again. At some point, we can affect these people personally, and really damage them where they live. It's the only way, through a broad-based movement, to overturn this horrible dynamic of financial industry control of government.

UPDATE: 45 Yea, 51 Nay, motion fails. Abominable. Will update with a roll call. This Senate is useless.

UPDATE II: Roll call. Nays included all Republicans and Baucus, Bennet, Byrd, Carper, Dorgan (?), Johnson, Landrieu, Lincoln, Nelson (NE), Pryor, Specter, Tester. Also, some video of Durbin's speech here.



UPDATE III: Ryan Grim shouts out to Ted Kaufman, the first Senator from Delaware to vote against the banks maybe in history. Being a caretaker Senator not planning on running for re-election will do that.

Banks Still Rule Washington, But The Shareholder Meetings?

The bad news is that the Senate is on the verge of gutting that mortgage "cram-down" bill, removing the ability for bankruptcy judges to modify the terms of loans for primary residences of people facing foreclosure.

Democrats Ben Nelson (Neb.), Mary Landrieu (La.) and Jon Tester (Mont.) have indicated to the Huffington Post that they oppose the bill's central measure -- giving bankruptcy judges the power to reduce, or cramdown, a homeowner's mortgage payment under bankruptcy proceedings.

That provision is on the chopping block.

"The bill that the House sent us is a very, very good bill, a very good bill," said Reid. "It would be a terrific bill if we had cramdown in it and it'll still be a good bill if that's not in it."

Cramdown, however, is the guts of the bill, House Speaker Nancy Pelosi (D-Calif.) told the Huffington Post.

"Well, it wouldn't be a bankruptcy reform bill without cramdown in it," she said.

The two versions of the bill would need to be reconciled in a conference committee. "I strongly support [cramdown], but we'll see what happens on the Senate floor," said Pelosi.

I can tell you what will happen, the banking lobby refuses to relinquish the power they hold, and will squash efforts to write down these loans. Because the banks, in the words of Dick Durbin, own the place. So despite the facts that the lenders committed clear acts of fraud on practically all of their customers when handing out the loans, the people will get no relief with the only tool available to them to ensure a level playing field when they try to rewrite the terms.

On the flip side, a shareholder revolt led by institutional investors, state pension funds, union leaders and everyday people got Ken Lewis fired as the chairman of Bank of America. He remains on as CEO but lost the chairmanship to Walter Massey. This may not mean a hell of a lot on its own, but it's a powerful symbol of the anger felt by people out in the country with the banksters. And this will only grow. If Congress refuses to take action on these executives, maybe the people will hold them to account.