Why Critics of Wall Street Exist Among Avowed Capitalists
A Wall Street banker friend of mine dismissed Occupy Wall Street as a bunch of socialists with too much time on their hands. Indeed, I myself criticized the protestors in an interview on CNN recently by saying that I lived under socialism in Western Europe for 11 years and the complete meltdown of their economies shows it leads to bankruptcy. I believe that people who can work have to work. I believe the government should be kept small and empower its citizens to be self-sufficient. I believe that human dignity is achieved through individual effort and receiving handouts undermines our self-sufficiency and our self-confidence. There have been times in my life wherein, due to financial pressures, I have had to turn for help from others. I obviously never felt good about it. It was humiliating and I cannot imagine that anyone would believe that economic dependency of any kind should be a first choice. While government must, of course, provide a safety net for those in need, it dare never create an unhealthy reliance. But we should not dismiss the protests outright for, whatever they have morphed into, there exists an important message that ought to be heard.
About eighteen years ago I started writing columns about how the banking industry is taking over every other profession. My students at Oxford, where I had already served for four years as Rabbi, would discard their training as doctors and attorneys if the investment banks made them offers. I worried that the brain drain into banking would handicap professional talent in so many other sectors. How could it not? With the banks offering starting salaries in the hundreds of thousands of dollars and the potential to make tens of millions a year, you had to be crazy not to accept it.
But even I could not foresee hedge fund managers routinely making half a billion dollars a year or feeling like failures for making just 10 to 20 million, a phenomenon I addressed in my book “The Broken American Male.” Now, since I am an avowed capitalist, why should there be any issue with banks or those who have legitimately found a means by which to produce staggering wealth, especially when a great many of the hedge fund managers known to me are highly charitable?
For two reasons. The first is that any of us who have dealings with banks have learned just how awful they can be, how condescending, how greedy, and how dismissive. The second is that there seem to be two standards, one for Wall Street the other for Main Street, and to the extent that OWS has garnered wider support then it deserves it’s because Wall Street refuses to reform itself and insists on retaining unfair privileges.
I have earlier written of my battle with Bear Stearns over my treatment at the hands of a trader who tried to gorge me with fees. Then I had my issues with JP Morgan Chase and how, amid tens of billions of dollars in TARP money they received, they obstructed virtually every effort I attempted at a mortgage adjustment, which was the purpose of them receiving government assistance in the first place. Just getting someone on the phone was a near impossibility and it was common, after waiting an hour to speak to someone, to suddenly have the line drop and nobody call you back. I have also had my run-ins with American Express and the utter incompetence and arrogance of some of the staff associated with the elite cards they offer, even as they charge you an annual fortune to have it. And if these were just my experiences you could dismiss me as a grouch. But in the most prestigious and reliable news outlets you will see endless horror stories of how the banks treat their customers.
The same arrogance is manifest in the fact that the fund managers are insisting on retaining their absurd 15% capital gains loophole. Said loophole allows hedge fund managers and private equity firms to treat a substantial portion of their compensation as capital gains, meaning they are taxed at 15% rather than the 35% rate that applies to income such as wages and salary.
To be sure, I think all taxes in this nation are way too high, and the last thing I want to see is tax raised anywhere. But I don’t want us little people to be suckers either. And the idea that the tax rate is 35% on income over $379,150 but fund managers like John Paulson, earning as much as $15 billion in a single year, are able to pay a 15% tax rate on the majority of their income is unfair.
The same of course applies to the bailouts that were given to banks but did not trickle down to end users like me. In August of 2009 The New York Times released a story detailing former Treasury Secretary Henry Paulson’s calls to his former firm, Goldman Sachs, in the days leading up to the A.I.G. bailout and financial collapse of 2008. Paulson asked for and received an ethics waiver from both the White House counsel’s office and the Treasury Department, allowing him to speak freely with Goldman Sachs chairman Lloyd Blankfein. Information obtained by The Times shows that during the week of the A.I.G. bailout Paulson spoke with Blankfein two dozen times, making their communication far more frequent than with any other bank chairman. Goldman Sachs, of course, was the bank that benefitted most from the A.I.G. bailout. All of the above highlights a huge conflict of interest that the public is arrogantly told to accept as necessary on account of the “too big to fail” notion.
And why, when the banks are borrowing money at .25% from the Federal Reserve, do we have to borrow at a minimum 3.25% prime rate that is often far greater for individuals with even a single credit blemish? Why the huge spread?
This is where the objectors to Wall Street are gaining traction even among avowed capitalists, by demonstrating to the public that too many bankers insist on a privileged position, as if they are masters of the universe whom we have to support.
I don’t want to see Wall Street punished, and I don’t want bankers treated any worse than anyone else. I reject class warfare. If people work hard and find ways to become extraordinarily wealthy, God bless them and I hope they devote huge sums to charity. But just as the bankers should not be treated worse, then should be treated better, either. What is needed is an even playing field which, once achieved, will help reestablish the credibility of bankers and undermine their opposition.
Rabbi Shmuley Boteach has just published of “Ten Conversations You Need to Have with Yourself.” (Wiley) and will shortly publish “Kosher Jesus.” Follow him on his website www.shmuley.com and on Twitter @RabbiShmuley.