October 27, 2012
Occupy Wall Street
Occupy Wall Street was a passionate peaceful protest that began in the financial district of New York City’s Zuccotti’s Park. This movement stemmed from issues such as social and economic inequality, government corruption, and corporations influence on government decisions. The OWS slogan is “We are the 99%,” which addresses the growing income inequality and wealth distribution in the U.S. between the wealthiest 1% and the rest of the population. These were the core issues in the beginning, but like a ripple affect other issues began to surface. The protest brings attention to issues that some consider moral others economic such as: Why are CEO and presidents of Major Corporation’s still receiving quarterly million dollar bonuses? How is it that the only people benefiting from stimulus checks, bailouts, and tax breaks are the wealthy? Whose job is it to ensure that the wealth is being fairly distributed? These issues can be both economic and moral. These are just some of the questions I will attempt to answer based on the research I have conducted.
In October of 2008 the United States was in the beginning stages of a recession. The banks were on the verge of a collapse partially due to the Wall Street mortgage bonds created from subprime mortgages in the 1990’s under the Clinton administration. The subprime mortgages allowed banks to qualify people for homes that financially they could not afford.
To increase their profit Wall Street began combining and selling the bonds from the subprime loans. In order to stabilize the economy the federal government gave the banks over $700 billion from a bailout fund (Troubled Asset Relief Program). Tarp is a government-loan program. Foreign and domestic banks were assisted with the funds from the program. Of the $700 billion $350 billion was used for the banks. In January of 2009 another issue arose the three major auto companies GM, Chrysler, and Ford were on the brinks of bankruptcy and asked the government for a $34 billion bailout. The government after great opposition gave the companies’ money claiming these companies were too big to fail and that if they went bankrupt, the entire economic system would have collapsed. By March of 2009 the Federal Reserve had committed to $7.77 trillion to stabilizing the economy.
There are a few key issues OWS had concerning the bailouts: The first is why were banks permitted to participate in subprime loans? The mortgage lenders had a fiduciary duty to its clients to verify all income to clients applying for a loan. If they there income did not suffice the loan should have been denied. Second, Wall Street was so focused on boosting profits that they sold bonds that they knew were in fact worth nothing and would eventually start a catastrophic domino effect. Third, if the economy was believed to be going into a recession why were the CEO’s of the banking institutes still receiving huge bonus checks? According to SEIU, Bank of America and Merrill Lynch awarded its traders and executives $6.9 billion in bonuses for 2008, despite receiving a $45 billion taxpayer bailout. Eleven of Merrill Lynch executives and traders were paid more than $10 million each, while nearly 700 received at least $1 million. Also Bank of America offered signing packages to its new Merrill Lynch hires that are even richer than what Merrill paid out at the peak of the economic boom in 2006 and 2007. If Bank of America had the funds to payout large bonuses, how is it that they cut more than 34,000 jobs despite receiving a $45 billion taxpayer bailout? They also planned to eliminate an additional 30-35,000 jobs over the next three years in what would be one of the largest rounds of layoffs in the history of the financial services industry. To add insult to injury Merrill's Lynch CEO John Thain spent $1.2 million redecorating his