Sunday, January 25, 2009

Banks Still Falter

Even after the secret distribution of $350 Billion of U.S. Treasury Money and an accommodating Federal Reserve Policy US Banks are still bleeding. First Centennial Bank in California was seized by the FDIC as insolvent. Over 8,000 Financial Firms and 318 Banks have received some form of Government Bailout, yet the problem still persists. This leads one to believe that the business models, including the employee compensation packages at these corporations are flawed. Fund Managers at these institutions receive millions of dollars in salary and compensation. A second tier fund manager at these institutions receive total compensation packages of $5 million dollars, even if we assume that these managers work 65 hours a week for 52 weeks, which they absolutely do not, that means their average hourly salary is right around $1500 per hour. That is a staggering amount of money, that is the equivalent of 171 hourly workers earning the National Average of $8.73. Is any ONE person worth the labor of 1761 people? There is no way, no matter how you calculate it that these banking executives are worth the hard, physical labor of 171 people.

Maybe the solution to the problems lies in helping the majority, the 171 workers as opposed to the one Banking Executive Millionaire. All working Americans should be outraged that the Federal Government persists in bailing out Millionaires while the average hourly wage of hard working Americans is suppressed by the Congressional failure to act on a fair and reasonable hourly wage law. The average AMERICAN HOURLY WORKER CAN AT MOST EXPECT TO EARN $728,000 FOR WORKING 40 HOURS A WEEK, 52 WEEKS A YEAR FOR 35 YEARS. One Bank Executive is compensated in one YEAR, over 6 times the amount that the average worker makes in a life time. There is no way to justify this disparity. There is certainly no way to justify the debt that the Federal Government is accumulating to Bailout these Banks that continue to pay this unjust compensation to their employees while the American Family is sinking rapidly into the desperation of poverty and despair.

The Federal Government and the Nation would be better served by insuring a livable wage for the Average American and by regulating the banking industry which has sucked the sweat and life from American Families for decades with excessive interest rates. Even with the ravaging of the American Family by the banks with interest rates that exceed 39% on credit cards, 15% on Auto Loans and over double the value of the house on mortgage loans these banks can not balance their books and show a profit because of the excessive greed of the compensation that they take from the banks. If these banks were allowed to fail, newer more efficient entrepreneurs would run banks in different ways and be able to make them work, pay livable wages to their employees and loan money at reasonable rates to the American Worker.

Banks now have access to Federal Money at virtually 0% interest from the current bailout programs of the Federal Government, yet the Federal Government has set no restrictions on the amount that they charge the American Worker for borrowing this money. For there to be any Credit Card or loan in America above a 6% interest rate is a sin of omission by the leadership of this Nation. Interest rates should be restricted by law to be no more than 5.5% above that which the Federal Reserve Loans money to the banks. If a Bank can not survive on a 5.5% margin than they have no business being in the American Industry.

The solution is to rescue the consumer from the grip of loan sharking from the existing banks, not to rescue the Loan Sharks.
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