Wall Street bankers had recently issued a formal statement in response to continuing calls by the general public to arrest them and put them in jail. Their defense, as shown below in roman print, was regarded by the general public as an insult.
Stung by the adverse public reaction, the bankers, instead of being conciliatory, dug in their heels and amended their original statement point-by-point, as shown below in italics. The bankers thought doubling down would make their proclamation of innocence more persuasive. Needless to say, their arrogance and tone-deaf attitude only made matters worse. It also made it much more difficult for the government to keep angry citizens at bay. This is what happens when an elitist group of bankers believes it can dope slap Americans into submission.
We have been accused of making excessive political contributions in order to influence elected officials to pass favorable legislation. This is true and we make no apologies. It is our protected constitutional right to spend our money as we see fit. Our friends on the Supreme Court upheld this right, as we knew they would. We will continue to be among the biggest political contributors because we know from experience that the money is well spent. The dividends are enormous. Our political donations deliver the greatest return on investment we can think of. Donations are the gifts that keep giving.
Elected officials are never going to refuse our political contributions and we are never going to stop contributing to them. That’s the way pay-to-play works in this country. If you don’t like it, go live somewhere else.
We have opposed the Consumer Financial Protection Bureau because we consider it to be an obstacle to the free enterprise system we cherish. It is counterproductive to have a government agency second-guess how we run our commercial banks and credit card programs. It is an insult to have a government watchdog determine what is best for our customers when we pride ourselves in treating our customers as we would treat our own family. It is foolish to nitpick the fees we apply to credit cards and other financial services. If the government unfairly prohibits one charge or another because it deems it predatory, we will simply shift the charges elsewhere. Bank depositors learned how this works as we began to levy fees on checking accounts and other services, which were previously free of charge. It is a zero sum game. We are a business, not a charity. We have to cover our costs and those costs include meeting our generous payrolls and paying handsome dividends to our shareholders. We believe we have been successful in making the Consumer Financial Protection Bureau a toothless tiger.
What is really needed is a Banker Protection Bureau that nips in the bud any attempt to protect consumers from predatory practices that don’t exist. We routinely give consumers the benefit of doubt, if there are complaints about any fee or charge. Just ask our depositors and credit card holders. We need protection from overzealous bureaucrats, who have nothing better to do than waste taxpayer money by poking their noses in places they don’t belong.
There have been scathing attacks concerning our role as an esteemed advisor to the Federal Reserve. These scurrilous attacks are groundless. Since the creation of the Federal Reserve in 1913, the government has understood the wisdom of having the largest banks in the country attend advisory committee meetings of the Federal Reserve Board. How else would the Federal Reserve know the condition of the U.S. banking system? What the public does not appreciate is how dependent the Federal Reserve and U.S. Treasury are on the banking industry. A strong banking sector is a prerequisite for a strong America. Government officials reach out to us all the time for information and guidance. We provide pro bono assistance and somehow this is construed by troublemakers as being a conflict of interest. If it were not for the timely notifications that we gave the New York Federal Reserve and the U.S. Treasury in 2008, they would not have been aware of the dire condition of our financial system. Fortunately, we had our protégés in high places within the government who immediately understood and responded with alacrity to save the U.S. economy from an unimaginable catastrophe. Together, we quickly formulated a plan to fortify the financial underpinnings of our country. Although there were some casualties like Lehman Brothers and Bear Stearns, at the end of the day, it all worked out. We lived to see another day and so did America.
The Federal Reserve and U.S. Treasury are our partners. Partners do what they do best — they take care of each other. This fact of life was demonstrated for all to see in 2008 when Paulson, Bernanke and Geithner tripped over each other to help us. They couldn’t do enough for us despite misguided calls by some idiots that big banks be broken up or nationalized. Instead of being vilified by the uninformed masses, these individuals should be honored as the heroes they really are for the service they rendered to our banks and our nation.
It is not our fault that the Fed and the U.S. Treasury overreacted and threw money at us in the form of bailouts and guarantees. This was unnecessary and we advised them at the time that it would turn public opinion against us, if we accepted taxpayer funds. We were as solvent then as we are today. Instead of thanking us, public opinion turned against us, just as we predicted. There was even talk of capping our salaries and eliminating our bonuses. This vengeful attitude betrays a complete misunderstanding of the situation as it really was. Not only should we have been praised for our quick response to a national emergency, we should have received record bonuses for our service to America. It has become cliché to say our banks are too big to fail, but the truth of the matter is our banks are too well-managed to fail. We consider it poor form and the height of ingratitude to have the media and the public carp about our salaries and bonuses, which are a small fraction of what we actually deserve. Let us be clear. We make no apologies for our success and the compensation we earn.
The nexus between government and Wall Street is a good thing. The government threw tens of billions of dollars our way in 2008 without us even having to ask. They also made sure all the worthless securities on our books were purchased at par or near par. They kept interest rates at zero ever since then and goosed our profits with Quantitative Easing, both of which worked wonders for our corporate and personal balance sheets. Regardless of how the Fed normalizes interest rates, if that’s even possible, we know we are golden. We know the government will come to our rescue once again, if it’s ever necessary. There’s no way politicians will risk bankrupting a systemically important bank, contrary to claims that they can unwind a big bank in an orderly manner. It’s not possible and it’s not feasible; therefore, it won’t happen. We’re here to stay. Get used to it.
Much has been said about the way we conduct proprietary trading in our capital markets. Some believe we have tilted the playing field in our favor through high frequency algorithmic trading. Nothing can be further from the truth. High frequency trading is not illegal, as some would have you believe. Our partners at the Securities and Exchange Commission, many of whom were our associates when they worked with us at our banks, oversee our trading practices and set the regulations that all market participants must follow. The SEC has assured us that high frequency trading will remain an integral part of the stock market because of the liquidity it provides. If we are manipulating markets like some critics claim, show us the proof. High frequency trading is a major profit center for our business and we do not intend to abandon it. On the contrary, we are actively expanding this lucrative business platform. We are successful traders because we have the expertise and proprietary tools that give us an advantage. Trading is a combat sport and we are very good at what we do. Yes, it is possible to earn profits every single trading day because that is what you expect to do when you are successful. It is not statistically impossible as some claim. Actually, it is quite feasible when you are consistently good at what you do, as we have demonstrated quarter after quarter.
Our friends at the SEC and the Commodity Futures Trading Commission have been investigating high frequency trading for years and haven’t found any problems with the way we conduct our business. Rumors that we use manipulative high-speed trading to front-run and scalp investors are irresponsible slurs meant to denigrate our trading prowess. Our proprietary trading algorithms are the crown jewels of our investment banking business. Market regulators will never ban or seriously curtail high frequency trading because it represents well over half of total market volume. If that kind of volume suddenly dries up, a market collapse will certainly ensue and no one wants that to happen. High frequency algorithmic trading is here to stay and so are the massive profits that we derive from it every single trading day.
Ignorant rabble-rousers say we should be indicted and put in jail for crimes we have not committed. Years of investigations have not yielded one shred of evidence of any wrongdoing on our part. Our friends at the U.S. Justice Department made sure that the wild accusations went nowhere. That’s because our business ethics are beyond reproach. It’s just the way we roll.
You may not like us, but we know in your heart that you really admire us. Most honest and successful businessmen, like ourselves, are envied. It comes with the territory. The people that matter; i.e., the decision-makers in government, love us and will continue to protect us from unfounded allegations. By the way, the statute of limitations has elapsed on any white collar crimes that may have been committed years ago. So, if there are any ambitious prosecutors out there, please be advised that we have run out the clock on any crimes we didn’t commit. None of us will be indicted and none of us is going to jail. So get over it.
Fellow Americans, we hope we have cleared the air. We are not crooks.
We stand ready to serve America as we have done since its inception. We are a proud industry, admired by every nation on the planet. Wall Street stands shoulder to shoulder with its brethren on Main Street. What is good for Wall Street is good for America. God bless Wall Street. And God bless America.
Our doors are wide open for business. Bring us your hard-earned money. Rest assured that your deposits will be managed by men of integrity, whose business ethics are beyond reproach.
Note: For Part 1of this article, go to investmentwatchblog.com/bankers-arrogantly-proclaim-their-innocence-part-1/