Broadcast Nets Celebrate Dow 10,000 with Calls to Restrict Wall Street Bonuses
You might think that the three major networks would look favorably upon the Dow Jones Industrial Average (DJIA) breaking through the symbolic 10,000 mark. After all, it they could use it as an opportunity to spin the news as a victory for Barack Obama and his economic policies.
But that wasn't the case. Instead ABC, CBS and NBC used the occasion to point out that the rich on Wall Street are getting bonuses for the performance of the stock market, while others across the country are suffering.
"Now, if an economic recovery is under way, not everyone is sharing in it equally," "CBS Evening News" anchor Katie Couric said. "Pick up today's Wall Street Journal and you'll read banks and securities firms are on track to pay their employees record amounts this year. And, you pick up The New York Times and you'll see some workers are being forced to take huge pay cuts."
CBS correspondent Jim Axelrod, referring to a front-page story in the Oct. 14 Wall Street Journal singled out some Wall Street firms for increased compensation, despite the massive layoffs (by some counts 83,000) of Wall Street employees.
"If you're on Wall Street, it may just be the best of times, an analysis by the Wall Street Journal suggests," said Axelrod. "Looking at 23 top banks, hedge funds, and money managers, The Journal predicts a record high compensation pool of $140 billion, on track to top 2007`s record payout of $130 billion. Could the go-go days be back already?"
Axelrod even named three Wall Street firms, one of which is Goldman Sachs (NYSE:GS), which has put in motion a plan to completely pay the government back the money it received for the TARP bailout.
"The Journal projects at year's end, compensation at Goldman Sachs will be up 99.8 percent. At Bank of America, 63.4 percent, Morgan Stanley comp levels will be up 33.3 percent," Axelrod said. "All this while corporate profits aren't nearly back to pre-crisis levels at all three, which took billions in bailout money."
"NBC Nightly News" took a similar tack on the issue in the wake of the Dow Jones closing above 10,000 for the first time in nearly a year. NBC correspondent John Yang set his sights on banking giant JPMorgan Chase (NYSE:JPM), the bank that was in part responsible for leading the Dow up and beyond the 10,000 mark.
"Talk to economists and Wall Street banks and they'll tell you the recession may well be over," Yang said. "But talk to people here on the streets of Chicago and elsewhere around the country, and you'll hear a very different story. On Wall Street, cheers and applause as the Dow closes above 10,000 points for the first time in a year, driven by a big quarterly earnings report from JPMorgan Chase."
He wanted viewers to contrast the fortunes of JPMorgan to those in other parts of the country, and all the while pointing at the part-government-owner AIG.
"But beyond New York, big numbers of a different kind," Yang continued. "Lines stretched for blocks in downtown Detroit to apply for federal housing aid. In Chicago, hundreds of people looking for jobs jam a career fair, a far cry from the record earnings and bonuses expected this year at Wall Street banks and investment firms. One hundred sixty-eight million dollars in bonuses at insurance giant AIG, bailed out last year with $180 billion in taxpayer dollars, sparked outrage today on Capitol Hill."
Yang then showed members of the House Oversight Committee complaining about the issue of previously agreed upon bonuses paid out to AIG employees.
Over at ABC, the Dow reporting was similar. "The near-collapse of the nation's banks, which occurred a year ago prompted the government to scramble to provide infusions of taxpayer money to prop them up," anchor Charles Gibson said. "But in exchange, Congress wanted to put a lid on big salaries and bonuses paid by the big Wall Street firms. And on that issue it seems, not much has changed."
"Did the banking crisis or recession ever happen?" Correspondent David Muir said. "It would be hard to tell looking at the pay now being doled out by the nation's top banks - by some estimates, a record $140 billion in compensation this year, enough to pay for 2.6 million teachers."
Muir cited the same Wall Street Journal story CBS's Axelrod did, which claims workers at the top 23 U.S. investment banks will earn more than ever. However, both CBS and ABC left out some key details in their reporting of the Journal story. Both Goldman Sachs and Morgan Stanley pay their employees based on the revenue they bring in and revenue from the brokerage portions of their businesses have made that possible.
"Investment banks such as Goldman and Morgan Stanley (NYSE:MS) typically pay employees about 50% of revenue," Aaron Lucchetti and Stephen Grocer wrote for the Journal. "The rate is lower at commercial banks, whose tellers and other retail-banking employees earn less than traders."
And the increased pay at Bank of America (NYSE:BAC) is easily explained as well - they're paying out previously agreed upon bonuses that were negotiated by former mortgage provider Countrywide and investment firm Merrill Lynch, prior to Bank of America's acquisition of them.
"Bank of America is on track to pay about $30 billion, up 64%, the Journal analysis shows," Lucchetti and Stephen Grocer wrote. "But much of that increase reflects Bank of America's purchases of Merrill Lynch and Countrywide Financial Corp. Both banks are on pace to pay less as a percentage of net revenue than they did in 2008."