Goldman Sachs released its income and expense data for the second quarter of 2012. Revenues are up 4% from the first quarter, but down 17% over the same period last year, and for the first six months of 2012, they are down 13% over the same period last year. Net earnings (profits) are down 55% over the first quarter. For the first half of 2012, net earnings are down 12% over the same period last year.
Compensation is a different story. For the first six months, compensation is 44% of revenues (p.4), compared with 42.4% for all of 2011. P.55 That includes a reduction of 9% over the first quarter. In contrast, dividends to common stock were $.46 for the quarter, amounting to approximately $230 million. Shareholders get 3.5% of the revenues and insiders get 44%? Really? Whose money is at risk, again?
That’s modern capitalism for you, lousy results don’t lead to lousy rewards for the insiders. Greedy bankers taking all the money, who could have imagined?
This story fits right in with Jennifer Ablan’s title in a Reuters piece: Banks Behave Badly redux: Is It Killing Confidence? She gives a quick rundown of the various crimes and frauds of the financial sector, and describes investor withdrawals from equity mutual funds and pretty much anything smacking of risk. She gives regulators a passing smack, not as hard as they deserve, but no doubt investors noticed that no one from Wall Street has gone to jail, or even been investigated, for the massive criminal corruption that led to the Great Crash.
She misses several components, though. We all know that big investors get an edge. Gretchen Morgenson confirms that the big investor funds get a heads up on changes in opinions of major analysts, the people whose views can have a big impact on the prices of the securities they follow. The major banks are repeatedly caught doing business with money-launderers, Ponzi Schemers, check-kiters and even terrorist organizations. The scandal today is HSBC, but there are plenty of others.
But the biggest problem is the arrogance of Wall Street and its corporate counterparts: they really believe that all those CEO Worship stories they get from an adoring media. Look at this picture of a preening Jamie Dimon, giving it his best gazing into the future of Randian Glory for the business paparazzi. And that isn’t all, we non-Wall-Streeters, otherwise known as “muppets”, need to revere them, praise them, and never, never hurt their feelings by using ugly descriptions like pirates, or thugs, or, even worse, by insisting on regulating them like the thieves and liars that they are.