Wall Street gets it all: Bailouts, bonuses, first dibs on H1N1 vaccine
Nov 6th 2009 3:00PM
Updated Dec 4th 2009 4:29PM
When it comes to allocating scarce public resources, large corporations seem to have the upper hand in the US. We already know that many powerful companies, particularly the Wall Street investment banks, having gotten plenty of Washington cash. Now it looks like they're getting first dibs on the scarce H1N1 vaccine as well.
If I remember correctly, last fall the problems with the financial sector nearly cratered the global economy -- what with the $30 trillion in lost stock market value and over a trillion dollars in bank write-offs. As I've written before, Wall Street accounts for 0.057 percent of our population, but because it has given $5 billion to Washington politicians and lobbyists over the last decade, the government poured trillions of dollars into bailing it out after its little collapse last year.
Even after the storm passed, the preferential treatment has continued. The latest outrage may well be how major banks are using taxpayer funds to cut borrowing costs even as they raise credit card rates. The first half of this equation -- reduced borrowing costs -- hinges on government guaranteed bonds. According to The New York Times, the government guaranteed on $300 billion in bonds that Wall Street issued, letting financial institutions save $25 billion on their borrowing costs. And that $25 billion is just a small part of what Wall Street got. The government has devoted trillions of dollars to the bailout, with the final costs still unknown. Meanwhile, Wall Street will pay itself record bonuses of $140 billion this year.
Needless to say, this generosity was not passed along to the consumer. While banks got taxpayer funds to cut their borrowing costs, they also raised consumer interest rates. According to The Boston Globe, banks are scrambling to raise credit card rates to 30 percent before tougher regulations take effect in February 2010.
But at least those 175,000 Wall Streeters are mortal, right? Sure -- except that hundreds of Wall Street employees will be able to reduce their risk of infection from H1N1.
How so? Some of the biggest Wall Street banks -- including Goldman Sachs Group (GS) and Citigroup (C) -- will be receiving the swine flu virus before you, according to The Associated Press.
To be fair, this benefit extends far beyond Wall Street; 50 large employers in New York City have received the vaccine so far, and just for their high risk employees, who include pregnant woman and obese people. These other companies include include DailyFinance's ultimate parent company, Time Warner Inc. (TWX) and hospitals such as Memorial Sloan-Kettering Cancer Center. Goldman has received 200 doses and Citigroup got 1,200 -- and their officials said the vaccine would only go to those in high-risk groups.
Even so, it's galling to think that some of the people who have profited so richly from government bailouts will receive special treatment from government health care too. It seems like -- even in Uncle Sam's eyes -- we are all equal, but some are more equal than others.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He owns Citi stock and has no financial interest in the other securities mentioned.