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According to information released by the office of the Honorable Andrew Cuomo, Attorney General of the State of New York, as published in the Wall Street Journal, yesterday:

Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.

There are a number of people on Wall Street who are now criticizing Mr. Cuomo for having the nerve to investigate executive pay rates at the big investment banks in New York. They claim that the pay rate situation "may or may not be immoral" but is not "criminal" and, therefore, Cuomo has no business investigating it. Most of these critics, however, are simply the beneficiaries of the current system whereby banks take money from the taxpayers and give it to their executives.

In fact, Cuomo has done a great service to America by bringing this important issue to the forefront of debate. What his detractors choose not to understand is that Cuomo is not merely a "District Attorney", and not merely charged with criminal prosecutorial duties. He is the Attorney General and, as such, is charged with a duty to investigate all actual and potential frauds upon the public. That includes the issue of excessive bank pay being taken directly, or indirectly, from the American taxpayer.

The information he has released indicates that we have a group of essentially civil servants, who are still being called bankers, but whose jobs have been "guaranteed" by the government, whose companies have recieved hundreds of billions of dollars worth of either overt or backdoor bailouts, and who are being paid millions of dollars in salary and bonuses. No one would tolerate such pay rates among civil servants who are called what they are.

The only way to justify these excessive pay packages is by a deception. First, you call yourself a "private" industry (even though you are being heavily subsidized by the government). Then, you claim that excessive pay rates are "needed to retain talent". Finally, you allege that, if you don't pay ridiculous amounts of money to these people, someone else, somewhere, will.

I am not sure what kind of special "talent" it takes to destroy the world's financial system, but I have no doubt that it does require very special skills. Ordinary human beings, like you and me couldn't possibly do such a thing. But, given that they are all still on the public dole, if banks like Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), JP Morgan Chase (NYSE:JPM), Merrill Lynch/Bank of America (NYSE:BAC), and so on, want to pay such money, let them first break up into little trading divisions, with each unit so small that it poses no systemic risk. Tiny boutique trading houses would not have the financial clout to bring down the financial system, nor political clout to obtain bailouts. If they lose, let them go down in flames, and be forced into bankruptcy.

Subsidized bankers, of course, will not willingly do that. High pay rates are now possible with the help of a parasitic attachment to jugular vein of our Treasury and Federal Reserve. The big banks are the beneficiaries of FDIC bond guarantees, making their bonds as good as U.S. Treasuries, and allowing them to obtain cash at ultra-low rates of interest. They are also the beneficiaries of a host of giveaway programs through the TARP, the "loan windows" of the Federal Reserve, and the Fed's "cash for trash" program designed to clear away toxic debt securities, whilst sticking taxpayers with the liability. Most of the loan "window" borrowings are perpetually renewed, making them gifts, not loans. However, even if this situation were to eventually turn around, with the banks paying back all that they owe, they will be back sucking at the Federal teat, again, as soon as their wild bets go bad again.

In short, they play with taxpayer money. It is not important whether the money came to them in the form of overt "TARP" giveaways, backdoor bailouts through AIG, FDIC guaranteed ultra-low-rate bonds, TALF, the Fed discount windows, or otherwise. The fact is that, when they win, they take the profits. When they lose, they threaten worldwide economic implosion, and by doing so, we are forced to shoulder their losses. Gains are privatized, whereas losses are nationalized. That is just plain wrong.

An important point to remember is that the employees of all major investment banks are now essentially civil servants, whether they like that label of not. They should be paid accordingly. That includes the ones who "paid back their TARP obligations". TARP is the smallest part of their bailout from the U.S. government. These corporate welfarite companies are able to support their traders mainly because they are all on the dole, or will be on the dole, again, as soon as things go wrong.

Wall Street's executives are being allowed to continue taking huge profits, while sticking losses and/or risk of losses, to the rest of us. The only "talent" I can see is the uncanny ability to fleece America and the world.

Disclosure: No positions in any company mentioned in the article.

Source: $33 Billion in Taxpayer Money Subsidized Wall Street Bonuses