Spitzer: The Banking System is Broken

(AP Photo/Steven Senne)

The system is broken, the banking system that is, says former New York Gov. and State Attorney General Eliot Spitzer.

On the cusp of bonus season on Wall Street, Spitzer blasted U.S. banks for their imminent multimillion dollar executive compensation packages, telling CBS' "The Early Show" Monday their profits were built solely on taxpayer-funded bailouts. "They (banks) believe they are entitled to these crazy sums of money," Spitzer said. "It is inequitable, it is wrong."

Despite the recession, financial firms had a blockbuster year. For some chief executives and top producers, they could be getting bonuses with six, seven or even eight figures, reports CBS News correspondent Jeff Glor.

Bonus Bingo Resumes As Financial Crisis Commission Convenes

White House Economic Adviser Christina Romer fired the administration's latest shot toward Wall Street, saying Sunday that the bonuses were "ridiculous," adding that it will "offend the American people."

Asked what needs to change, Spitzer, who was once known as the "sheriff of Wall Street" before a sex scandal with a prostitute while New York governor destroyed his political career, was blunt: "We need a different banking system."

He said Treasury Secretary Timothy Geithner, with whom he regularly clashed when Geithner was the head of the New York Fed, "embraces the old vision of what banking should be."

"Right now we don't have a template for reform that is adequate," Spitzer said. "We need something fundamentally different."

Click below to see Spitzer's full interview with "The Early Show's" Harry Smith:


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This week, the financial crisis inquiry commission begins hearings with the nation's top bank executives expected to attend. The commission was created by congress to investigate the near-collapse of the financial system," Glor reports.

Of the major investment banks to receive bailout money, Goldman Sachs is likely to get the lion's share of scrutiny thanks to its soaring profits and list of alumni holding key government positions. One analyst tells the Journal he expects Goldman Sachs to dole out $18 billion in bonuses, a 64 percent increase from 2008.

Goldman Sachs is trying to buffer itself from criticism by considering telling its top-earners they have to donate a certain percentage of its earnings to charity, The New York Times reports. However, the Times reports Goldman employees could make an average of almost $600,000.

Goldman Sachs declined to talk to both the Times and the Journal for their stories.

[SocietysNightmare]

And to think you were ousted for having extra-marital sex. I always said most Americans need to get off their idealistic soapbox. I agree. The system is broken. But Banks realize that they now hold the cards, and there's not much CONSUMERS or the GOVERNMENT can do about it. Until these troglodytes wake up and realize that you HAVE TO BE IN DEBT to get a credit score worthy of purchasing a house, and that only consumers NOT USING CREDIT AT ALL will change that, they deserve to have their money taken from them.

[jd2408]

Fight back. Join the revolt and move your money to a community bank or credit union. Check the rating of the bank and credit union, go with a rating of A or B, make sure the bank and credit union are federally insured and move your money and credit cards. Your one account added to all the rest of ours will make a difference !

[SocietysNightmare]

Sadly, this GOOD advice you've given here will probably be ignored.

[CommentMaker]

Obama needs to have the IRS identify all of these guys with this kind of compensation and tag it for higher taxes. When you stop MILLION dollar bonuses you stop some taxable income.

[parisdakar]

It's not just the banking system, dummy. It's the whole system. We all, of course, want to make money, but these days the pursuit of personal profit has taken precedence over all else. Especially among our business and political leaders who are in positions to make obscene amounts of money with relative ease. Conscience, duty, and responsibility mean very little to the current generation in charge.

[Stevenapoli7]

Why the outrage? If we didn't bail them out there would be no tax payer funded bonuses. If we didn't bail them out, they would have collapsed and more ethical banks with health balance sheets would have stepped in to claim market share. Another in the long list of examples hoe government interference makes things worse, no matter how weill-intentioned.

[cbs4111]

If you think Wall Street, the US Treasury Department, and Timothy Geithner aren't broken, please read Matt Taibbi's recent article in the Rolling Stone, it's an eye-opener.

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout/print

[teaparty2010]

I think he was trying to pay the hooker with a debit card, he just thinks the whole thing is broken, it was just that ATM.