Friday, February 20, 2009

Santelli’s greed

Rick Santelli's impassioned rant on CNBC about Obama’s mortgage bailout plan brought cheers on the floor of the Chicago Board of Trade, from where he was reporting. His rant has received a lot of favorable coverage on the Drudge Report and on “conservative” talk radio like Rush Limbaugh and Sean Hannity. More importantly, his tirade reflects a growing resentment by the wealthy over President Obama's plans to help the nation out of the recession. These plans, which started with the stimulus package, will now not only include a bailout for mortgages but also a second bailout for the car companies and perhaps even a second stimulus.

Santelli mentioned that the “clerks” on the floor do not want to pay for anyone else's mortgage. His insistence that these guys represent the "real America" won't play well on Main Street. The majority of Wall Streeters are under 45 with Wall Street being the only world they’ve ever known. With average signing bonuses of $16,411 to $18,772 and average starting salaries of $70,000 in Marketing to $445,000 in Corporate Finance, they consider their pay “a joke” – even though the average Wall Street salary is much higher than the average American's yearly pay. Even a clerk’s average salary is around $60,000 per year. Compensation on Wall Street is structured so that banks pay “low” base salaries and give bonuses that are generally considered part of one’s “true” salary. But everyone gets bonuses, right down to the secretaries. The average bonus for 2008 was $112,000. If average Americans got that kind of bonus, they could pay off their mortgages in two or three years. As a teacher, my yearly salary was under $35k until the last few years - and there were no bonuses for a job well done. I would like to see a Wall Streeter live off of that while putting money in savings for retirement.

Santelli’s bias is a form of money bigotry, a form of class bigotry, where a CEO who gets millions in compensation is an American Hero who “earned every dime”, but a person who was duped by an unscrupulous mortgage broker and is now in a bind is stealing Santelli’s tax dollars. His screaming is the sound of a completely immoral and bankrupt soul falling into a hell of Wall Street’s making. He is the poster boy for greedy Wall Streeters who pocketed hundreds of billions of dollars in the last eight years and now cry like babies because the party is over. Santelli lives in an expensive home, has made millions of dollars, and is crying because “his tax money” is going to help some stupid mortgage holders who are in trouble “because they didn’t read the fine print.” Oh my, let’s hang those uneducated, stupid Joes by their toes and flail them with the stack of paperwork that they didn’t understand. How dare they be so dumb as to trust their mortgage broker!

Of course it is foolish to buy more home than you can afford. What Santelli ignores is that the mortgage brokers told many buyers that they could afford it. He ignores that some “educated” homeowners used the same logic the bankers and Wall Street used when they packaged together the mortgage-backed securities and CDOs – that home prices will only go up. Many other homeowners were snookered by brokers who steered them into subprime, high interest mortgages when they would have qualified for a low fixed-rate mortgage. Why on Earth is the average, fiscally uneducated person held responsible for a contract that an educated professional wrote up ... and sold to him ... to make a quick, fat profit? Why does Santelli think that mortgage brokers and bankers should get a free pass on any sort of ethical responsibility to their clients? When will it be obvious to people like Santelli that great harm was done by peddling very dangerous mortgages by very greedy educated investment firms.

Earth to Rick: The issue for those of us who did "the right thing" is that we are continuing to be harmed directly by our own home values plummeting and indirectly by the resulting instability in the economy that is causing massive layoffs, shrinking retirement funds, and tight credit. We should not think of the Housing Stabilization Plan so much as a reward for folks who made poor choices, but as a plan to protect the rest of us from the results of those poor choices.

Rick Santelli loves deregulation. He has made his career off of it. He joined CNBC from the Institutional Financial Futures and Options at Sanwa Futures, L.L.C. where he was a vice president handling institutional trading and hedge accounts for a variety of futures related products. Prior to that, Santelli worked as vice president of Institutional Futures and Options at Rand Financial Services, Inc. where he was managing director at the Derivative Products Group of Geldermann, Inc. He was vice president in charge of Interest Rate Futures and Options at the Chicago Board of Trade for Drexel, Burnham, and Lambert. Santelli began his career in 1979 as a trader and order filler at the Chicago Mercantile Exchange in a variety of markets including gold, lumber, CD's, T-bills, foreign currencies and livestock.

Santelli rants like the Republican senators who want you to think the only thing wrong with Detroit is labor costs when the Detroit auto workers make virtually the same as foreign plant workers. Look it up. It is class war when people like Santelli are screaming from their expensive Mercedes or BMWs en route to their gated mansions. If only the little people could survive without healthcare and houses the rich could be richer. Santelli should have been screaming, “I'm a greedy @*&# and I don't want ANY regulation so that I can continue to be greedy and make lots of money off of the average fiscally uneducated sap.”

People who think like Santelli always blame the person who was duped – and damn that Obama for wasting borrowed money from China on the stupid peasants.

FYI: No, my husband and I are not among those who are in trouble. We “did the right thing” and bought a home we could afford. Refusing to listen to the realtor who said we could afford much more, we kept our house payment at 25% of our take home pay. We bought a "fixer upper" in a middle to upper class neighborhood and fixed it ourselves. We have no debts except for our mortgage payment. And we bought our home nearly two decades ago, so, although we lost some value, we are nowhere near underwater. It is just that I have great sympathy for those who were fiscally uneducated and got taken to the cleaners by unscrupulous bankers and mortgage brokers.

Go here to see the Santelli rant:
Wall Street salary information: