Mayor Bloomberg Isn't Very Streetwise
New York Mayor Michael Bloomberg's recent proposal to ban large-sized sugary beverages sums up a troubling trend: Instead of attacking Wall Street, it's far easier to go after Main Street -- even though doing so doesn't address more dangerous problems threatening the fabric of our society.
Apparently it's OK for Wall Street to create financial "weapons of mass destruction" that gave us a crash course in financial crisis. Hardly anyone who indulged in that behavior even took much of a hit salary-wise, much less was called to account for the financial ripple effects that America's still struggling through. But hey, folks on Main Street should be "saved" from having the choice to purchase large sugary drinks.
Give me a break. Wall Street's a far sketchier neighborhood than Main Street with its citizens' (gasp) large drinks and super-sized fast-food meals. America's long-term health is threatened more by the ethics-starved theme that keeps repeating in an endless loop of greedy gluttony on Wall Street and other deep pockets of America.
Fat cats with dynamite
Bloomberg (the financial news source, not the mayor who created it) reported that Wall Street CEO compensation increased by an average of 20% in 2011. Buyout outfit KKR set the decadent tone for the data, with co-CEOs and cousins Henry Roberts Kravis and George Roberts making about $30 million apiece in 2011.
If our financial markets could muster some rational sense, that CEO pay increase would have been linked with stellar performance, but guess what: not a chance. Most financial companies' revenues, profits, and stock prices dropped or even plunged in 2011.
Citigroup's (NYS: C) one of the biggest stinkers in this regard. Remember, it was one of the financial companies that failed the latest stress tests for U.S. banks. Still, CEO Vikram Pandit was awarded a whopping $15 million in 2011; he was identified by Bloomberg (the financial news source) as the banking chief executive who delivered the least shareholder value when judged on a three-year assessment of stock returns.
Thankfully, Citigroup shareholders got a clue and fought back against the absurdity of Pandit's pay package in light of the circumstances.
Since 2008, JPMorgan Chase (NYS: JPM) CEO Jamie Dimon has gained a reputation for being a gold-standard leader even as many others on Wall Street weren't, but even his good reputation couldn't last.
Dimon's pay in 2011 increased 11% to an eye-popping $23 million while the stock price fell 20%. And more recently, Dimon's reputation received a layer of tarnish: JPMorgan recently lost at least $2 billion on investments in synthetic credit securities.
As Henry Blodget said at Business Insider, Wall Street's "just kids playing with dynamite," and the JPMorgan scandal has underlined that it's as true now as it ever was.
The fact that Wall Street's finest are putting together potential financial bombs in his fair city doesn't seem to get much attention from Mayor Bloomberg, who's been on a weird health kick about New Yorkers' habits and waistlines for a while. Cigarette and trans-fat bans paved the way to a proposed ban on sugary drinks in containers that hold more than 16 ounces.
Here's Coke's response to Mayor Bloomberg's move: "New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase." A McDonald's spokeswoman said, "Public health issues cannot be effectively addressed through a narrowly focused and misguided ban."
Granted, many people do say America's in the grips of an obesity epidemic. And of course, I can see the public officials' argument that such public health problems add up to public expenses, especially in this day and age.
Still, I can't think of a more public cost than the price we all paid to bail out too-big-to-fail banks whose employees made truly massive mistakes with their gluttonous appetites for profits over principle or even common sense.
Meanwhile, maybe it's a lot easier for Mayor Bloomberg to pick on the supposed typical American chugging down a gallon of soda than his moneyed buddies on Wall Street.
When executive Greg Smith resigned from Goldman Sachs (NYS: GS) with a published criticism of the firm's culture and practices that spread like wildfire, Mayor Bloomberg visited the company and defended Goldman's importance to the city's economy. Incidentally, Goldman Sachs is also important to Bloomberg's economy, since the company leases Bloomberg terminals representing tens of millions in annual revenue.
Meanwhile, just yesterday, Bloomberg (the news source) reported: "New York City Budget Balanced With Help From Wall Street."
Let's really talk about healthy behavior
The current economic mind-set in America, most specifically on Wall Street, is absolutely starving for accountability and ethics lessons. In fact, the kind of behavior that Wall Street has shown over and over again is dangerous and always seems to firebomb Main Street while Wall Street gets off scot-free. The recent Facebook IPO served as a stark reminder that Wall Street's pathologically messed up behavior never seems to change.
There may be an obesity epidemic in America, but we're going to pay a far higher price for the epidemic of nearly sociopathic behavior that emanates from many supposedly "high places," particularly Wall Street. When it comes to healthy behavior and the public good, Mayor Bloomberg has philosophically cracked down on the wrong Street.
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At the time this article was published Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool owns shares of Citigroup, Coca-Cola, Facebook, and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Goldman Sachs, and McDonald's. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.