After laying off 4,664 workers, Canada’s top six banks have recorded a combined profit of $35 billion and set aside a bonus pool of $12.5 billion for their executives at the end of 2015. It has become evidently clear that Canada’s bankers have not felt the pain of the economic crisis the same way as the working class and impoverished.
According to a new report by Bloomberg, a prominent financial information company that analyzed the findings, the 4,664 job cuts at the six banks was the most in six years. The firings, or “cost controls”, as the bankers like to say, are set to continue into 2016.
Toronto-Dominion Bank alone eliminated 1,594 staff positions. In response to criticism, TD Bank CEO Bharat Masrani said “This is simply a reality of today’s slower-growth world.” Ironically, this year’s executive bonuses were higher than $12 billion in 2014 which was a surge of 13 per cent from $10.8 billion in 2013. All of this during a time when the Canadian economy has entered recession and created immense suffering for average working people and the poor.
In fact, looking back at a trend since the 2008 global recession reveals just how the bonuses of bank executives have grown progressively: $8.3 billion in 2009, $8.6 billion in 2010 and $9.3 billion in 2011. Seven years since the Great Recession with continuous slow growth in the world economy and in Canada, the bonuses of bank executives have in turn been rapidly growing. Hence, Mr. Masrani’s description of a “slower-growth world” is meant for those losing their jobs, but the opposite is true if you’re a bank executive.
Bill Vlaad, president of a Toronto-based firm that monitors compensation trends said “Compensation this year is going to be a grab bag… some are going to have a good deal of candy in the bag and some are not going to get as much.” Here is this year’s candy distribution:
The Bank Bailout of 2008: Canadian Workers Robbed of Their Labour
While Canada’s bankers continue to make the case that they deserve every penny of their colossal bonuses through ‘prudent financial intelligence’, the truth is that they are being spoiled and protected by the government through tax payer dollars, especially when they fail big time.
In 2012 Fightback wrote about a Canadian Centre for Policy Alternatives report, The Big Bank’s Big Secret, which revealed that between 2008 and 2010, $114 billion was shelled out of public coffers to save the top five banks in Canada as a response to the 2008 financial crisis.
Royal Bank and TD are the two largest banks in the country. Together they received $25 billion and $26 billion, respectively, in government support. This was enough to buy majority shares in both: 63 per cent share of RBC and a 69 per cent of TD Bank. Scotiabank, CIBC and Bank of Montreal received $25 billion, $21 billion and $17 billion respectively. That was enough money for the government to buy all of them; in fact they overpaid 148 per cent of the market value of CIBC!
Of the $114 billion, $41 billion was made in loans, $69 billion in direct cash injections through mortgage buy-outs for the big five banks and $4 billion to several smaller banks. As a result, during 2008-2010, the banks made a profit of $26.8 billion. None of this vast sum of money made its way back to the public. This kind of wasteful government spending is not criticized on Bay Street because it maintains the for-profit capitalist system. The government bailout allowed the banks to carry on business-as-usual after they had conclusively demonstrated their failure.
As the banks post these massive profits, we are told to “tighten our belts” and accept cuts to social services, wage freezes, job losses, attacks on labour rights and an onslaught of austerity budgets. How often are multi-billion dollar government deficits blamed on government investments into social programs, job creation and infrastructure? How often do we hear the mantra “the money is not there”? The truth is that the “money is not there” as a result of corporate welfare, tax-cuts for the rich, bailouts of big banks and corporations, bad-asset buy-outs, and the failure of the capitalist system generally. Capitalism creates its own crisis and the rest of us are left to pay for it all.
What the Bonuses are Worth
As we have seen, governments hand over more money than the banks are even worth, just to keep the profits in the hands of a tiny minority. Canada’s banks and corporations sit on trillions of dollars. This year’s bank executive bonuses alone, totalling $12.5 billion, instead of being spent on luxury cars, yachts and mansions, could be used for more important things:
- Free Post-Secondary Education: $9.5 billion (or nearly wipe out all national student debt $15 billion
- National Pharmacare Program: $15.1 billion
The Only Solution: Nationalize the Banks under Democratic Workers’ Control
The idea that a government can engage in cordial negotiations with the bankers or their rich friends in the corporate world to pay for any of these social services is utopian. This is evident if you take a glance at recent global events. In Greece, Syriza tried to negotiate with the EU and Greek bankers, even when the opportunity to nationalize the banks under the control of Greek workers existed. The result was a defeat for the Greek workers as their country is currently being privatized into bits by the capitalists. In Venezuela, the PSUV nationalized some industries more than a decade ago, but the road to complete nationalization was not taken and under pressure from internal and external forces of capital, the government lost the trust of the people and lost power. History shows that any government that either adheres or tries to collaborate with the for-profit system of capitalism cannot meet the needs of workers and the impoverished – especially today when capitalism is in its deepest crisis in its history.
Capitalism is a system that protects the private property and wealth of a few individuals in a chaotic and illogical global network of profit making, and it is time the leaders of the labour movement accepted this reality. The predominant ideas within Canada’s labour movement’s leadership, going back to the 1950s and 60s when capitalism was in its heyday, has run its course and is decades behind the reality of what is happening in this country, let alone the world. Today, capitalism is in its deepest crisis and is revealing immense inequality and lack of wealth distribution. It hasn’t been easy to explain this reality to average workers and youth for a long time.
The choice between capitalism and a new genuinely democratic socialist society is a choice between the unnecessary lavish lifestyles of the rich few and the vital needs of everyone else. This choice is becoming increasingly clear to millions of Canadians. Therefore, the case to nationalize the big banks and corporations in this country and place them under democratic worker’s control has never been stronger. Now is the time for bold demands that can enthuse and organize workers and youth to take back the immense wealth that exists in society and run it in a rational manner for human need.
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