[A-List] Obvious Solution to Global Banking Crisis
shimogamo at ashisuto.co.jp
Mon Mar 23 05:00:20 MDT 2009
by Denis Campbell
LA Progressive (February 16 2009)
It's been done before, an FDIC/Comptroller of the Currency (or
similar insurance or governmental institution elsewhere) bank take
-over. I witnessed my first in Miami in 1991 when a former employer
in the mid 1980s, Southeast Banking Corporation of Miami, then
Florida's oldest bank, had a deep liquidity crisis.
It was a swift, brutal, and painless to depositors and those
receiving loans intervention. Thursday night the FDIC swooped in,
padlocked the doors, a team of examiners were on the premises, and
by Monday it had all been sold to then healthy 1st Union
Corporation with some assets being sold to Sun Bank. WaPo
depositors and loan clients saw the same thing. Seamless and with
ruthless efficiency the problem was solved and it was anything but
business as normal.
A $16 billion dollar asset bank in trouble disappeared overnight.
No one lost a cent on their deposits. Officers and managers at the
top that got them into the mess were shown the door immediately, no
golden parachutes, no executive buyouts and no, "here's $19 million
dollar for three weeks of work" pay-offs. Mid to low-level managers
actually running something that served customers were mostly
retained/sold and stockholder equity was poof, wiped out. The FDIC
eventually made a record $200 million dollar profit on the bank sale
and that, as they say, was that.
So why must we listen to whining about a "talent and brain drain" on
Wall Street if they cannot pay bonuses? The same dolts who got us
into the mess are the ones that are gonna get us out of it? Is that
not a textbook definition of insanity, to continue to do the same
thing over and over again and expect a different result?
Repeat, no golden parachutes. Then bank President John Porta, a very
nice man thrown into a cesspit, was seen standing in the same
unemployment benefits application line as other former top
You pays your money, you takes your chances in life. They all lost
and, unfortunately, compared to Citi or BofA, were not a big enough
fish to use the "we're too big to let fail" line of reasoning.
I am waiting for Geithner, Obama, Summers, et al to grow a pair of
solid brass ones and take them all down. With stock valuations not
that much greater in today's dollars, it's time for the FDIC and
Treasury to step up, seize all eight of the pretenders who showed
up looking so contrite last week, put some white collar crime special
prosecutors on the case, hire back some out-of-work-through-no-fault-
of-their-own bankers and accountants (who are already applying for
Census 2010 positions) to clean it up and end the con game once and
It's time for some South African banking system due diligence. Why
is theirs the only banking system in the world still functioning at
a high standard was a key dinner question last night? Because they
take identity, security and lending standards seriously. They protect
their customers and the market. They have been innovating for thirty-
years with technology and now are the model and standard everyone
wants to copy.
It's time for tough love on Wall Street. Yes, there is a risk that
one side of the street (the investment bankers) will do very well
selling the assets, but we taxpayers get our TARP and TARF money back
and the wolf back under control. Simply, I cannot find one person in
any sector of today's Wall Street economy that can with a straight
face, say they have earned a nine figure income! Can you?!?
UK Prime Minister Gordon Brown said the other day he was "very, very
annoyed" with the executives of RBS and Northern Rock. Congressional
committee members gave the CEOs of the eight taxpayer bailout-funded
banks a solid tongue-lashing … and nothing changed.
Take … them … out! Take them over! Wipe out the shareholders,
protect depositors and clients, get rid of all those indispensable
bankers and see how quickly it all turns around. This is President
Obama's internal 'Bay of Pigs' moment. Act decisively. Act now.
Follow through. Get in and out of the business quickly. Start it all
over under with a brightly painted sign, "under new management".
The government should not own or run banks for any period of time,
spend weeks in Congress tipping their hand or debating over whether
we should all have a Kumbaya moment over this or listen to banker
excuses for another year. Rather, they should isolate the toxic
assets, sell them all off at a profit, clean house and pay down the
taxpayer debt in this sector.
That is change we can all believe in!
Why do this now? Because there exists a very real and arrogant
banking oligarchy in both the UK and USA. It is here, at the very top
of the very biggest, where there is no fear. They thumb their noses
at everyone else because they have bought and paid lawmakers to do
their bidding and insinuated themselves into halls of power and
legislation writing process that controls these banks and … they
think they are in control and got away with it. It's time Mr President
and Mr Prime Minister to send a crystal clear message and hit them
where everyone else is hurting, in the pocketbook.
Do that Mr Brown and David Cameron is an afterthought in history. Do
that Mr President and the Republican Party, already on life support,
has the plug pulled. It is the one unilateral action you can both take
without listening to the bloviators.
What do these bankers do instead, they laugh at us all. $18 billion
in bonuses, pshaw, their attitude: "what are they gonna to us? Nothing!
Why? Because we own them and their future once they leave public
service." Keep them blithely thinking that then assemble the
accounting Special Ops SEALS and act! You don't need Congress or
bipartisanship to do this, just the will.
Mr President, you and Secretary Geithner have but one chance to junk
the system, assure everyone their money is safe, close it down and
reopen the next Monday.
Then perhaps the New York member of Congress who asked Tim Geithner
if the CEO of Goldman Sachs - who earned a nine-figure income before
taking $10 billion dollars in tax-payer bailout money - should have
been fired, will finally be able answer his own question.
Yes and we, the people, did it!
Then we can talk about ways and means of criminal prosecution, global
asset freezes, forfeitures and seizures, something you do very well
to both Internet gaming executives and rogue nation states. You can
also do it to these jokers.
Double dare ya!
Denis Campbell is a US journalist based in the United Kingdom. He
contributes to newspapers and magazines, is a BBC Radio election
commentator and publishes the daily e-magazine The Vadimus Post from
the Latin Quo Vadimus - where are we headed and do we know why?
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