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 executives.
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 crimespecial 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 for all.
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 30-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?