Tuesday, December 15, 2009
They Just Don't Get It!
I was having coffee with a friend yesterday and managed to catch a few minutes of President Obama's bashing of the banks. He singled out financial institutions for causing much of the economic tailspin and criticized their opposition to tighter federal oversight of their industry.
"It was, as some have put it, risk management without the management," he said.
The president also told CBS' "60 Minutes" that "the people on Wall Street still don't get it. ... They're still puzzled why it is that people are mad at the banks. Well, let's see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year ... in decades and you guys caused the problem," Obama said in an excerpt released in advance of Sunday night's broadcast of his interview.
Upon returning home I received an e-mail from the New York Times saying that Wells Fargo was selling 10.4 billion dollars in new stock to repay the $25 billion TARP loan. Citigroup had just repaid $20 billion but still owes us more. Surely this was not just to get the president off their butts? And it isn't. They are still the Scrooges in this story. By repaying these loans from the American taxpayer the restrictions on the practice of obscene end of the year bonus is lifted. Be prepared to hear about how much their CEO's will be getting as Christmas Presidents.
Everyone is getting into the Christmas spirit. Bank of America paid back $45 billion on December 9th. And they sidestep the President's stated objective of forcing borrowing banks to make more loans to small businesses and homeowners bottom up in their mortgages.
But my question is where did Wells Fargo get the $10.4 billion in stock? And where were they hiding the other $35 billion. Weren't they about to go belly up when we bailed them out? It is possible it was hidden the same place G.W. Bush's 22 million missing e-mails were. But we found those. During his eight years in office lots of controversial electronic mail on iffy decisions went missing. Key here is to know merely pressing the delete button obviously does not work. Consider that bank CEO's. Your real financial balance sheets can be found.
As a side issue I was Googling an image for this blog on banking and Monopoly seemed appropriate. Parker Bros still has that smiley and lovable banker despite current polls that put people of that ilk up in the most hated list. And I found this image for the electronic version of the time honored game we all loved to fight over. No more paper money to dole out. You can do it all with plastic. And you can begin training your children to just swipe that credit card as the tender age of eight. Merry Christmas.
Isn't this a large part of how we got into this mess in the first place? Everyone was not playing with real money. And obviously still aren't. But the good news is Christmas spending is down 50% from last year, which was not a banner one, plastic or no plastic.