Tuesday, February 10, 2009

Mr. President: Let's clear out the banking dead wood

Let's hope the banking lobbyists aren't still working their magic in Washington. There certainly are signs they could be.

A fascinating story in Tuesday's New York Times suggests that Treasury Secretary Timothy Geithner prevailed over other high-ranking Obama aides who wanted to impose tougher sanctions on banks and bankers seeking more federal bailout money. On the oped pages of the same paper, conservative columnist David Brooks, an opponent of the stimulus plan, praises this bank bailout.

I consider that a bad sign.

I am no economist and the multiplex of multi-billion-dollar numbers thrown around these days often leaves me dizzy. But I do have common sense, and I have always lived within my means. I play my mortgage on time. I don't load up my credit cards. I defer purchases that I don't have the money to make.

That's why I'm angry -- really angry -- at the profligate SOB's of the financial world who seem to think it's their right to drain my children's future and then have the government run to the rescue, no strings attached. And that's why I'm getting equally angry at the government's unwillingness to punish them for their utter irresponsibility.

OK. So the new plan, as President Obama announced last week, will cap top executive salaries at rescued financial institutions at $500,000 a year until these rescued institutions can again stand on their own feet. Now there is tough love -- not.

I'm sure some of these guys will have to sell a yacht or two -- maybe a home or two -- at a loss to get by on a mere $500,000 a year. But I'll be damned if I can understand why the U.S. government is concerned about keeping their stockholders whole. Or why the salary cap doesn't extend beyond the top executives to all executives. Or why Geithner is loathe to clean house and bring in executives and boards not tainted by a run-up in our national debt that could surpass $1 trillion eventually just to keep the banks afloat.

Change, Mr. President, doesn't mean keeping the same shysters at a half mil. Change means doing something different. Free enterprise doesn't mean that if bank executives act like irresponsible fools, they, along with their banks, get a bailout. It means if they are fools, they should be fired.

The crisis we are in was no accident. Banks began giving mortgages with no downpayments and no credible requirements for lenders to show they could ever repay their mortgages. The banks would then sell these loans to bigger banks, who would sell them to Wall Street and so on. I guess it was all legal, but it sure sounds to a layman a lot like Bernard Madoff's Ponzi Scheme. So why then is the government so concerned about keeping these executives and their boards intact and in place?

I smell a rat, or at least a lobbyist.

Yes, I can, though grudgingly, understand why the Obama administration wants to keep the banks from going under. That would pull us down with them. But I cannot understand why the Obama administration continues to protect the self-centered, arrogant, unethical and unbowed executives who have beaten these banks and this country into the ground. (If they haven't exactly fiddled while Rome burns, they have thrown six-figure luxury "retreats" with taxpayer money that was supposed to open up credit markets, but has not.)

President Obama, your popularity remains strong. You should use it to lead the people - and to leave the Republican Party and the lobbyists behind if they choose not to follow. Splitting the difference in an economic crisis is no solution. As you said yourself Monday night, catastrophe could be close behind. This is no time for subtle shifts in a failed system. It is time to be bold.

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