Tuesday, September 16, 2008
You and I...as Bankers
You know...I always thought SOMEDAY it would be nice to be a banker...be on the OTHER side of the desk when it comes to borrowing or lending, begging and pleading. Historically it has most always been better to be a lender than a borrower...with laws and rights heavily on the lender's side if the borrower defaults.
That seems to have all changed now...and most of us find ourselves in the position of being lenders...without our consent. We the taxpayers of the USA are now funding some of the biggest loans ever recorded in the form of bailouts of huge financial companies as well as the auto industry and some other heavy hitters who have powerful lobbyists lining the pockets of our legislators and Presidential campaign funds. Here is a short list of the larger "loans" we Americans are making...
AIG Insurance Group: $85 BILLION from the Federal Reserve Bank of New York
Bear Stearns Investment Bank: $30 BILLION
Fannie Mae and Freddie Mac: $200 billion in preferred stock of these loss-plagued finance giants / whiz kids
So one has to ask how do a Federal Government and Reserve System, TRILLIONS of dollars in the red, offer or invest at these levels in private industries? This is like asking a minimum wage migrant worker to loan a few million to his employer. Again, no one seems to consult the accountants anymore before making such huge financial decisions...with YOUR money and mine.
So if we DIDN'T do this...what would happen? Well, they would probably have to go through the same process that most of us average citizens would be required to do...file for some form of bankruptcy, throw themselves at the mercy of the courts, and probably be gobbled up or dissected off to competitors. Regardless, they would have to take the fall and responsibility for their own risks and actions instead of asking all of us little guys to pick up the pieces and hand it back to "them".
And while we're in this "free for all" frenzy for government dollars, other industries are ponying up for their share as well. GM and Ford want $25 BILLION from the government (us) to pursue more competitive, fuel efficient vehicle production. What have they been doing the last 20 years or so? Have they set nothing aside from revenues for R&D or market needs analysis?
These current requests for "loans" make tame the other recent bailouts our government has performed, such as the $5 BILLION cash and $10 BILLION in loan guarantees we gave to airlines post 9/11. One wonders if a penny of those loans has been repaid yet, 7 years later.
Now, if we are to show our true mettle as bankers, we must look at how much money we are spending or lending on our Iraq War...reportedly $3 TRILLION or so. Who is signing on the line for that debt in addition to the 4000 or so American lives lost in the conflict? Has Iraq started shipping us their oil yet in payment? Have we started "buying American" when it comes to gas and oil purchases to fuel our military? Ah, no, I didn't think so. Instead we continue to line the pockets of our Arab enemies who are laughing all the way to the bank and borrowing from the Chinese who continue to grin while holding our "paper" and currency in their hands.
And now we have these "smooth politicians" running for office, members of our "bank board", who are telling us they are going to do MORE for us with LESS taxes...or through simple "redistribution". "Cooking the books" if you will.
Fellow bankers, it is time for us to reel in our free spending "executives and board members" and get a proper accounting of what is owed, how much is being paid, and how much if anything we have left on deposit to loan or bail out with. This election is a good time to start this process.
Just as an afterthought, I think every banker/taxpayer should receive a loan to cover all their debts BEFORE considering any other 3rd party loans. If the government wants to consolidate debt, they should consolidate ALL of us. After all, we OWN the bank…or at least we THOUGHT we did.