My blood started boiling as I was reading an article in the New York Times on December 15th coming in to work about how executives of three large banks–Goldman Sachs, Morgan Stanley and Citigroup–did not show up at the White House for a meeting with President Obama that was to deal with getting these institutions to make more loans to small businesses and consumers.
Their excuse? Bad weather prevented their flights from getting to Washington from New York on Dec. 14.
So, they had to participate in the hour-long meeting by speaker phone. This is one case where you can literally say “they phoned it in.”
A year ago, these same banks were all too anxious to get to Washington because that was where the money was that would pull their butts out of the disaster they had created through their risk-taking folly.
Now, however, that they seem to be on a sounder financial footing, and have paid back the bailout funds that were so constricting their bonus and compensation schemes, they let some fog or otherwise inclement weather interfere with meeting with the president.
I ask you, if you knew you were supposed to meet with the president on a Monday morning, wouldn’t you have enough sense as the CEO of a multi-billion dollar institution to check what the weather was supposed to be and, if forecast was poor, go to D.C. the day before? And if you were too busy as said CEO to do so yourself, couldn’t one of your assistants have done it?
But perhaps you were too busy either counting your expected compensation (since your bank was no longer under TARP restrictions) or bemoaning the fact the public outrage had forced you to forego a cash bonus in favor of stock.
This episode, along with the year-long dithering that has just seen the House pass a financial services reform bill and is still waiting for something to emerge in the Senate, makes me believe that not only has nothing changed, but that things have actually gotten worse.
It is no secret that the banks that took bailout money last year were in a rush to pay it back because of the salary and bonus restrictions for executives that came with the bailout funds.
Some of these banks are stronger than others and could very well be in a position where they could justifiably pay back the money they owed and then some.
But it is also no secret that some of these banks, such as Citigroup and Bank of America, are in not in a position to do this. Nonetheless, the Treasury Department has given its approval to every one of the banks that have said they intend to pay back what they owe because they’re strong enough.
Some banks have raised the money to pay back the funds by issuing stock, others through trading profits. In any case, many analysts have grave doubts about the condition of some of these mega-monsters. There is still a lot of garbage on their balance sheets that has not seen the light of day but will have to be accounted for in terms of massive losses, probably sometime next year. Apparently these doubts don’t extend to anyone in charge at Treasury.
There’s been no twisting of arms that I can see. And further, these banks know that should they approach the brink again, Treasury is there for them, it wouldn’t dare to let them fail.
It really is past time for the Treasury to get out of bed with Wall Street and start thinking about the rest of us. And if some bankers sticking their fingers in the president’s eye won’t do it, what will?