Some neighbors call Roy Haynes “the World’s Cheapest Man.” I was outraged since I think of myself that way; I reckoned they missed a bet until I saw him dumpster diving on the local news. He dives every day. I do it only when I see something really good and then almost never if there are news cameras about.
Mr. Haynes says to live like “every year is a recession.”
Meanwhile, outspoken California food activist Alice Waters knows we have to make tough choices. She wants us to give up our Nikes to buy organic grapes. Never mind that organic grapes cost four times as much as the Chilean grapes on sale this week or that I have never been able to buy Nikes in the first place.
Methinks Mr. Haynes gets it more than Ms. Waters.
The lead recession story today is that A.I.G. released the names of dozens of the financial institutions they shuffled our bailout money to. We provided $12 billion each for Société Générale, and Deutsche Bank, and “smaller amounts to Barclays and UBS. Wachovia, a bank that is already defunct got $1.5 billion more defuncter.
Now I really can’t buy any Nikes.
National Economic Council chair Lawrence Summers appeared on Face The Nation to talk about it.
The NY Times cherry picked this quote from Mr. Summers’ 15 minutes in the spotlight, “There are a lot of terrible things that have happened … but what’s happened at A.I.G. is the most outrageous.” That irks me because Mr. Summers told Bob Shieffer that the government can’t do much to stop insurance giant’s payout of millions “because they [the bonusees] all have contracts.”
Mr. Shieffer reminded him that A.I.G. managed to cut salaries and bonuses and jobs for all their other people and that there were plenty of “financial wizards at Starbucks with their laptops open, looking for work.”
Mr. Summers, who, despite the NY Times article, apparently thinks the Administration is doing a good job managing this mess, had no reply.
In other news, “Financial fraud is focus of attack by prosecutors” as Bernie Madoff went to jail. Fortunately, it’s not just Mr. Madoff. Unfortunately it’s not Congress. “Across the country, attorneys general have already begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams.”
I’m thinking the foot soldiers will go to jail but anybody with a bonus over a million bucks is home free.
I had a nice chat with bank president Rick Manahan last week. Mr. Manahan heads the Peoples Trust Company, a privately held community bank with branches in Enosburg Falls, Essex Town Center, Georgia (the town, not the state), St. Albans, and Swanton, Vermont. Like almost all “real” banks1 Rick has no toxic loans; unfortunately like almost all real banks he is now forced to stave off the regulatory nightmare sure to envelop the community banks. His bank will hold the funds for the CapCancer event this summer and will sponsor us as well.
The regulatory issue is a real one. Doctors’ offices have about 6 staff members per doc now because they have so many regulatory and insurance demands to meet. Banks already seem to have about a 1:1 ratio of employees to customers (I made that up) to meet their legal obligations. I don’t think we need to saddle them with more.
“Rules don’t work if people have no fear of them,” Barney Rubble said last week. I think Joe Stalin said it first.
Back to Mr. Summers. He is the (drummed out) Harvard president who said that women have lesser aptitude for work in the highest levels of math and science. The economics prof was Clinton’s Secretary of the Treasury and now heads Obama’s National Economic Council. He is one of more than two dozen members of the Obama inner circle who served in previous administrations.
Change?
I don’t think so.
I do think Mr. Summers must be the brains behind calling the 9,000 earmarks “old business.”
Are we managing this mess?
I don’t think so.
I had hoped I wouldn’t have to blog about this mess any more. I guess that really means I had hoped the people we elect to represent us were at least three quarters as smart as I am.
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Huh.
I don’t get it. I have spent most of a year hammering our Congress critters about how they just don’t listen and look at what happened. I floated this whacko “windfall bonus tax” and, for first time, they listened!
Let’s see if I have this right: The White House is still trying to “formulate a policy” and the Congress is scrambling to “implement new rules.” Sounds like no one in Washington deserves their bonuses, either.
On the other hand, Mr. Summers apparently still believes the Administration is doing a good job managing this mess. Must not be any female mathematicians on the team, innit.
1“Real” banks means the kind of community bank we used to have. These companies might be large, even statewide, depositories but they have concentrated on banking instead of getting into trouble with reinsurance and other playgrounds outside their areas of expertise.
I know of a bank in Central Texas that was giving away cheap (but desirable) tableware in order to attract new accounts or to upgrade existing accounts holders into things like Certificates of Deposit or Home Imporvement loans. They dedicated a special room to house the giveaway goods and hired a young woman specifically to maintain inventory and to keep track of who got what. She was the daughter of one of their biggest depositors and recognized the prestige of that.
She seemed to do her job well and kept shelf after shelf of inventory well stocked. Eventually the customer pool reached its saturation point, and since there was no one with foresight to see it coming, the bank ended up with enough dishes to do a sit-down meal for the USS Kittyhawk.
On top of that, there was the problem of what to do with the prestigous employee it no longer needed.
Understandably, she was very popular with bank customers who saw her as the bearer of gifts; however, it turns out she was also a petty thief who managed to fill her hope chest and that of her closest friends–who were also daughters of major depositors and who represented millions of dollars.
The bank manager did the right thing and let her go; and with her went millions of disgruntled dollars. I knew the manager and gave him a personal recommendation for his job search.
Does this sound systemic of banking on a much grander scale?
–George