Showing posts with label Banc of America. Show all posts
Showing posts with label Banc of America. Show all posts
Monday, August 29, 2011
Ten Things
The deeper meaning to my purchase of 1000 BAC the morning Warren Buffet announced his purchase: it was a day of otherwise huge import in our family, as Doug and Becca and kids were moving to Barcelona. For me to make such a purchase just before taking them to the airport was "a signature moment." We'll see if it works out.
Thursday, November 18, 2010
Sunday, December 20, 2009
Baseline Scenario -- Missing the Meeting With the President
(c) F. Bruce Abel
A simple but powerful effort by Simon Johnson:
The Baseline Scenario
“It’s Certainly Not For A Lack Of Effort”
Posted: 19 Dec 2009 06:21 AM PST
The fundamental divide in opinion regarding our financial system is: Are the people running “large integrated financial groups“ hapless fools, buffeted by forces beyond their comprehension and control; or do they know exactly how to ensure they get the upside and the awful, sickening downside is borne by society – including through high unemployment.
Some light was shed on this issue by Monday’s meeting at the White House or, more specifically, by who didn’t turn up and why. Of the dozen bank CEOs invited, Vikram Pandit was supposedly busy trying to extricate Citi from TARP and asked Dick Parsons to attend instead – a wimpy but smart move, as Parsons is close to the President.
However, three executives – Lloyd Blankfein, John Mack, and Dick Parsons himself – did not show up in person and had to join by conference call. Their excuse was bad weather (fog) in DC meant that they were unable to fly in; Mack was quoted as saying, regarding their absence, “It’s certainly not for a lack of effort“.
But really there are three possible interpretations:
Pure bad luck. This happens to us all; even the best laid plans are for nought sometimes.
Bad management by the executives and their logistic teams – who are ordinarily the best of the best.
Wilful defiance of the government which, while not premeditated in this instance, means that the executives grabbed an opportunity to show disrespect and relative power.
We don’t know all the facts of how these executives planned to travel or exactly their routes on Monday morning – and I would be happy to be corrected on any details – but here’s what we can readily construct from the public record. (We do know they didn’t try to come down Sunday evening, because that would have worked.)
President Obama held a press briefing after his meeting with the bankers, starting at 12:36pm. The meeting itself lasted a bit over an hour. As we all like to start meetings, particularly important meetings, on round numbers, it seems fair to assume that the appointment at the White House was for 11am. Even VIPs need some time to clear security, so let’s assume that the CEOs were asked to arrive by 10:30am.
All three of the missing bankers were apparently coming from New York. There are many ways to make the flight, but US Airways is among the most reliable – flying from LaGuardia to National Airport, every hour on the hour, from 6am. The flight takes just over an hour, it’s easier to get to LaGuardia from Manhattan before 7am, and delays are common at LGA as air traffic builds up over the east coast. Any conservative banker, who really did not want to be the only person missing a meeting with the president, would aim for the 7am shuttle – putting him on the tarmac in DC at 8:10am, with a comfortable time cushion (and an opportunity to have coffee with his chief lobbyist).
There was thick fog in DC on Monday morning, but this did not descend in a matter of seconds during rush hour – it was evident already by 5am. Corporate jets could get through (Jamie Dimon came that way), but let’s limit ourselves to public transportation – remember that the Acela train service is not generally slowed by fog and on Monday ran almost on time.
So the question becomes: At what point did the CEO realize that there was a fog issue, and was there still time to come by train? The Acela leaves Penn Station every hour on the hour, with the 7am train getting to DC at 9:49am and the 8am arriving at 10:49am.
We can rule out explanation #1 (bad luck). These are experienced people who travel all the time, with first class support staff, and they are supposed to be the best in the timely information business. These executives don’t generally wander around airports trying to puzzle out flight information displays.
Is explanation #2 plausible (bad management)? It is possible that at least one bank team wasn’t paying close attention and sent their boss to the airport for the 7am shuttle (although what are the odds that this would happen for 3 of our biggest and most dangerous banks?) An experienced traveller, who has checked in on-line, might aim to arrive at the airport at 6:30am – to discover the delays already in progress.
So then the question becomes: Can you get from LaGuardia to Penn station in 90 minutes early on a Monday morning? My experience is: Yes (if any New Yorkers know differently or if anyone saw John Mack pushing desperately through the crowds at Penn Station just before 8am Monday, please post or send that information in).
The implication is inescapable. These three bank executives did not plan on missing the meeting but, once they learned of the fog delay, they did not rush to the train station – which is what any other business traveller with a pressing commitment would have done.
These three executives – who were, in some sense, the primary audience for the president’s remarks – did not really want to attend. They do not see the need to show deference or even respect. They won big from the crisis and that is now behind them. As they move on (and up), there is nothing – in their view – that the executive branch can do to hold them back.
Even so, it wasn’t polite to behave in this fashion; showing disrespect to the President of the United States is always objectionable. But there is a pattern of behavior here, reflecting a deeper culture on Wall Street. This arrogance will eventually prove their undoing - no self-respecting White House can let this kind of repeated insult pass unaddressed.
By Simon Johnson
A simple but powerful effort by Simon Johnson:
The Baseline Scenario
“It’s Certainly Not For A Lack Of Effort”
Posted: 19 Dec 2009 06:21 AM PST
The fundamental divide in opinion regarding our financial system is: Are the people running “large integrated financial groups“ hapless fools, buffeted by forces beyond their comprehension and control; or do they know exactly how to ensure they get the upside and the awful, sickening downside is borne by society – including through high unemployment.
Some light was shed on this issue by Monday’s meeting at the White House or, more specifically, by who didn’t turn up and why. Of the dozen bank CEOs invited, Vikram Pandit was supposedly busy trying to extricate Citi from TARP and asked Dick Parsons to attend instead – a wimpy but smart move, as Parsons is close to the President.
However, three executives – Lloyd Blankfein, John Mack, and Dick Parsons himself – did not show up in person and had to join by conference call. Their excuse was bad weather (fog) in DC meant that they were unable to fly in; Mack was quoted as saying, regarding their absence, “It’s certainly not for a lack of effort“.
But really there are three possible interpretations:
Pure bad luck. This happens to us all; even the best laid plans are for nought sometimes.
Bad management by the executives and their logistic teams – who are ordinarily the best of the best.
Wilful defiance of the government which, while not premeditated in this instance, means that the executives grabbed an opportunity to show disrespect and relative power.
We don’t know all the facts of how these executives planned to travel or exactly their routes on Monday morning – and I would be happy to be corrected on any details – but here’s what we can readily construct from the public record. (We do know they didn’t try to come down Sunday evening, because that would have worked.)
President Obama held a press briefing after his meeting with the bankers, starting at 12:36pm. The meeting itself lasted a bit over an hour. As we all like to start meetings, particularly important meetings, on round numbers, it seems fair to assume that the appointment at the White House was for 11am. Even VIPs need some time to clear security, so let’s assume that the CEOs were asked to arrive by 10:30am.
All three of the missing bankers were apparently coming from New York. There are many ways to make the flight, but US Airways is among the most reliable – flying from LaGuardia to National Airport, every hour on the hour, from 6am. The flight takes just over an hour, it’s easier to get to LaGuardia from Manhattan before 7am, and delays are common at LGA as air traffic builds up over the east coast. Any conservative banker, who really did not want to be the only person missing a meeting with the president, would aim for the 7am shuttle – putting him on the tarmac in DC at 8:10am, with a comfortable time cushion (and an opportunity to have coffee with his chief lobbyist).
There was thick fog in DC on Monday morning, but this did not descend in a matter of seconds during rush hour – it was evident already by 5am. Corporate jets could get through (Jamie Dimon came that way), but let’s limit ourselves to public transportation – remember that the Acela train service is not generally slowed by fog and on Monday ran almost on time.
So the question becomes: At what point did the CEO realize that there was a fog issue, and was there still time to come by train? The Acela leaves Penn Station every hour on the hour, with the 7am train getting to DC at 9:49am and the 8am arriving at 10:49am.
We can rule out explanation #1 (bad luck). These are experienced people who travel all the time, with first class support staff, and they are supposed to be the best in the timely information business. These executives don’t generally wander around airports trying to puzzle out flight information displays.
Is explanation #2 plausible (bad management)? It is possible that at least one bank team wasn’t paying close attention and sent their boss to the airport for the 7am shuttle (although what are the odds that this would happen for 3 of our biggest and most dangerous banks?) An experienced traveller, who has checked in on-line, might aim to arrive at the airport at 6:30am – to discover the delays already in progress.
So then the question becomes: Can you get from LaGuardia to Penn station in 90 minutes early on a Monday morning? My experience is: Yes (if any New Yorkers know differently or if anyone saw John Mack pushing desperately through the crowds at Penn Station just before 8am Monday, please post or send that information in).
The implication is inescapable. These three bank executives did not plan on missing the meeting but, once they learned of the fog delay, they did not rush to the train station – which is what any other business traveller with a pressing commitment would have done.
These three executives – who were, in some sense, the primary audience for the president’s remarks – did not really want to attend. They do not see the need to show deference or even respect. They won big from the crisis and that is now behind them. As they move on (and up), there is nothing – in their view – that the executive branch can do to hold them back.
Even so, it wasn’t polite to behave in this fashion; showing disrespect to the President of the United States is always objectionable. But there is a pattern of behavior here, reflecting a deeper culture on Wall Street. This arrogance will eventually prove their undoing - no self-respecting White House can let this kind of repeated insult pass unaddressed.
By Simon Johnson
Saturday, October 3, 2009
Joe Nocera's Best Column Is This Week
(c) 2009 F. Bruce Abel
This column reveals the dirty secret about those who were running our financial institutions. Ken Lewis was merely an operations man, no leader. And he was a coward and insecure, so there was no succession plan. He bit on every merger and bought Merrill Lynch inartfully, even negligently.
My praise for this column might have been tempered had I seen Lewis's poor performance before Congress, apparantly this week. That would have given Nocera a lot of the interesting fodder of his article.
http://www.nytimes.com/2009/10/03/business/03nocera.html
This column reveals the dirty secret about those who were running our financial institutions. Ken Lewis was merely an operations man, no leader. And he was a coward and insecure, so there was no succession plan. He bit on every merger and bought Merrill Lynch inartfully, even negligently.
My praise for this column might have been tempered had I seen Lewis's poor performance before Congress, apparantly this week. That would have given Nocera a lot of the interesting fodder of his article.
http://www.nytimes.com/2009/10/03/business/03nocera.html
Friday, August 14, 2009
Monday, July 20, 2009
Saturday, July 18, 2009
Nocera -- Looking Back in Anger at the Crisis Last Fall
One of Joe Nocera's best.
Talking Business
Looking Back in Anger at the Crisis
Recommend
By JOE NOCERA
Published: July 17, 2009
“Did they first bring up the bailout to you, or did you bring it up to them?” asked Congressman Edolphus Towns, the chairman of the House Committee on Oversight and Government Reform.
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“I prefer to use the word ‘rescue,’ ” replied Henry Paulson Jr., the former secretary of the Treasury.
•
It was Thursday morning, and Mr. Paulson was once again before Congress, as he had been so many times last fall, defending his actions during the financial crisis. This time the subject was the Bank of America’s $50 billion purchase last year of Merrill Lynch, which Mr. Towns’s committee had become almost bizarrely obsessed with. In the middle of all the important issues Congress is currently tackling, it has managed to devote three full days of hearings to this seven-month-old deal.
Each hearing has had only one witness: the first to be grilled was Bank of America’s chief executive, Ken Lewis. Then came the Federal Reserve chairman, Ben Bernanke. Thursday was Mr. Paulson’s turn on the hot seat. The questions, from both parties, were uniformly hostile.
“Mr. Lewis, isn’t it true that ...”
“Yes or no, Mr. Bernanke ...”
“Isn’t that why you issued that threat, Mr. Paulson?”
The congressmen claimed to be investigating the events of last December. You’ll recall that just weeks before the Bank of America deal with Merrill Lynch was supposed to be consummated — and after shareholders had approved it — Mr. Lewis suddenly got cold feet. With Merrill Lynch’s toxic assets rapidly deteriorating, Mr. Lewis called Mr. Paulson and Mr. Bernanke to tell them he was thinking of pulling out of the deal.
Terrified that this might set off renewed panic in the financial markets, Mr. Paulson and Mr. Bernanke persuaded Mr. Lewis to stick by the deal. Quietly, over the next few weeks, they agreed to lend Bank of America an additional $20 billion from the Troubled Asset Relief Program to help shore up the bank’s capital. (They also agreed to backstop some $118 billion in troubled assets — though that part of the deal was later abandoned.) The first time the world learned of the additional government assistance was when the bank made its quarterly financial disclosure in January 2009 — weeks after the deal had closed.
To the congressmen at the hearings, something nefarious must have taken place during those negotiations. But what exactly? Dennis Kucinich, a Democrat from Ohio, told me that Mr. Lewis’s failure to inform shareholders was a “potential violation of securities law.” He felt that Mr. Lewis had gamed the banks’ regulators to get more money.
Mr. Towns, for his part, seemed to think that Mr. Paulson and Mr. Bernanke should have fired Mr. Lewis as a condition of more bailout money — that the government had been too nice to an incompetent management. Republicans, meanwhile, felt that Mr. Paulson and Mr. Bernanke had overreached, using intimidation and threats to force through a private transaction. And they all cited e-mail from the Fed that expressed skepticism at Mr. Lewis’s motives, and emphasized the need to keep things quiet for as long as possible.
I had watched the first two hearings with a growing sense of bewilderment. It always seemed obvious to me that if the Bank of America-Merrill deal hadn’t gone through, Merrill Lynch would have been in a horrible position, akin to Lehman Brothers or the American International Group. The government very likely would have had to spend an awful lot more than $20 billion to save it. Surely, the end result was worth whatever arm-twisting and additional government aid was required.
So why the anger? Why the suggestions of “cover-up” and “lies”? On Thursday, as I watched Mr. Paulson being castigated, it dawned on me. Seven months later, with the palpable fear of a financial collapse largely subsided, it really all boils down to how you view what happened last year. Was it, as Mr. Towns believes, a bailout of a handful of unworthy but too-big-to-fail institutions? Or was it, in the eyes of Mr. Paulson, a rescue of a teetering financial system? My vote is for the latter.
•
In retrospect, the events of last December have a kind of irrefutable logic. Mr. Lewis, scared by the mounting losses at Merrill, tells the government he is thinking of invoking the “material adverse event” clause in the contract to get out of it. Even though the clause is pretty airtight — among other things, it says that deteriorating assets are not enough to create a material adverse effect — it is still a useful weapon, and a common tactic. No matter what the actual wording, invoking it usually prompts litigation or a renegotiation of the terms, or both.
Mr. Paulson and Mr. Bernanke understand this, of course. But having just finished giving Citigroup another round of TARP aid, they fear that even a rumor that the Merrill deal is in trouble will set off a rerun of the awful events of last September, when the financial system melted down. They persuade Mr. Lewis to take one for the team.
“They needed to say to Ken Lewis, ‘You haven’t had very good capital ratios, and we’ve looked the other way,’ ” said Nancy Bush, a prominent bank analyst. “‘Now it is payback time. We’ve let you do deal after deal after deal. Now it’s time to take one on the chin.’ ”
That appears to be exactly what happened. Instead of renegotiating the deal with Merrill Lynch, Mr. Lewis wound up renegotiating it with the federal government. Mr. Paulson helpfully pointed out that as Bank of America’s regulator, the Federal Reserve had the right to remove him and his management team from their jobs if it no longer trusted his judgment. I can almost picture Mr. Lewis gulping as he listened to “Hammerin’ Hank” laying down the law.
Seen in this light, virtually all the Congressional objections seem almost laughably naïve. Mr. Lewis gamed the regulators? Hardly. Bank of America is paying 8 percent interest on the $20 billion. Unlike Goldman Sachs or JPMorgan Chase, it lacks the financial wherewithal to pay it back. And accepting the extra money means it has now taken as much overall TARP money as Citigroup, the very symbol of a crippled bank. Plus, of course, it has to abide by strict executive compensation rules.
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Talking Business
Looking Back in Anger at the Crisis
Recommend
By JOE NOCERA
Published: July 17, 2009
“Did they first bring up the bailout to you, or did you bring it up to them?” asked Congressman Edolphus Towns, the chairman of the House Committee on Oversight and Government Reform.
Skip to next paragraph
Related
Times Topics: Henry M. Paulson Jr. Merrill Lynch & Company Inc. Bank of America CorporationColumnist Page »
Readers' Opinions
Post a Comment on the Executive Suite Blog »
Add to Portfolio
Bank of America Corp
Go to your Portfolio »
“I prefer to use the word ‘rescue,’ ” replied Henry Paulson Jr., the former secretary of the Treasury.
•
It was Thursday morning, and Mr. Paulson was once again before Congress, as he had been so many times last fall, defending his actions during the financial crisis. This time the subject was the Bank of America’s $50 billion purchase last year of Merrill Lynch, which Mr. Towns’s committee had become almost bizarrely obsessed with. In the middle of all the important issues Congress is currently tackling, it has managed to devote three full days of hearings to this seven-month-old deal.
Each hearing has had only one witness: the first to be grilled was Bank of America’s chief executive, Ken Lewis. Then came the Federal Reserve chairman, Ben Bernanke. Thursday was Mr. Paulson’s turn on the hot seat. The questions, from both parties, were uniformly hostile.
“Mr. Lewis, isn’t it true that ...”
“Yes or no, Mr. Bernanke ...”
“Isn’t that why you issued that threat, Mr. Paulson?”
The congressmen claimed to be investigating the events of last December. You’ll recall that just weeks before the Bank of America deal with Merrill Lynch was supposed to be consummated — and after shareholders had approved it — Mr. Lewis suddenly got cold feet. With Merrill Lynch’s toxic assets rapidly deteriorating, Mr. Lewis called Mr. Paulson and Mr. Bernanke to tell them he was thinking of pulling out of the deal.
Terrified that this might set off renewed panic in the financial markets, Mr. Paulson and Mr. Bernanke persuaded Mr. Lewis to stick by the deal. Quietly, over the next few weeks, they agreed to lend Bank of America an additional $20 billion from the Troubled Asset Relief Program to help shore up the bank’s capital. (They also agreed to backstop some $118 billion in troubled assets — though that part of the deal was later abandoned.) The first time the world learned of the additional government assistance was when the bank made its quarterly financial disclosure in January 2009 — weeks after the deal had closed.
To the congressmen at the hearings, something nefarious must have taken place during those negotiations. But what exactly? Dennis Kucinich, a Democrat from Ohio, told me that Mr. Lewis’s failure to inform shareholders was a “potential violation of securities law.” He felt that Mr. Lewis had gamed the banks’ regulators to get more money.
Mr. Towns, for his part, seemed to think that Mr. Paulson and Mr. Bernanke should have fired Mr. Lewis as a condition of more bailout money — that the government had been too nice to an incompetent management. Republicans, meanwhile, felt that Mr. Paulson and Mr. Bernanke had overreached, using intimidation and threats to force through a private transaction. And they all cited e-mail from the Fed that expressed skepticism at Mr. Lewis’s motives, and emphasized the need to keep things quiet for as long as possible.
I had watched the first two hearings with a growing sense of bewilderment. It always seemed obvious to me that if the Bank of America-Merrill deal hadn’t gone through, Merrill Lynch would have been in a horrible position, akin to Lehman Brothers or the American International Group. The government very likely would have had to spend an awful lot more than $20 billion to save it. Surely, the end result was worth whatever arm-twisting and additional government aid was required.
So why the anger? Why the suggestions of “cover-up” and “lies”? On Thursday, as I watched Mr. Paulson being castigated, it dawned on me. Seven months later, with the palpable fear of a financial collapse largely subsided, it really all boils down to how you view what happened last year. Was it, as Mr. Towns believes, a bailout of a handful of unworthy but too-big-to-fail institutions? Or was it, in the eyes of Mr. Paulson, a rescue of a teetering financial system? My vote is for the latter.
•
In retrospect, the events of last December have a kind of irrefutable logic. Mr. Lewis, scared by the mounting losses at Merrill, tells the government he is thinking of invoking the “material adverse event” clause in the contract to get out of it. Even though the clause is pretty airtight — among other things, it says that deteriorating assets are not enough to create a material adverse effect — it is still a useful weapon, and a common tactic. No matter what the actual wording, invoking it usually prompts litigation or a renegotiation of the terms, or both.
Mr. Paulson and Mr. Bernanke understand this, of course. But having just finished giving Citigroup another round of TARP aid, they fear that even a rumor that the Merrill deal is in trouble will set off a rerun of the awful events of last September, when the financial system melted down. They persuade Mr. Lewis to take one for the team.
“They needed to say to Ken Lewis, ‘You haven’t had very good capital ratios, and we’ve looked the other way,’ ” said Nancy Bush, a prominent bank analyst. “‘Now it is payback time. We’ve let you do deal after deal after deal. Now it’s time to take one on the chin.’ ”
That appears to be exactly what happened. Instead of renegotiating the deal with Merrill Lynch, Mr. Lewis wound up renegotiating it with the federal government. Mr. Paulson helpfully pointed out that as Bank of America’s regulator, the Federal Reserve had the right to remove him and his management team from their jobs if it no longer trusted his judgment. I can almost picture Mr. Lewis gulping as he listened to “Hammerin’ Hank” laying down the law.
Seen in this light, virtually all the Congressional objections seem almost laughably naïve. Mr. Lewis gamed the regulators? Hardly. Bank of America is paying 8 percent interest on the $20 billion. Unlike Goldman Sachs or JPMorgan Chase, it lacks the financial wherewithal to pay it back. And accepting the extra money means it has now taken as much overall TARP money as Citigroup, the very symbol of a crippled bank. Plus, of course, it has to abide by strict executive compensation rules.
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Monday, February 23, 2009
Krugman -- On Nationalization of the Banks
Nationalization is as American as Apple Pie. As usual, he is excellent, if wonkish:
http://www.nytimes.com/2009/02/23/opinion/23krugman.html?_r=1
http://www.nytimes.com/2009/02/23/opinion/23krugman.html?_r=1
Sunday, January 25, 2009
Rich -- No Time For Poetry
The following is brilliantly constructed and said:
Op-Ed Columnist
No Time for Poetry
comments (119)
new_york_times:http://www.nytimes.com/2009/01/25/opinion/25rich.html
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By FRANK RICH
Published: January 24, 2009
PRESIDENT Obama did not offer his patented poetry in his Inaugural Address. He did not add to his cache of quotations in Bartlett’s. He did not recreate J.F.K.’s inaugural, or Lincoln’s second, or F.D.R.’s first. The great orator was mainly at his best when taking shots at Bush and Cheney, who, in black hat and wheelchair, looked like the misbegotten spawn of the evil Mr. Potter in “It’s a Wonderful Life” and the Wicked Witch of the West.
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Such was the judgment of many Washington drama critics. But there’s a reason that this speech was austere, not pretty. Form followed content. Obama wasn’t just rebuking the outgoing administration. He was delicately but unmistakably calling out the rest of us who went along for the ride as America swerved into the dangerous place we find ourselves now.
Feckless as it was for Bush to ask Americans to go shopping after 9/11, we all too enthusiastically followed his lead, whether we were wealthy, working-class or in between. We spent a decade feasting on easy money, don’t-pay-as-you-go consumerism and a metastasizing celebrity culture. We did so while a supposedly cost-free, off-the-books war, usually out of sight and out of mind, helped break the bank along with our nation’s spirit and reputation.
We can’t keep blaming 43 for everything, especially now that we don’t have him to kick around anymore. On Tuesday the new president pointedly widened his indictment beyond the sins of his predecessor. He spoke of those at the economic pinnacle who embraced greed and irresponsibility as well as the rest of us who collaborated in our “collective failure to make hard choices.” He branded as sub-American those who “prefer leisure over work or seek only the pleasures of riches and fame.” And he wasn’t just asking Paris Hilton “to set aside childish things.” As Linda Hirshman astutely pointed out on The New Republic’s Web site, even Obama’s opening salutation — “My fellow citizens,” not “fellow Americans” — invoked the civic responsibilities we’ve misplaced en masse.
These themes are not new for Obama. They were there back on Feb. 10, 2007, when, on another frigid day, he announced his presidential candidacy in Springfield, Ill. Citing “our mounting debts” and “hard choices,” he talked of how “each of us, in our own lives, will have to accept responsibility” and “some measure of sacrifice.” His campaign, he said then, “has to be about reclaiming the meaning of citizenship.” But the press, convinced that Obama was a sideshow to the inevitable Clinton-Giuliani presidential standoff, didn’t parse his words all that carefully, and neither did a public still maxing out on its gluttonous holiday from economic history. However inadvertently, Time magazine had captured the self-indulgent tenor of the times when, weeks earlier, it slapped some reflective Mylar on its cover and declared that the 2006 Person of the Year was “You.”
It was in keeping with the unhinged spirit of the boom that three days after Obama’s Springfield declaration, a Wall Street baron, Steven Schwarzman of the Blackstone Group, a private equity and hedge fund, celebrated his 60th birthday with some 350 guests in the vast Seventh Regiment Armory on Manhattan’s East Side. To appreciate the degree of ostentation and taste, you need only know that Rod Stewart was the headliner, at an estimated cost of $1 million.
That same week the National Association of Realtors told less well-heeled Americans not to fret about its report that median home prices had fallen in 73 metro areas during the final quarter of 2006. “The bottom appears to have already occurred,” said one of the N.A.R. economists. Another predicted: “When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices.”
We have discerned what happened to those sales and prices ever since. As for the Blackstone Group, it went public four months after its leader’s 60th birthday revels. Its shares have since lost 85 percent of their value, and Schwarzman’s bash has become a well-worn symbol of our deflated Gilded Age.
Yet the values of the bubble remain entrenched even as Obama takes office. In the upper echelons, we can find fresh examples of greed and irresponsibility daily even without dipping into the growing pool of those money “managers” who spirited victims to Bernie Madoff.
Last week’s object lesson was John Thain, the chief executive of Merrill Lynch. He was lionized as a rare Wall Street savior as recently as September, when he helped seal the deal that sped his teetering firm into the safe embrace of Bank of America on the same weekend Lehman Brothers died. Since then we’ve learned that even as he was laying off Merrill employees by the thousands, he was lobbying (unsuccessfully) for a personal bonus as high as $30 million and spending $1.22 million of company cash on refurbishing his office, an instantly notorious $1,405 trashcan included.
Thain resigned on Thursday. Only then did we learn that he doled out billions in secret, last-minute bonuses to his staff last month, just before Bank of America took over and just before the government ponied up a second bailout to cover Merrill’s unexpected $15 billion fourth-quarter loss. So far American taxpayers have spent $45 billion on this mess, and that’s only our down payment.
In less lofty precincts of the American economic spectrum, the numbers may be different but the ethos has often been similar. As Wall Street titans grabbed bonuses based on illusory, short-term paper profits, so regular Americans took on all kinds of debt wildly disproportionate to their assets and income. The nearly $1 trillion in unpaid credit-card balances is now on deck to be the next big crash.
This debt-ridden national binge of greed and irresponsibility washed over our culture not just through the Marie Antoinette antics of a Schwarzman and a Thain but in mass forms of conspicuous consumption and entertainment. Cable networks like Bravo, A&E, TLC and HGTV produced an avalanche of creepy programming catering to the decade’s housing bubble alone — an orgiastic genre that might be called Subprime Pornography. Some of the series — “Flip This House,” “Flip That House,” “Sell This House,” “My House Is Worth What?” — still play on even as more and more house owners are being flipped into destitute homelessness.
The austerity of Obama’s Inaugural Address seemed a tonal corrective to the glitz and the glut. The speech was, as my friend Jack Viertel, a theater producer, put it, “stoic, stern, crafted in slabs of granite, a slimmed-down sinewy thing entirely evolved away from the kind of Pre-Raphaelite style of his earlier oration.” Some of the same critics who once accused Obama of sounding too much like a wimpy purveyor of Kumbaya now faulted him for not rebooting those golden oldies of the campaign trail as he took his oath. But he is no longer campaigning, and the moment for stadium cheers has passed.
If we’ve learned anything since the election, it is this: We have not remotely seen the bottom of this economy, and no one has a silver bullet to arrest the plunge, the hyped brains in the new White House included. Most economists failed to anticipate the disaster, after all, and our tax-challenged incoming Treasury Secretary may prove as evanescent as past saviors du jour. As we applauded Thain in September, we were also desperately trying to convince ourselves that Warren Buffett’s $5 billion investment in Goldman Sachs would turn the tide, and that Hank Paulson, as Newsweek wrote in a cover story titled “King Henry,” would be the “right man at the right time.”
Obama couldn’t give us F.D.R.’s first inaugural address because we are not yet where America was in 1933 — in its fourth year of downturn after the crash of ’29, with an unemployment rate of 25 percent. But no one knows for sure that we cannot end up there.
On Tuesday, our new president did offer one subtle whiff of the Great Depression. His injunction that “we must pick ourselves up, dust ourselves off” was a paraphrase of the great songwriter Dorothy Fields, who wrote that lyric for “Swing Time” (1936), arguably the best of the escapist musicals Hollywood churned out to lift the nation’s spirits in hard times. But Obama yoked that light-hearted evocation of Astaire and Rogers to a call for sacrifice that was deliberately somber, not radiantly Kennedyesque.
That call included the obligatory salutes to those who serve by parenting, firefighting or helping strangers when natural disaster strikes. But he also cited one less generic example: “workers who would rather cut their hours than see a friend lose their job.” There will be — there must be — far larger sacrifices in that vein yet to come. No one truly listening to the Inaugural Address could doubt that this former community organizer intends to demand plenty from us as we face down what he calls “raging storms.”
Last weekend, Bob Woodward wrote an article for The Washington Post listing all the lessons the new president can learn from his predecessor’s many blunders. But what have we learned from our huge mistakes during the Bush years? While it’s become a Beltway cliché that America’s new young president has yet to be tested, it is past time for us to realize that our own test is also about to begin.
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No Time for Poetry
comments (119)
new_york_times:http://www.nytimes.com/2009/01/25/opinion/25rich.html
if (acm.cc) acm.cc.write();
By FRANK RICH
Published: January 24, 2009
PRESIDENT Obama did not offer his patented poetry in his Inaugural Address. He did not add to his cache of quotations in Bartlett’s. He did not recreate J.F.K.’s inaugural, or Lincoln’s second, or F.D.R.’s first. The great orator was mainly at his best when taking shots at Bush and Cheney, who, in black hat and wheelchair, looked like the misbegotten spawn of the evil Mr. Potter in “It’s a Wonderful Life” and the Wicked Witch of the West.
Post a Comment »
Read All Comments (119) »
if (acm.rc) acm.rc.write();
Such was the judgment of many Washington drama critics. But there’s a reason that this speech was austere, not pretty. Form followed content. Obama wasn’t just rebuking the outgoing administration. He was delicately but unmistakably calling out the rest of us who went along for the ride as America swerved into the dangerous place we find ourselves now.
Feckless as it was for Bush to ask Americans to go shopping after 9/11, we all too enthusiastically followed his lead, whether we were wealthy, working-class or in between. We spent a decade feasting on easy money, don’t-pay-as-you-go consumerism and a metastasizing celebrity culture. We did so while a supposedly cost-free, off-the-books war, usually out of sight and out of mind, helped break the bank along with our nation’s spirit and reputation.
We can’t keep blaming 43 for everything, especially now that we don’t have him to kick around anymore. On Tuesday the new president pointedly widened his indictment beyond the sins of his predecessor. He spoke of those at the economic pinnacle who embraced greed and irresponsibility as well as the rest of us who collaborated in our “collective failure to make hard choices.” He branded as sub-American those who “prefer leisure over work or seek only the pleasures of riches and fame.” And he wasn’t just asking Paris Hilton “to set aside childish things.” As Linda Hirshman astutely pointed out on The New Republic’s Web site, even Obama’s opening salutation — “My fellow citizens,” not “fellow Americans” — invoked the civic responsibilities we’ve misplaced en masse.
These themes are not new for Obama. They were there back on Feb. 10, 2007, when, on another frigid day, he announced his presidential candidacy in Springfield, Ill. Citing “our mounting debts” and “hard choices,” he talked of how “each of us, in our own lives, will have to accept responsibility” and “some measure of sacrifice.” His campaign, he said then, “has to be about reclaiming the meaning of citizenship.” But the press, convinced that Obama was a sideshow to the inevitable Clinton-Giuliani presidential standoff, didn’t parse his words all that carefully, and neither did a public still maxing out on its gluttonous holiday from economic history. However inadvertently, Time magazine had captured the self-indulgent tenor of the times when, weeks earlier, it slapped some reflective Mylar on its cover and declared that the 2006 Person of the Year was “You.”
It was in keeping with the unhinged spirit of the boom that three days after Obama’s Springfield declaration, a Wall Street baron, Steven Schwarzman of the Blackstone Group, a private equity and hedge fund, celebrated his 60th birthday with some 350 guests in the vast Seventh Regiment Armory on Manhattan’s East Side. To appreciate the degree of ostentation and taste, you need only know that Rod Stewart was the headliner, at an estimated cost of $1 million.
That same week the National Association of Realtors told less well-heeled Americans not to fret about its report that median home prices had fallen in 73 metro areas during the final quarter of 2006. “The bottom appears to have already occurred,” said one of the N.A.R. economists. Another predicted: “When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices.”
We have discerned what happened to those sales and prices ever since. As for the Blackstone Group, it went public four months after its leader’s 60th birthday revels. Its shares have since lost 85 percent of their value, and Schwarzman’s bash has become a well-worn symbol of our deflated Gilded Age.
Yet the values of the bubble remain entrenched even as Obama takes office. In the upper echelons, we can find fresh examples of greed and irresponsibility daily even without dipping into the growing pool of those money “managers” who spirited victims to Bernie Madoff.
Last week’s object lesson was John Thain, the chief executive of Merrill Lynch. He was lionized as a rare Wall Street savior as recently as September, when he helped seal the deal that sped his teetering firm into the safe embrace of Bank of America on the same weekend Lehman Brothers died. Since then we’ve learned that even as he was laying off Merrill employees by the thousands, he was lobbying (unsuccessfully) for a personal bonus as high as $30 million and spending $1.22 million of company cash on refurbishing his office, an instantly notorious $1,405 trashcan included.
Thain resigned on Thursday. Only then did we learn that he doled out billions in secret, last-minute bonuses to his staff last month, just before Bank of America took over and just before the government ponied up a second bailout to cover Merrill’s unexpected $15 billion fourth-quarter loss. So far American taxpayers have spent $45 billion on this mess, and that’s only our down payment.
In less lofty precincts of the American economic spectrum, the numbers may be different but the ethos has often been similar. As Wall Street titans grabbed bonuses based on illusory, short-term paper profits, so regular Americans took on all kinds of debt wildly disproportionate to their assets and income. The nearly $1 trillion in unpaid credit-card balances is now on deck to be the next big crash.
This debt-ridden national binge of greed and irresponsibility washed over our culture not just through the Marie Antoinette antics of a Schwarzman and a Thain but in mass forms of conspicuous consumption and entertainment. Cable networks like Bravo, A&E, TLC and HGTV produced an avalanche of creepy programming catering to the decade’s housing bubble alone — an orgiastic genre that might be called Subprime Pornography. Some of the series — “Flip This House,” “Flip That House,” “Sell This House,” “My House Is Worth What?” — still play on even as more and more house owners are being flipped into destitute homelessness.
The austerity of Obama’s Inaugural Address seemed a tonal corrective to the glitz and the glut. The speech was, as my friend Jack Viertel, a theater producer, put it, “stoic, stern, crafted in slabs of granite, a slimmed-down sinewy thing entirely evolved away from the kind of Pre-Raphaelite style of his earlier oration.” Some of the same critics who once accused Obama of sounding too much like a wimpy purveyor of Kumbaya now faulted him for not rebooting those golden oldies of the campaign trail as he took his oath. But he is no longer campaigning, and the moment for stadium cheers has passed.
If we’ve learned anything since the election, it is this: We have not remotely seen the bottom of this economy, and no one has a silver bullet to arrest the plunge, the hyped brains in the new White House included. Most economists failed to anticipate the disaster, after all, and our tax-challenged incoming Treasury Secretary may prove as evanescent as past saviors du jour. As we applauded Thain in September, we were also desperately trying to convince ourselves that Warren Buffett’s $5 billion investment in Goldman Sachs would turn the tide, and that Hank Paulson, as Newsweek wrote in a cover story titled “King Henry,” would be the “right man at the right time.”
Obama couldn’t give us F.D.R.’s first inaugural address because we are not yet where America was in 1933 — in its fourth year of downturn after the crash of ’29, with an unemployment rate of 25 percent. But no one knows for sure that we cannot end up there.
On Tuesday, our new president did offer one subtle whiff of the Great Depression. His injunction that “we must pick ourselves up, dust ourselves off” was a paraphrase of the great songwriter Dorothy Fields, who wrote that lyric for “Swing Time” (1936), arguably the best of the escapist musicals Hollywood churned out to lift the nation’s spirits in hard times. But Obama yoked that light-hearted evocation of Astaire and Rogers to a call for sacrifice that was deliberately somber, not radiantly Kennedyesque.
That call included the obligatory salutes to those who serve by parenting, firefighting or helping strangers when natural disaster strikes. But he also cited one less generic example: “workers who would rather cut their hours than see a friend lose their job.” There will be — there must be — far larger sacrifices in that vein yet to come. No one truly listening to the Inaugural Address could doubt that this former community organizer intends to demand plenty from us as we face down what he calls “raging storms.”
Last weekend, Bob Woodward wrote an article for The Washington Post listing all the lessons the new president can learn from his predecessor’s many blunders. But what have we learned from our huge mistakes during the Bush years? While it’s become a Beltway cliché that America’s new young president has yet to be tested, it is past time for us to realize that our own test is also about to begin.
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Thursday, July 17, 2008
Things No One Talks About -- Yet
In today's bank crisis it is dawning on me: so if all banks are in trouble, where does one put one's money? What about a corporation? Break everything up into $100,000 insurable amounts? Impossible for a Procter & Gamble.
Start one's own bank? Impossible.
Cramer last night had a three-part answer, based on the savings & loan crisis. And I'd bet that the government does just what he suggests: set up a Resolution Trust to buy up all the "bad" paper of the banks. Then let Wells Fargo's of the world (there's got to be other "good banks" doesn't there?) buy up the rest of the good operations of the failing banks.
Start one's own bank? Impossible.
Cramer last night had a three-part answer, based on the savings & loan crisis. And I'd bet that the government does just what he suggests: set up a Resolution Trust to buy up all the "bad" paper of the banks. Then let Wells Fargo's of the world (there's got to be other "good banks" doesn't there?) buy up the rest of the good operations of the failing banks.
Thursday, May 22, 2008
Beware the BOLI
See my earlier blog on Fifth Third's law suit filed in U.S. District Court, Southern District of Ohio. Search the word "astounding" within this blog.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahyNQ.QWgD1Y&refer=home
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahyNQ.QWgD1Y&refer=home
Tuesday, April 22, 2008
There's a Reason Why We Have Banks...
Except for a few sectors like energy, you can forget about making money in the stock market for a few years:
http://www.nytimes.com/2008/04/22/business/22bank.html
http://www.nytimes.com/2008/04/22/business/22bank.html
Saturday, January 12, 2008
Banc of America -- The Worst Bet Ever?
Those of us who have seen Mazilo on CNBC, deep tan and all -- there's no way Countrywide isn't indicted as a company, a la Arthur Anderson in Enron. If that happens, of course, the Banc of America deal is the Worst Bet Ever.
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