Monday, February 16, 2009

Week of 02/16/2009

Do They Really “Get It”?
– by David Matthews 2

For the longest time, Peanuts characters Lucy Van Pelt and Charlie Brown would have this endless test of wills over a football. Lucy would hold a football for Charlie Brown to kick, and then right at the last minute, she’d pull it away, causing Charlie Brown to go sailing into yet another pratfall. And every time Charlie Brown realized what was happening, Lucy would convince him to try again, saying that she “learned her lesson” and that the next time would be different. Of course it wouldn’t be. She’d jerk the football away and Chuck would be spiraling away… again.

The animators at Adult Swim’s “Robot Chicken” finally gave a solution to the age-old football tease, where Charlie Brown would once again be talked into kicking the football, only this time he would stop right as Lucy pulled the football away. He would then punt her off screen, exclaiming “That’s for years of humiliation, bitch!”

I’m sure the late Charles Schultz was spinning in his grave when that segment got aired, but in all honesty, you have to wonder how many times someone would be played before they would be tempted to do just that.

That little thought came to mind as the chief executives of eight of the major banks showed up in the not-so-hallowed halls of Congress to get their much-needed tongue-lashings this past week. All eight bank executives were summoned to Congress to answer questions about how they have spent the billions of taxpayer dollars that were given to them in bailout money. Money that they supposedly needed to restart the financial flow that stalled a few months back when the economic downturn kicked into high gear.

And they were there because the members of Congress did not like what they had heard beforehand. They heard about banks getting the bailout money and holding on to it. They heard about banks screwing over customers… the very taxpayers that are paying for the bailout in the first place… by jacking up credit card rates and slashing limits. They heard about bank execs getting bonuses and going on still more junkets to places like Las Vegas and sponsoring the Super Bowl. And they knew we didn’t like hearing that.

So these so-called “Captains of Capitalism” were summoned to Congress to get their well-deserved scolding. And they sat there as members of Congress put on their ugly faces and chewed them out for the things they did. One of them commented that he felt more like a “Corporal” after the dressing-down they all got.

And then came the promises! They all promised changes. They all promised contrition. Citigroup CEO Vikram Pandit, already suffering egg on his face for trying to use bailout money to buy a new private jet, said that he now gets “the new reality” and he promises that his bank will as well.

But are they really serious? Do they really “get it”?

Or are they only saying what Congress WANTS to hear?

To be certain, the banks have never been seen wearing white hats when the economy is not doing too well. The image of Jimmy Stewart personally lending out money from his own pocket, as seen in the movie “It’s a Wonderful Life”, is pretty much nothing more than Hollywood fiction. Lenders have a long history of being the bad guys when times are tough.

In fact, while the bank CEOs were getting their tongue-lashing in the House, the Deputy Director of the FBI was busy telling the Senate that they are investigating 530 active corporate fraud investigations, with 38 of them directly related to the current economic crisis. New York Attorney General Andrew Cuomo also accused executives at Merrill Lynch, now owned by Bank of America, of issuing themselves $3.6 billion in secret early bonuses just as the government was moving to bail them out. Not only that, but their new owners knew about the secret Christmas presents, and rather than discourage it, they only suggested that those bonuses be reduced “substantially”.

And still unaccounted for is the estimated TWO TRILLION in money issued from the previous administration to lenders prior to the October bailout. Money that we are only told was “essential” to keep the financial institutions going, but apparently it didn’t do what it was supposed to or else Wall Street wouldn’t have had to go begging again.

So the question remains… do they REALLY “get it”? Or is this yet another in a long string of promises made, much like Lucy Van Pelt’s promise to hold the football down so Charlie Brown can kick it?

Or maybe the real question that should be asked is… do WE “get it”?

Let’s get brutally honest here… a lending institution, a bank, or whatever you want to call it, is first and foremost a private enterprise. It’s a business. Above and beyond anything else in this world, it is a business.

Like any other business, that institution’s goal is to make money. Never mind what their mission statement says. Never mind what their PR statement says. They’re in this for themselves and their investors before anyone else.

And like any other business, in times of trouble, that business has only one thing on its mind: survival. They don’t care who they have to screw over to do it, or how many corners it has to cut; they will do whatever it takes to survive.

I need to mention this because this gets lost when we start talking about banks and other lending institutions. They’re not in this for a “public service”. They’re in this to make money!

So… give a bank a few billion, without conditions, without accountability… and did you REALLY think that they would do what you EXPECT them to do with that money? Or didn’t it ever occur to you that they would treat it as business as usual?

The really scary part is that WE HAVE seen this before! All you have to do is go back about twenty years to see the same pattern with the Savings and Loan lenders. Gross incompetence, lavish spending, banks collapsing… and promises from those in the government to do better. So why didn’t they?

There’s nothing “new” about this “reality”. The only thing that is “new” is the scope of gross incompetence and mismanagement and bad governance surrounding it.

What bank executives need to “get” is that the billions of taxpayer dollars that are being funneled their way are not Christmas presents. It’s WELFARE money. It’s an attempt to keep their businesses open so that they can try to keep what’s left of this deteriorating economy going. Don’t think of this as a bailout as much as it should be seen as a “buy-in”. The government is the new co-owner of your financial enterprise. Treat it accordingly.

What the legislators need to “get” is that we’re not happy with THEM either! The Republicans may be at fault for relaxing the rules five years ago that set the stage for this fiscal train wreck, but the Democrats are ones in the hot seat for needing to fix it. The only way that businesses will “get it” is if there ARE conditions to that money. Again, don’t treat this as a “bailout” but as a “buy-in”. We’re the new co-owners, and it’s high time that we paid better attention to our new investments.

And what the rest of us need to “get” is that these banks are not our friends. They’re not community institutions here to do the “public good”. They are businesses first and foremost, and their interests are no less self-serving than any other business.

The image of Charlie Brown constantly falling for Lucy’s lies and deceptions and ending up flat on his back may be funny once or twice, but in the real world it’s only a matter of time before either Charlie Brown refuses to take part in the hoax, or else he does what the “Robot Chicken” animators allowed him to do and he punts Lucy in the head. The lawmakers AND the bank executives need to know that WE are the Charlie Browns in this situation, and we’re getting sick and tired of being played for fools.

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