What 8 Bailout CEOs Need to Explain

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First, I have enjoyed the series of blogs, including this article, on the "financial crises". I have been reading through them on nad off for the past 5 hours and still have 15 to go. For the most part I have considered them "right on target".
In this article, however there were two banks, BNY Mellon and State Street who appeared before congress at the same hearing, for which you appeared to have no follow-up questions.
My point is that there are, as you have referred to in other blogs, healthy banks out there that have been and expect to reamin solvent and profitable through this crises and who also are using the bailout funds "as designed".
There are also "wall street" firms that play by the rules, work for the benefit of their customers and thereby also benefit themselves and do pay bonuses bsed on profitability and merit.
Don't you think those stories are also worth telling?

Dr Paul of NY 2:19PM March 18, 2009

Instead of bailout money to the banks, have the government convert ARM's and high interest mortgages to 4% deals. It will keep homeowners in their homes, solidify the real estate market,keep R/E taxes flowing to cities,and find a bottom to this mess. Foreclosed properties or vacant houses devalue adjacent homes. Anyone who can't pay a 4% mortgage SHOULD loose their house anyway!!! At 4%, people would have some money left over to spend in the local economy. And I would take my chances of getting repaid by a homeowner with an interest in their real value, rather than bankers who got a handout of taxpayer money with no skin in the game.

Paul Douglas of NJ 5:28PM March 12, 2009

check this out. the subsequent sales of these cmo's libor based class III assets through hedge funds were already in the process of being intentionally dumped on global bank markets,purely for commissions as a known toxic asset... as most big banks got caught in catastrophic illiquidity after they failed to commission enough hedge funds to sell their class III and IV EA SCRATCH AND DENT OMISSIONS.
the mentality was the same as the subsequent Russian Derivatives crisis in the late 80's and early 90's... "nothing will matter if these over leveraged assets crashes...because the whole global system will have collapsed. So eat, drink and be merry and let's make money dumping this junk on the greater fools.

patrick Munce of MI 3:09PM March 12, 2009

OK, maybe it is time to expose another myth. Price per share of bank stock does NOT equal the book value of bank assets. Price per share of bank stock does equal what investors are willing to pay for it. And right now, a lot of the folks who have been saving instead of spending are thinking it isn't very smart to buy shares in Citibank (or General Motors), even at penny stock prices.
The book value of Citibank or GM might be increasing because of the government bail-out. When many think there is a high probability that the Federal government might nationalize the bank, there will be few buyers for the stock at any price above zero.
How many people would spend $10,000 for a $20,000 Ford truck if they thought the government would sieze the truck this year? Maybe the folks that don't want to pay off their credit card debt or home mortgage? The savers are just as likely to put the $10K in gold and bury it.

dennis hansel of NE 11:00AM March 12, 2009

I agree with the concept of giving us, the tax payers the money and let us stimulate the economy. Think of how many business would be doing much better if all tax payers had $50K or $100K to pay off bills, catch up on mortgage payments (no defaults) buy houses and cars etc. So many would still be in business. All bail out money for banks is doing is making things worse. More greed. I say let the strong survive and the weak, poorly managed banks fall. I am no rocket scientist but even I, with a high school education can see that. So why can't all of these supposedly smart people running our almost bankrupt country see it? Anyone notice the crime rate going up? Oh yea I almost forgot... hang Bernie's ass. In public.

Louis of FL 9:19AM March 12, 2009

I'm going to go see if I can find a copy of ATLAS SHRUGGED by Ayn Rand at the local library.
I read the book 40+ years ago as a teenager (I'm 56 now). The answer to this financial crisis is philosophically ingrained in that reading.
What was it she said? That we must pursue our basic industries and renew capitalism.
There is no answer to this crisis through government intervention. Nationalization leads nowhere.

P. H. Mills of TX 11:09AM February 28, 2009

Too bad nothing will come of all this. They get millions while we pay for it. Must be nice driving your yacht away from all of this hell. $160 million payout for O'neal. Hell, I'll go run that bank for a few years if I can get that kind of money for ruining a company.

aaron beaulieu of SC 7:21PM February 18, 2009

Yea ,you left out AIG the one that really needs nailed to the wall. Afterall they received bailout money..(REMEMBER US TAXPAYERS HARD EARNED MONEY PAYS FOR THIS BAILOUT)...to go on big cruises and then turn around and have NERVE TO ASK FOR MORE????...IF THEY CAN AFFORD THE BIG CRUISE THEY TOOK THEIR STAFF ON, THEY CAN AFFORD TO PAY BACK THE TAXPAYERS..CAUSE WE DIDNT AGREE TO PAY FOR THEIR VACATION IN A CRITICAL TIME OF ECONOMIC NEED~!!
Also Mortage companies and Banks...I dont feel we should have to bail them out either , after all they are the ones that put loans thru to people who had income that couldnt meet the payments..how do you give a $100,000-up loan to a person with $45,000 income???...common sense tells you this person cant make the payments unless they have a savings or some other source of income. So the loan companies need to be more in depth with checking out these kinda things before granting loans to people who dont meet the guidelines instead of just looking at the interest money they make for themselves only to loose that as well as the loan amount financed when the consumer falls under for whatever the reason might be~!!
I personally think that to really stimulate the economy the best way to do this is to give each taxpayer a say $50,000 or more (afterall it is our money), people will use this money to pay their past due mortages,car payments,credit card, buy vehicles, and etc... that means money going into the economy right??? Apparently the government isnt really looking out for anyone but their best interest and we the American people need to stand up and fight for what is ours and stop letting the government take full control of our lives..communism is well underway and we the American people need to take action fast~!!

Vickie of OH 10:54AM February 15, 2009

Well said! Lucid and to the point. It is also particularly galling to hear these former masters of the universe attribute their corporate failures to the world economy. Haven't these boozos heard of economic cycles? If JPMorgan and (to a lesser extent) Goldman Sachs were able to dodge the storm, what does that say about the quality of the CEOs heading the other firms! It also seems clear that renumeration and performance seem to be operating in an inverse relationship: the more the CEOs were paid, the worse they have performed. Does elevating your company's CEO to the league of the mega rich, led them to engage in reckless behaviour? If you are earning over 1 million USD a year as a CEO for a company you haven't built (unlike Gates or Steve Jobs), perhaps this level of renumeration clouds your judgement and you lose the ability to perceive risk correctly? Obama is right, if you take the taxpayers dimes and nickels to save your company from bankruptcy, then don't pay out million dollar bonuses until you have repaid the debt to the nation.
One minor criticism: you forgot to include the crown (or clown) prince of reckless endeavour, Dick Fuld of Lehman Brothers.
Thanks also for your recent articles, they are right on the money and I hope people in Washington have the sense to read them and take note.

Bob of NY 1:48AM February 14, 2009