Tuesday, March 24, 2009


I was pissed before, now I’m … just can’t find the words for how disgusted I am. CNBC Erin Burnett is interviewing Gerald Lipkin, CEO of Valley National Bank, and John Koelmel, CEO of [big ole] First Niagara Bank, who received TARP money but said they didn’t need it. They said they just took it to help the government unfreeze the credit market and lend money to the folks on main street. If you’re a healthy bank, then you can give out loans w/o TARP money. Right?

Next, Lipkin and Koelmel are upset because they don’t want their compensation and bonuses messed with. Erin Burnett shows a great deal of sympathy for these “poor little ole banks” [which aren’t poor by any stretch of the imagination].

Well, let’s examine this. For the sake of clarity, I’m going to call TARP money taxpayer money.

These banks are doing just great, yet they take tax payer money which supposedly will allow them to extend more loans than they would have w/o it. These banks also got bigger by acquiring other banks [do we really want bigger banks?].
Erin Burnett failed to ask some very pertinent questions. CNBC business as usual.
Since they didn't ask, we have to; and, we’ve got to take a peek at all these banks' books and whatever else might be lurking out of regulator range.

Let’s see who wins here:
These healthy banks are potentially going to make a lot of money with the tax-payers money. Is the tax-payer going to get a share in the real profits in proportion to the amount of money these banks received; or will the banks be hiding something so we don’t get our fair share?

Now they say they’re going to give (perhaps tax-payer funded) bonuses to employees (on top of their regular salaries) because they did such a fine job with tax payers’ money (even though they didn’t need the money). I don’t even like that scenario, but let’s see what happens if we find out down the line that these loan officers and underwriters (and other high paid employees) did a really lousy job and the loans went bad.

Even more horrifying: What if First Niagara is involved in a mini AIG-type scandal? FNB owns an insurance brokerage and Gramm-Leach-Bliley and the Commodities Futures Modernization Act still have not been repealed, ... right? They’ve already got the bonus, and perhaps we’ve also been scammed. How screwed are we?
Is this whole thing starting to stink a little, … a lot?

More on Wall Street:
Let’s take a closer look at Wall Street and AIG:
The Big Takeover
Elizabeth Warren – [Nowhere to go but down]

1 comment:

Elaine said...

**********You absolutely must read this:
"Why the U.S. Has Launched a New Financial World War -- and How the Rest of the World Will Fight Back"