Saturday AM Rant

It’s 6AM on Saturday and for the last hour or so I’ve been tossing, turning and resisting the urge to yet again clutter this blog with my political and economic ponderings. Resistance it seems really is futile. The compromise agreement I made with myself is to cut to the chase and condense my usual elaborate rants into a single post. To wit….

To be Frank
The surprise of the week was to find myself in agreement with Rep. Barney Frank on the issue - more like an aspect - of executive compensation. It has been my experience that his assertion that executives are rewarded for taking risks whether or not they pay off is true. He goes on to say that the shareholders should have a say in executive compensation and that where the Taxpayers have taken a stake in institutions he would ensure that that would be the case.

This is where it gets interesting. As a taxpayer, I don’t recall having a say in those investment decisions nor – as I’ve already said this too often – any evidence of or control over them. I’m also very sure that I never granted Mr. Frank power of attorney on my brokerage account or a proxy to speak on my behalf.

So Mr. Frank, I agree that the Taxpayers as stock holders – voluntary or otherwise – should be able to exercise their rights as such. To that end let me once more say – I WANT MY SHARES!


A bridge to nowhere
The last thing I need is another reason to question my memory so please check me out on this.

As I recall the current economic crisis owes primarily to epic amounts of irresponsible lending. Further, those that did the lending knew better or should have known better. I agree, and I also agree with the hoards of posturing politicians that they were at best irresponsible and at worst criminal.

Moving along, I also recall those same posturing politicians bristling at the characterization of the auto bailout as a bailout. No, they vehemently insisted that it wasn’t a bailout but rather that it was a bridge loan to carry them over until they could return to solvency if not profitability. The unthinkable alternative they told us was bankruptcy which would have catastrophic consequences.

And here we are. Money gone – check; bankrupt – check; sky falling – no check. Now the posturing politicians are quick to point out that this is an ‘orderly’ bankruptcy. They are less quick to define what that means or why it could not have been done from the outset.

So my dear posturing politicians if you really believed you were making a bridge loan, you should have known better. If you said it but didn’t believe it then I guess you were – well let’s just say being politicians.


A lesson from Ken Lewis
Ken Lewis was dragged up to Washington to yet again testify about the Merrill Lynch merger. Center to the questioning was the issue of whether Mr. Lewis was coerced by the government to proceed with the deal against his better judgment. It seemed obvious to most that he certainly was. However, when asked if he felt threatened Mr. Lewis seemed to avoid the question by saying that he took the strength and tone of the remarks as evidence of the government’s conviction that the merger was a necessity.

I think what Mr. Lewis was trying to convey is that being threatened and feeling threatened are not the same thing and, however we got here, we are where we are and our focus needs to be on the future. Ken Lewis didn’t want the discussion to be about Ken Lewis but rather about what’s best for the country.

Mr. Lewis’ selfless attitude stands in pretty stark contrast to Stan O’Neal and others that stood tall and proud as they led American icons into extinction. Mr. Lewis reminds us that there is a high road and that humility is a virtue, not a weakness. Well done.