A Congressional panel headed by Harvard Law School professor Elizabeth Warren is suggesting it's time to fire bank CEOs and liquidate the banks they ran. As Jon Stewart would say, "Me likey."
The panel is not suggesting that the firing and liquidation happen en masse. Rather, it simply argues that the Treasury's approach denies the reality of just how bad the banks' financial condition is and leaves those sick banks in control of the very people who got them into the toxic-waste business. The panel suggests that CEOs of sick banks have a too-rosy view of their institutions' prospects.
What is most striking about the panel's report is the political courage it takes to publish the report and its relative objectivity. Since Warren is not on the Wall Street payroll, as others like Larry Summers clearly are, her panel is in a position to look at the problem in the cold hard light of reality. If the U.S. chooses to liquidate the institutions that are in the worst shape and that liquidation is carried out in an orderly manner, the rest of the financial system will be spared.
Unfortunately, since there is so much political momentum behind the $1 trillion plan to enrich hedge funds by paying them to buy toxic waste, I predict that this brave, direct-bulls-eye of a report will be ignored.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.
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Reader Comments (Page 1 of 1)
4-08-2009 @ 12:47PM
Mike Rowan said...
I think that it gets a little bit into the "grey" area about the government or public "firing" anyone. We have the most powerful tool available with our power of choice. Read my post here about the GM situation.
http://www.erollover.com/blog/gm-bankruptcy/general-motors-rick-wagoner
4-08-2009 @ 12:47PM
joe soule said...
Agreed.
4-08-2009 @ 1:09PM
James Fowlkes said...
I agree completely. This is what would have happened naturally in the first place had the govt not stepped in and tried to save these failing companies. The companies that made bad decisions would have failed and the companies that invested wisely would have gotten their customers and taken their place as leaders in the industry. It is natural selection in capitalist markets. What the govt has done by trying to save these struggling companies will only delay the inevitable and waste billions of taxpayer money in the meantime.
4-08-2009 @ 1:28PM
CLEATON CANTRELL said...
The so called Toxic Asset's are the Homes and property of the weakest most vulnerable of Our society, Yet still they are in great Pain and suffering not asking or even a hope for any sort of a bail out the only bail out they got was when the Evil Greedy Banksters offered them a slick new mortgage or a re-finance on their Home at a meager price of $12,000 or more for the paper work on the Home, Knowing full well that they would not be able to maintain payment's, every single day You Evil Banker's would send them Offers in the Mail With only One intent and that was to steal all of their property's ! You want bail out's for Your Evil Greed !. Banker's have compiled the Best of the Best Evil Greedy, Lying, Swindler's and Cheaters in the World !.
4-08-2009 @ 2:22PM
ij70 said...
Since government now owns these banks, government is the employer and should fire and hire according to its goals.
@ Cleaton Cantrell. Dude, nobody made those people take mortgages.