Bankruptcy

So Where are the Chastened Wall Street Executives?

By J. Michael McBride

“Since there's one standard for automakers and another for bankers, the quickest way for GM to pick up some loose change would be to buy a few banks and thus get the company's mitts on some of the Treasury's $700 billion. If insurance companies are doing it, why not GM?

A story on the Bloomberg wire on November 17 told us that four of the world's biggest insurers, including Transamerica and Hartford Financial Services Group, may buy some ailing S&Ls in trouble with the Office of Thrift Supervision for making shifty loans. That way the insurance giants can join the excited line at the back door of the Treasury's Troubled Asset Relief Program (TARP) and dip into the moolah. "Hartford's $10 million acquisition of Sanford, Florida-based Federal Trust Corp.," Bloomberg's reporters wrote, "may entitle it to $3.4 billion of U.S. capital. Lincoln National in Philadelphia may win access to $3 billion by taking over Newton County Loan & Savings, which has three full-time employees and $7.3 million of assets."

Whenever the issue is one of giving money to big industrial corporations employing real, live workers, particularly workers in labor unions, the commentariat hauls up the Double Standard and nails it to the top mast, next to the Jolly Roger.”

It is clear that in order to get their share of the bail out money, executives from Ford, GM and Chrysler have all had to put on hair shirts and lose the corporate jets. Seems like a reasonable trade for taxpayer money. However, Wall Street executives have not had to do the same thing. In fact, the typical drill is for a distressed credit card company to buy a bank, make the request and get their millions/billions in bail out money and thereafter, continue as if life had not changed with all of the executive bonuses and expensive corporate retreats intact. Not so for the companies which actually make and sell a product.

“Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement. His panel is to hear testimony Thursday from the auto executives, UAW chief Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans. The House Financial Services Committee is to hold a similar session on Friday.”

Here is a link to one article on the “chastened” auto executives:
http://news.yahoo.com/s/ap/20081203/ap_on_bi_ge/meltdown_autos

Here is a link to The Nation, the article quoted above (free trial subscription required):
http://www.thenation.com/doc/20081208/cockburn

Michael

Full post as published by Texas Lawyer Blog on December 03, 2008 (boomark / email).