Banking Law

Barney Goes To Bat For Baytown Bank: Big Deal

I wish I could get as worked up about the page one story in today's Wall Street Journal as many others have done. I simply cannot. The entire process of picking winners and losers in the bank bailout game totally lacks transparency and accountability. Cockroaches always roam in the dark, folks. Want to see them scurry to the sidelines? Turn on the lights. It's a law of nature. Seriously, you didn't expect that this was going on?

Try representing a bank that's having capital and/or management "issues," that's applied for TARP funds, and is desperately trying to get a straight answer from the regulators as to whether they will grant the bank enough time to raise the necessary private capital to match the TARP preferred stock investment, or whether everybody's wasting their time and money. Sometimes you get an answer, sometimes you don't, sometimes the answer's favorable, sometimes it's not, and you can't tell what is the reason for the difference. It's just...because.

The government doesn't have to justify the reasons for its decisions in picking winners and losers. If it did, if the decision-makers had to publicly justify the decisions they made as to who gets money and who doesn't, who lives and who goes bye-bye, how long do you think they'd stand straight in the face of the hurricane-force winds caused by equal parts gales of derisive laughter and howls of outrage, before being blown away? If they had confidence in the reasons for their decisions, why don't they explain those reasons publicly and in detail? What's your guess?

This is our government, my friends. A Congress dominated by the party of Barney and the Boyz, certainly, but chock-full of pachyderms just as venal and ready to intervene in the run for the gold. In a way, you can't blame them for figuring that anything goes, when as far as we unenlightened members of the public are concerned, the US Treasury Department and the federal bank regulators feed data into a mysterious black box, which then uses algorithms supplied by discredited Wall Street asset securitization model-makers to select the winners. Perhaps they throw darts at names tacked to the wall. Whatever the process, since all we can do is guess, don't be outraged that a herd of swine runs to the through and oinks loudly until it's filled by the mysterious food-giver.

I truly hope that this new crowd in the White House is really "the change we have been waiting for." I kind doubt it. The change I've been waiting for is usually accompanied by a mushroom cloud.

Full post as published by Bank Lawyers Blog on January 22, 2009 (boomark / email).