Apparently the outcry about George Jr's administration doing socialism for rich companies struck a nerve last week. From the Wall Street Journal of 15 Sep 2008:
Quote:
When Paulson called Wall Street CEOs Tuesday and Wednesday to inform them at his no-bailout stance, some argued to him that the government needed to structure a rescue like that of Bear Stearns Cos., according to people familiar with t he matter. To prevent Bear's collapse in March, the fed agreed to put up $30 billion to J P Morgan Chase & Co, the acquiring bank. The government also took on some of Bear's riskier assets. ...
Mr Paulson was also irked that Wall Street saw him as someone who would always ride to the rescue. And because Lehman's troubles have been known for a while, Mr Paulson felt the market had had time to prepare. Also, on Friday, federal officials monitoring talks to sell Lehman to Bank of America, which had started the day before, realized the big Charlotte NC bank would likely balk without federal backing. ...
Mr Paulson told the group it was in their interest to find a solution. "Everybody is exposed" to Lehman, Mr Paulson said ...
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Why? Why would everyone do business with a firm that had financial statements that read like a black box? Nobody knew whether Lehman (and others) was fiscally stable for years. The same mentality that made home loans routinely to NINJA (no income, no job apparent) applicants also did business with anyone under the new philosophy of profit without considering risk; that the spread sheets need not be honest.
GM is worth $5billion. AIG (whose accounting has been speculated a black hole for maybe 5 years) attempted to raise capital through private sources. AIG could not. Nobody could trust AIG's financial reports. Despite the public outcry against corporate socialism and Paulson's warning, last weekend, AIG went begging to the government for $40billion. When will it end? When corporate executive start being removed in mass number for being so incompetent.
Merrill Lynch's CEO Stanley O'Neal was warned by his senior VP that O'Neal had created a massive subprime loan problem. Instead, the VP was fired. One year later, those financial myths became a threat to Merrill's existence almost 100 year existence. O'Neal was fired (with $hundreds of millions in bonuses). New CEO John Thain is credited with doing so much so quickly to save enough of Merrill as to make Merrill a useful purchase for Bank of America. By replacing the only problem in Merrill (Stanley O'Neal) with a responsible CEO, then Merrill Lynch account holders are not stuck in the mess that Lehman Bros clients are now suffering. Just another example of what had to be removed to fix the problem - top management.
Meanwhile, those who are the problem have finally heard the word. They, not the government, must fix the problem. In many cases, that means the CEO must be removed by overt threats of bankruptcy. Otherwise the employees lose their jobs. Merrill is a perfect example of what must be done to save those jobs and customer investments. Lehman and AIG are perfect examples of how ignorant and myopic CEOs are.
How did we save NYC? The New York Post said it on the front page. Ford to NY - drop dead. That is the only way to get the attention of narcissist and corrupt people.