I was once an Assistant Manager of a branch bank. The manager was a highly respected man by the name of Enos Price. We were in his office one day when he called my attention to the crowded lobby. He said, (paraphrasing) “Look at those people. They’re depositing money they need to feed their families and pay bills. They trust us to keep it safe. Whatever you do, don’t forget that.” (more…)
February 28, 2010
February 24, 2010
Banks – What To Do – Part Four
There’s an amusement park game where little critters pop up and when you hit one, another one pops up in a different place. I think it’s called “Whack-a-Mole”. It can drive a sane person nuts.
A group of regulators are meeting in Basel, Switzerland trying to do a similar thing with banks. They’re working on the third version of the “Basel Accord”, which is a body of regulation intended to stabilize the global banking industry. The first accord, known as Basel I was published in 1988. Basel II was published in 2004, but not fully implemented in all the G-10 countries. Now they’re working on Basel III. Basel I lasted sixteen years, whereas Basel II didn’t last long enough to be implemented. Repeal of the Glass Steagal Act is likely the reason. (more…)
February 21, 2010
Banks – What To Do – Part Three
“Too big to fail” is an interesting concept. So far it has cost billions of dollars. Is it likely to cost more? What did we get for the money? The concept is yet unproven – we don’t yet know if “big” is better. What if “big” ultimately leads to failure? Furthermore, what is “big” doing for, or to, American culture? Does “big” apply only to banks? (more…)
February 18, 2010
Banks – What To Do – Part Two
Former Treasury Secretary Henry Paulson has written a book entitled “On The Brink”. There’s an article about it in the February 15th issue of Business Week. This is an excerpt: “Henry Paulson recalls dining with some of Wall Street’s most powerful bankers on June 26, 2007, not long before the credit bubble burst. ‘All were concerned with excessive risk taking in the markets and appalled by the erosion of underwriting standards,’ … Yet they felt forced by competitive pressure to make loans they didn’t like… ‘Isn’t there something you can do to order us not to take all these risks?’ was the gist of a question posed by Chuck Prince, who was still running Citigroup as the bank bumbled toward disaster.” (more…)
February 15, 2010
Banks – What To Do – Part One
Those of you who know me are aware that I was once a banker. I managed to reach the level of Senior Vice President with a subsidiary of Maryland National Corporation, the holding company for Maryland National Bank. I spent fifteen years in banking, followed by another short period in the late nineties. I believe my experience gives me a pretty good idea of how banks work and how they fail. During those years I witnessed three periods where the banking industry got into trouble, resulting in the failure of several large banks. Since leaving the industry, I continue to watch developments with great interest. This is not just because I worked in the industry, but also because many of my friends still do. I consider myself pretty knowledgeable of the industry, how it operates and how mistakes are made. (more…)
February 10, 2010
The Pain of Too Much Debt
Recently, a lot has been written about the possible impact of too much federal debt. Some discuss the deterioration of society, the loss of military power, the effect on the dollar, and, of course, rising interest rates. Some predict these events will start when total federal borrowing reaches 90% of Gross Domestic Product. Others say it will occur later. I may not hold as many high powered degrees as some, but I know that you and I have already paid, and are paying, a price for too much debt. (more…)
February 3, 2010
Pollution – Great Pacific Garbage Patch?
Some eight thousand people from one hundred seventy countries gathered in Copenhagen, Denmark for the 2009 Climate Change Summit, including heads of state from the United States, China, Great Britain and France.
You and I both know that none of the dignataries or heads of state traveled to Copenhagen on horseback or by sail, which would have shown how serious they are about climate change. No, you can bet they all arrived in big jets like Obama’s Air Force One. Not only that, advance teams, support teams and security teams travel with them. Multiply the number of jets by about five, and you’ll be close to right.
So, what does this say about the climate change movement? (more…)
