Should we fire CEOs and liquidate their banks?
Filed under: Economy
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 like-y."
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 @ 4:31PM
Carol said...
As long as the fox(es) guard the henhouse there will be no logical justice to the banking mess. The toxic round-up plan is just another thinly veiled reward to the criminals who likely knew they wouldn't have to "pay" for their crimes. The hypocrisy is appaling - fire the GM CEO, but yeah, let's keep the guys who REALLY know how to screw up a deal.
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4-08-2009 @ 5:50PM
chris said...
I agree with carol , also the more the goverment is involved
the corruption
4-08-2009 @ 9:47PM
JCH said...
If it was done where deserved, the US government would take 3 years just to fill the vacancies.
So no, we should not simply liquidate the "insolvent" big banks and fire the management. It will be far more efficient to retain the managers and the existing structure. If health is achieved, start firing then.
As in, make them build their own gallows.
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4-18-2009 @ 8:51AM
Frank said...
until nobama came along and instituted communism in the US the only people who could fire CEOs were boards of directors. now this article intimates that citizens have an interest in firing CEOs. why would you assume that? why would you assume citizens are interested in this kind of outrageous suggestion? how does a liberal college professor come up with any kind of balanced report? a professor who undoubtedly has no real world experience. the only thing good about the report is that according to the article it will be ignore.grassfire.org
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4-09-2009 @ 5:04PM
Hal said...
This is crazy. Our free market society was supposed to liquidate these bad banks to begin with. That’s what it does with failed businesses. It’s what keeps the markets strong and thriving. Should have liquidated them to begin with. No business or country for that matter is too big to fail.
What’s too bad is I doubt that the advice of liquidating them will be heeded.
My guess is that it won't be too much longer till all that money they printed leads to inflation. Which should be good for the gold and silver markets and ETFs.
ExactPrice [ http://www.learcapital.com/exactprice ] shows gold's been falling but I think that's because the IMF announced their intentions of selling some 400 tonnes, I think it was. We'll see if that takes place but I think it's probably a good to time in light of this news that the government really is clueless to see about finding some hard currency.
Which reminds me of all the local governments now printing their own currencies. That's pretty telling if you ask me.
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