But the bigger question for the U.S. is whether President Obama's intellectual toughness will extend to the financial industry. Why does the U.S. keep shoveling hundreds of billions of dollars of taxpayer money into zombie banks without requiring them to produce the same kind of viability plan that the administration demands of the auto industry? Throughout the last several months I have continued to find it strange that banks keep getting more and more money with no questions asked while the auto industry has to work much harder to get much less money.
Make no mistake, I am not saying that the auto industry should not restructure -- I posted last fall on a six point restructuring plan I thought it should follow. I am just amazed that Wall Street continues to get ever more money from us taxpayers and the U.S. does not require those cash recipients to put together a plan for viability.
So I am suggesting here that before another bank gets any more money from the U.S. it should be required to produce a credible plan for showing a positive net present value, which is what the auto industry is required to do.To be fair, the banks are undergoing so-called stress tests in the next few weeks. But these simply estimate how much money banks will lose if the economy deteriorates at different levels of GDP contraction and unemployment. These stress tests lack the level of specificity and the tough restructuring steps required to make the zombie banks viable.
No more special treatment for Wall Street. Let's use the same tough approach that we're using for the auto industry also on Wall Street.
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. He has no financial interest in the securities mentioned.
