Global Squirming

The image of a pile o’ bank CEOs sitting at the witness table at a Congressional hearing the other day was just precious. Swearing that they will hereafter become responsible leaders of responsible companies seemed a bit lit like Nero promising to play better violin music as Rome burned. It seems as if the theme of a downsized bank executive’s lifestyle is enough to form the basis of a possible upcoming MTV television series.

Maria Woehr, writing for the February 12^th theDeal.com, suggested a few questions for the MTV producers as they interview possible “reality stars” for the series: “Perhaps MTV could add some other questions to make sure they secure the most representative cast:

• Did you push for a $10 million dollar bonus after selling your company off and get laid off for redecorating your office?
• Did you have to fly a commercial jet in coach or (sigh!) take a train, even though your company owns a private jet?
• Do you now get paid a dollar for your occupation rather than the millions you used to get?”

Americans are furious at the financial sector, even as many of us realize that in order for this nation to survive, we – the taxpayers – are going to have to pay the price to fix these banks. Expect lots of regulation, a pile of bank failures and profoundly more consolidation in the financial sector, with the question of our government’s nationalization of some of the biggest players still very much on the table, whether we like it or not!

The New York Times, February 12^th: “Nearly 100 federal banking regulators descended on Citigroup in New York on Wednesday morning. Dozens more fanned out through Bank of America, JPMorgan Chase and other big banks across the nation… It was just another workday. For years, regulators have embedded themselves inside the nation’s major banks to monitor their financial health... But now these regulators could become the arbiters of American finance. Treasury Secretary Timothy F. Geithner is empowering them to decide which banks are strong enough to survive on their own — and which must be compelled to accept new bailouts from Washington, along with any strings that might be attached to them.”

When the regulators digest what they find, expect them to focus on the next level of banks, working their way down and through the system. There will be new rules and new accountability. Banking may no longer be the attractive career path that it was in the recent past.

The road to a normalized (but responsible and realistic) towards reasonable access to consumer and business credit may be longer and more tortuous than most of us figured, even though unfreezing the credit market is an absolute precondition to economic stability and eventual recovery. But the lending world of tomorrow will bear little resemblance to what we see today and will have virtually nothing in common with what existed just six months ago.

I’m Peter Dekom, and I approve this message.