As Good as Their Word

The ructions in the world of finance have given us a chance to see the
big-time CEOs up close at the Congressional witness table. It's not a
pretty sight.

Almost without exception they appear to lack charm, warmth or wisdom,
confining themselves to biz-speak cliches. As the public faces of
the largest and once richest institutions in finance and banking, they
are a sorry lot.

The latest to appear is Bank of America CEO Ken Lewis.
Documents released by New York State law enforcement authorities seemed
to show that Lewis did not give the bank's stockholders accurate
information on
the financial condition of Merrill Lynch before taking a vote on
whether to buy the floundering brokerage house.

Lewis claims that Bush's last secretary of the Treasury, Henry Paulson,
told him to keep his mouth shut when Lewis said he was thinking of
reneging on the commitment to buy Merrill Lynch. The Lewis version of
what went down is disputed, but whatever went on between him
and the government, his unknowing stockholders voted for a stinker of
deal which has subsequently cost them dearly.

The historians of this sad and crazy era will eventually figure out who
ordered whom to do what and why, but for now it can be said that Ken
Lewis has done his bit to reinforce the idea that he and his
counterparts on the foundering ships of high finance are a pack of
liars. The system we are striving at such cost to prop up depends as
much on the word of those running it as on profit and loss.

If the reputations and credibility of many in the highest private sector
jobs are questionable, the number-one finance guy in the public sector
comes under suspicion. From the start, Timothy Geithner, the new
Secretary of the Treasury, had little
from the left-liberal
parts of the Obama constituency. As the first months of the new
administration have brought more bailouts and subsidies to big business,
Geithner has come under attack.

A recent
front-page article in the New York Times by Jo
Becker and Gretchen Morgenson
laid out the Secretary's associations,
allies and backers. The authors did not have to spell it out for readers
to conclude that Geithner, while honest in the narrow sense of the word,
has been extremely helpful to his billionaire mentors and protectors.

Truth to tell, however, we are stuck with Geithner and the small army of
shifty CEOs. The time to turn them out was last fall, when the Bush
administration elected to avoid the old-fashioned cure--bankruptcy and
liquidations--in favor of bailouts and insanely complicated devices for
handling the oceans of bad debts, bad loans and bad bets which have
brought the nation's major financial institutions and the country itself
to their knees.

The plan laid out was a Republican plan--a Bush plan--but the Democrats,
including President Obama, approved it. Nobody wanted to try the truly
difficult treatment, which would have crashed the system, which then
could have risen again, debt-free. But a vision of jobs lost, homes
foreclosed and businesses shuttered was enough to make people of both
parties agree to spending trillions which we do not actually have to
forestall such a disaster.

So the Paulson plan with its complexity, its TARP
(Troubled Asset
Relief Program), its TALF (Term Asset-Backed Securities Loan Facility) and
its PPIP (Public-Private Investment Program)
was embraced by all, even
though nobody was sure how to run them. To this hour the
mechanics and grease monkeys of finance and banking continue to try
to make these acronyms into well-run, effective programs.

They have not figured out how yet, but ultimately they will, with what
noxious side effects we won't know until we suffer them. An alternative
is to nationalize
the whole mess
. Change policies. Get rid of
Goldman Sachs and the other con men and create worldwide financial
anarchy. But if nobody knows how to do what we're doing now, we know
even less about the practicalities of a new direction.

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