Tag Archives: financial crisis

Must So Many of Us Have Such a Low Price?

Here’s a question for you: are there degrees of dishonesty?

If no one saw you miss a golf swing in the rough, and you didn’t add it to your score, is that dishonest?

If bad traffic made you late for work, should you lie and say you were on time, so to let your employer bear the cost of your missed time instead of you?

If you serve in the Legislature, and a certain political contribution from a trade association made it much simpler for you to agree with their reasoning, have you sold your vote? Read More More

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What Is The Real Problem?

Remember the imagery of an ostrich with its head buried in the sand? That is sort of how I view the average American taxpayer. They may be opinionated, but choose to remain purposely blinded to what is really happening around them. It is much easier to just not see anything in the periphery and keep to ourselves, or maybe just vent about what we think we don’t like and won’t try to understand.  

The Concord Coalition (www.ConcordCoalition.org) was formed in 1992 to create a bi-partisan dialogue on fiscal responsibility by then U.S. Senators Warren Rudman (R-NH) and Paul Tsongas (D-MA). Obviously it has not made enough progress in the years since to raise awareness of the need to reform the U.S. budget or its drunken propensity to continue an endless cycle of spending growth and income reduction. Read More More

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Living With Less

I keep hearing that we are waiting to recover from the great recession of 2008, but I will share a few thoughts on that statement that you might ponder. First of all, this period we are experiencing is no recovery. Nothing resembles the typical way our economy has always performed by taking a few months of rest, and resuming steady growth with consumer confidence restored and good job still held. We Americans always expect to return to the good life with gusto. And to do so quickly.

In fact, my view is that we are not in recovery – we are at the beginning of living with less. Recovery assumes you will return to where you were.   Think about residential housing and new bank start-ups. We are not going back to the heedless growth in those two sectors, and they were a significant part of the economy that fueled our blind confidence. The fallout from the loss of those two sectors continues to reverberate in virtually every sector of our economy. Read More More

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When There Aren’t Enough Borrowers, Train New Ones

I keep reading about the debate playing out across the country among the many interested parties. Who is the culprit behind tight credit and a continuing sluggish economy? Some say banks are still too tight with their credit decisions. Others cite a lack of demand for credit as the problem with growth. My answer: It depends.  

It is demonstrably true that hundreds of banks continue to struggle with capital issues, and frankly don’t have the money to lend.   It is also true that many banks do have sufficient funds to lend, but are still holding a tighter grip on lending criteria, and only funding the best deals. And both sides can accurately point to a zealous regulatory environment, which perhaps didn’t act forcefully enough when the bubble was inflating, but are darn determined to keep it flat now. Read More More

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Straight Talk About Our National Debt

In honor of the 250th anniversary Albert Gallatin’s birth, a Swiss native who became the fourth and longest serving U.S. Treasury Secretary, Atlanta’s Swiss Consul General Claudio Leoncavallo recently organized a forum to offer international perspectives on two timely topics on which Gallatin was quite outspoken: public debt and fiscal policy.

Emigrating to the U.S. at age 19, Gallatin was elected to the U.S. Senate only 13 years later. Venomous politics shortened his tenure, yet he later spent six years in the U.S. House of Representatives where he served as majority leader and founded the Ways and Means Committee.    

Thursday’s panel discussion at The Commerce Club was titled Balancing Act: A Dialogue on Public Debt and Fiscal Policy and gathered well qualified panelists for an insightful discussion – Fritz Zurbrügg, Director General of the Swiss Federal Finance Administration; Dennis Lockhart, President and CEO of the Federal Reserve Bank of Atlanta; Annabelle Malins, Her Majesty’s Consul General of Great Britain, Atlanta; and Glenn Campbell, the Consul General of Canada, New York and Head of their Economic Finance Program. I was selected to moderate the discussion, which was a real treat to share a conversation with such an imminent gathering of economists, bankers and diplomats. Read More More

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Jobless Recovery? We Need To Work On That

In September, 2008, after watching the seams being ripped out of the economy for almost a solid year with the collapse of dozens of major mortgage lenders and the crash of Bear Sterns, I wrote a memo to my staff with my observations of the economy. It was more an exercise for me to organize all the thoughts I had on these events so to try and make sense of it all, and clarify what we needed to do as a bank to respond moving forward in this environment.

Reading the memo again recently, it was better than I gave myself credit for at the time, and what I predicted then that seems somewhat prophetic now is that what we were experiencing was a paradigm shift. The recession rising around us was not just the run- of-the-mill kind of economic cycle, but a major change.   Read More More

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FDIC Assembles Forum to Offer Funding Solutions

The FDIC convened a broad panel of experts and stakeholders of the small business sector in Arlington, Virginia on Thursday to examine the issues of and potential solutions to the challenges facing small business funding.

Entitled “Overcoming Obstacles to Small Business Lending Forum,” the event offered two distinct panels: “Framing the Issues[1],” which provided a macroeconomic context of these funding challenges, and “Confronting the Obstacles[2],” which offered potential solutions from various perspectives.

The first panel offered much familiar information with little debate about where the economy had risen from since the darker days of 2008. Even U.S. Chamber Chair Thomas Bell grudgingly agreed that TARP and other government intervention prevented a meltdown of the capital markets, and was proving to have been legendary action by the Federal Reserve and Bush Administration. Read More More

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Words Matter

This Monday morning opens with the terrible news of the weekend shooting of a U.S. Congresswoman from Arizona, who was hosting an open air town hall gathering with constituents in a Tucson AZ Safeway shopping center. Shot down with a slew of other victims, fourteen people were wounded and six persons died. Representative Gabrielle Gifford clings to life with an uncertain recovery.

There is no way to adequately express the tragedy of this event, and I believe all Americans share with my sadness, anger, and frustration at the senseless violence, futile outrage, and unseemly consequences of this act. And, we know there are many less sincere people who have already begun using this event to spin  their own political liberal and conservative positions, well ahead of a clear explanation of the motivations, methods or madness that was behind this tragic act.

I have my own opinions and this is not the forum to air them – but a hint would be that  senseless backhanded references to violence in our national political theater have contributed to this ugly chapter in  political discourse.   Consider former Senate candidate Sharon Angle’s comments “if we don’t win at the ballot box, we’ll start looking at 2nd amendment solutions…” or potential presidential candidate Sarah Palin’s use of a gun sight crosshairs to ‘target’ opposing Congressional district races.

Instead of following that story, I want to borrow that theme to point to current rumblings about fiscal policy before the U.S. Congress.   The new Republican majority has arrived in the House and with them all the disjointed promises, demagoguery, and mistaken assumptions are on the floor. First issue at hand: a promised $100 billion spending cut.

Words matter.

If this freshman class was as brash to promise such an irresponsible idea, they darn well should have accepted the responsibility to understand exactly what they were promising. Flying into office, posing for all the pictures, figuring out how to navigate  the Capitol, they have stumbled into the inconvenient truth of what a $100 billion spending cut really means. Particularly since their leadership removed defense, social security, and Medicare off the lists of possibilities where such cuts would be made.

If you add up the remainder of the federal budget (like government operations, bank regulators, investor protection, national parks, education, pollution control, drug enforcement, foreign diplomacy, etc.), they will have to cut $100 billion out of roughly 14% of the federal budget, which will equate to about 20% across the board on every program provided for by the federal budget. Oh, and they did cut $35 million out of Congressional operations – chump change.


Republican legislative aides are already backing down, claiming that since the fiscal year is almost half over, the sum must be adjusted to $50 billion, representing an annualized reduction.   And for what good? How will their bold act impact the deficit? Zilch. $50 billion on $1+ trillion is a rounding error. How does it impact the economy? It will reduce employment in virtually every state, and add pressure to 50 state budgets already stressed. Job growth? Fuggetaboutit.

Words matter.  

When you decide to campaign and  roll into a public position full of spit and vinegar about big, bold ideas, it might help to understand what the hell you are talking about.   Don’t get pushed in a corner by political rhetoric that makes a great soundbite, but hurts everybody that hears it.

The most sacred rule of health care delivery is appropriate here: do no harm.

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Missing Too Long

Two things I believe (at least I hope) all my friends can agree with me about me is that 1) I am a fair person, and 2) I will readily admit when I’m wrong. Yesterday’s (November 14th) New York Times ran an interesting article about the projected long term (20 year) U.S. government budget deficit, and the choices for balancing it. I admit I was wrong.

The article provides an incredibly simple challenge to its readers:

You know how to fix the long term federal budget deficit? Here are the real numbers involved – do it.

So, I will admit that all the answers I have been touting presumptively for years were dispelled in about 15 seconds. I missed balancing the budget by hundreds of billions with my list of solutions.

I encourage every reader to check it out online, and throw your best course of action on the table. There is an interactive version of their worksheet that lets you test your big ideas and see how far they go toward resolving the problem.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?nl=todaysheadlines&emc=ab1   Read More More

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Equity Is An Essential Part of Capital Financing

For all of the preaching your must have heard from your father, your banker, and your priest, surely the credit bubble that occurred in 2007/08 was instructive of the dangers posed by 100% leverage?   Having no ‘skin in the game’ makes you a reckless borrower and exposes the lender as a shill with no accountability.

If it’s too easy and it can’t be too good. Read More More

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