Nathan Scandella (personal)

Does Anyone Know How to Run a Bank?

This interview absolutely made my blood boil. Ken Lewis, the brain-dead leader of Bank of America, speaking on CNBC (the brain-dead leader of the financial media):

http://www.cnbc.com/id/30313816

Lewis said that building loan-loss reserves at a time like this was "crazy". Are you crazy? This is exactly when you should make sure your loan loss reserves are sound. The economy is bad, and getting worse. Loan losses will be accelerating, for sure. Of course, that's not what bald-faced liars like Lewis will admit, but anyone with half-a-brain can see that the economy's still getting worse.

When banks run wild, leveraging up to their eyeballs, dishing out cheap money as fast as they can rope-in foolish first-time-borrowers, that's one thing. But, after-the-fact, for the leaders of those banks to then say that keeping reserves is crazy? That's unreal. These clowns are actually capitalizing on their own blunders to argue that they ought to be managing their businesses even further in the wrong direction than we let them stray for the last few years. Let's not reel in leverage ... let's let it get even bigger!

But, really, can you blame Ken? Why would his company need loan loss reserves when we've made it abundantly clear that we (the taxpayers) will tolerate his poor decisions, and provide whatever reserves he needs to cover his losses. And on top of that, we'll throw in some more money that isn't needed, so he can pay bonuses to retain all that "top talent" that kept his ship on course recently.

How can we ever fix the problem when we reward the problem-causers, and do nothing to replace the decision-makers who led us astray? The answer is, "we can't".

Posted at 12:48AM Apr 24, 2009 by Nathan in Economics  |  Comments[0]