DISQUS

PacificGatePost · 1 year ago

A NEEDED FIX IN THE BOARD ROOMS

In't it time the system went in for some much needed repair?

Due diligence and oversight long ago slid out the window. No one was watching.

Time to do something about it.

Here's a huge one they all missed.... The dramatic change that swept through all of North America's boardrooms over the past 30 years. It is one of the underlying causes of the headache the economy is now feeling, but more importantly, it has resulted in the general feeling of "disconnect" by most Americans.

"WE THE SHAREHOLDERS OF YOUR COMPANIES......

http://pacificgatepost.blogspot.com/2008/03/let...

Ken Lay · 1 year ago

His half a billion in salary + bonuses should help to soothe his pain.

frit · 1 year ago

The answer not to bailout of Lehman, while lending money to AIG is simple.

AIG had adequate assets for sale with valuation much higher than $850 billion lent by the Fed.
AIA, plus many subsidiaries of AIG, worth a lot of money, and a lot of companies might have interest in bidding for AIA .

What did Lehman have to repay the temporary loans lent by AIG at the brink of their collapse.
Lehman did not worth it.

Why UK and European banks were in trouble? They had extraordinary low capital ratio.
Think about it, if UK wanted to raise the capital ratio of their banks to 11%, and UK finally got over 50% or 40% ownership of some banks, one bank had capital ratio of around 5-6% (significantly less than 8% requirement for the one which UK have over 50% ownership) and the other had capital ratio of around 6-7% (for the one which UK have over 40% ownership). In other words, these banks might be as speculative as Bear Sterns and Lehman.Brothers.

UK need to inject capital to so many banks because the bank supervision of such banks was so loose that so many big banks did not have adqeuate captial at the same time. US can let Bear Sterns and Lehman Brothers to end their business because a lot of banks still have adqeuate captial ratio.
For the ones which fail to meet the capital ratio requirement, Washington Mutual, IndyMac, Wachovia were the examples. Fed and FDIC did pretty good jobs here.

This banking crisis occurred because the fools from UK, France, Germany, Italy and ECB had the guts to go out of the conference room on a particular Saturday without a solid proposal to save their own financial system. Germany was right to reject the proposal to form a fund save the whole Euro Dollar financial system, as the taxpayers should not be responsible to pay for liabilities of other countries. However, they can form some kind of assurance to the financial markets, to assure the safety of the deposits of depositors in their banks, by offering a common scheme of deposit insurance, and to flood the banks with Eurodollars funding, to alleviate the difficulties in borrowing money in Libor and all inter-banks lending.

Hence, this financial crisis is the failure of UK and EU in handling their own crisis in a prompt manner.
Germany devised their own rescue plan on the following Sunday, UK had announced rescue plan on Tuesday, Italy rescue plan on Wednesday, while the stupid France need to wait for Friday G7 Meeting, Saturday/Sunday G20 meeting to devise rescue plan. Can the stupid French completed this assignment by phone on Monday or Tuesday?

If the big 4 European countries had a rescue plan similar to that agreed in the G7 or G20 meeting, during their first Oct Saturday meeting, the extent of this crisis would not be so extended.

In 1907 bank run crisis, JP Morgan was reported that he invited bankers to have a meeting in his library.
When the bankers entered the library, he locked the door with key, and told everybody that no one can go out of the room if no solution could be devised to save the crisis. This is the right manner for the fools of Europe when they held that meeing.