Here is a guest editorial by Alex Geschke. He is so passionate about the treatment of the banking sector by President Obama, that he wrote this essay and sent it out on Facebook.
I’m not a political activist. In fact, I do my best to avoid political discussions but I’ve now reached a tipping point.
Obama has started an aggressive campaign against the banking industry that leaves most Americans with the wrong idea about how the banking system works in this country.
Obama has repeatedly criticized big banks and continues to site “obscene” bonus levels as the primary indicator that the banking system is irresponsible.
However, the President fails to point out an important fact. There are two types of banks: 1) Investment Banks and 2) Commercial Banks. Investment Banks focus on Wall Street activities such as mergers and acquisitions, IPO’s, commodities trading, and institutional investment management. Commercial Banks by contrast focus on core economic fundamentals such as lending to business, providing treasury management services and developing infrastructure for clearing funds through the financial system.
The current economic crisis was NOT triggered by core commercial banking as Obama would allow you to believe. Causes of the current recession are many (to name a few: a housing bubble created by low interest rates and creative mortgages - no-doc applications with less than truthful borrowers - Fannie Mae and Freddie Mac agencies pushing sub-prime mortgage backed loan pools to Wall Street - lax regulation or oversight to the brokerage industry - the natural cycle of economics) . Previous Fed Chairman Paul Volcker (who sits on Obama's economic advisory board) was quoted in Business Week as saying commercial baking is the core of the economic system. Thus, it is very miss-leading to lump all banks together as one.
Nevertheless, Obama wants to tax all big banks to cover costs of the bailout. It is estimated that 60% of this tax revenue would come from the 10 largest banks wether they are borrowing from TARP or not.
I'm upset enough to write all this because I work for US Bank, a large commercial bank that did not get involved in sub-prime lending or exotic Wall Street investment vehicles but would still have to pay this tax. We were the first large bank to repay all of the TARP funds, we passed the "bank stress test" with the highest score, we have remained profitable throughout the recession and have continued to lend money to well-maganed businesses. Also, the US Bank Foundation donated over $20 million to various community charities and organizations in 2009 (http://www.usbank.com/cgi_w/cfm/about/community_relations/commun_relations.cfm).
Good, but not good enough. US Bank would still be subject to the bank tax Obama is proposing. Why?? If US Bank didn't contribute to this mess, why should it be penalized? If it's not receiving tax payer assistance, why should it be penalized? It's reasonable to pressure firms that played a negative role or continue to pay large bonuses while utilizing bailout funds, but very un-American to punish those that acted responsibly and are not borrowing from tax payers.
At the beginning of Obama's administration I was encouraged that our country was on the path to reclaiming respect. Now I am disappointed. With roughly 200 million voters and approximately 1.5 million big bank employees Obama knows he can recklessly bash the banking industry with little downside.
So, I guess he's not a hero or the savior of America after all. He's a very ordinary politician who happens to be well spoken and lucky to be following the footsteps of George Bush.
During his camping Obama said "I don't believe in redistribution of wealth, I just believe in what is fair".
I guess I have a different definition of fair than he does.
No comments:
Post a Comment