Had a perfectly wonderful weekend with nary a care in the world and apparently neither did anyone else. Things appear to be exactly as I left them except that the football season has ended in England which means no more premiership matches in the middle of the week forcing me to occupy my spare time with less important things such as bank crises and ridiculous fiscal and monetary policies seemingly all around the world. So much to do.
One thing I will have more time for is Tim Geithner's new book which he has been humping unmercifully on every media outlet and all the ships at sea. So far, no one has panned it or gotten terribly upset. It seems to be self-serving, then again I can't remember the last time a personal memoir reached the conclusion, "I am an idiot," so one can overlook that. I expect to be able to comment a good deal more once I get my free--preferably autographed--copy, but there were a couple of things that struck me in the overall impression that can be gleaned from the reviews and certain quotes that have emerged.
To begin, let me say that comments from people for whom I have a great deal of respect indicate that in the midst of the crisis, Geithner did a hell of a job, which is all the more striking as it is clear that his credentials for becoming the head of the New York Federal Reserve, pretty much confirmed by his own words, were the political and personal ties to the Clintonistas headed by Bob Rubin whose political and financial influence crossed party lines and intertwined with the Goldman Sachs connection both at Treasury and at the Chairmanship of the NY Fed. He was as I used to refer to him as a "Suit" and quite frankly, though he has grown in stature I have a feeling that he is still a suit although one with the ability to stay cool and calm in the midst of a crisis which is no mean feat and one not to be belittled. So, he's a guy who hadn't a clue as to what the job was about who apparently rose to the occasion and performed. Good on ya.
Then again, in his published excerps, in speaking of the catalysts of the crisis, Bear Stearns and Lehman Brothers, he seems to overlook the fact that these were not surprises to which one awoke on a Monday morning; the seeds of collapse had been sown years before and had well-taken root and most importantly, had been recognized by those with more experience and savvy. The truth is his institution, which was best equipped to recognize and assess the systemic risk that was growing on a daily basis was caught seemingly unawares, and it to that he must answer.
It is simple to speak in hindsight but the colossal mistake was to "save" Bear and destroy Lehman, more so because there was no secret that Lehman had been warned time and again as to the state of their financial condition and "saving" Bear should have in no way be thought of relieving the pressure on Lehman. Bear could have been allowed to fail without so much as a whimper which might…and I emphasize, "might"…have influenced future developments especially on the part of Lehman which could have defused or certainly alleviated the destruction that followed. In my mind, there is much of the failure in regulatory bodies…not the lack of regulation…that was central to this crisis. But that is another book to be written by someone else and some other time.
With all of that said, he should be a good read and help him in his retirement planning. Little has been said as to what he thinks about the "reforms" to the system, or if it has been said, I missed it. After all, I was with grandchildren which tends to make me less perceptive to external sounds. I'm sure he feels much has been accomplished but more could be done. Memo to Tim: get real. Maybe you didn't know squat before but by this time you should be pretty much clued in. Then again, that may be asking for a bit too much.
Showing posts with label Lehman Bros.. Show all posts
Showing posts with label Lehman Bros.. Show all posts
Tuesday, May 13, 2014
Wednesday, February 9, 2011
AS I WAS SAYING...
Carter the Examiner has highlighted the most important point. One can attempt to write every regulation in the world, create oversight that is fool-proof and limit by law or fiat the activities of every financial institution in the world and in the end it will do no good. It is about the people; it is always about the people and in the end you are at their mercy.
Those of us who have operated in the financial markets, especially as deal makers, will tell you it's not about the money. Ha! you say, when someone says it's not about the money it is. Not quite. The money is very, very important but in the end it's ego. The money is just proof that, "I did that," when nobody else could or would. It's the chase, the win, the rush that keeps these folks going, which is why so many retire at a young age if they have been successful, not because they have enough money (one never does) but because you can't keep doing it for too long. It has become a young person's game and it is the person that must be managed, taught monitored and yes, controlled.
Carter is correct in saying that unless one gets burned the individual's memory is short or non-existant. He also implies that these folks can't be taught. I disagree. Carter is a smart guy I am sure. Where he examines I haven't a clue, but if it is a place like the Fed he is certain to have a damn good education at the college level, perhaps even an advanced degree or two. Carter LEARNED, but perhaps he hasn't asked himself why he learned. The answer is simple; if he hadn't he would have failed and been kicked out. No more Carter the Examiner but Carter the drop-out. There were consequences to not learning.
Dcisions such as those that were made which caused the crisis were not made by some dopey French kid at a desk at Goldie who liked to text his lady friend as to how smart he was. Nope. They were made far higher up the food chain at Goldie and in other institutions involved. A Vice Predident at BT Co. Leveraged Derivatives doesn't set the policy that enables him to "Rip the heart" out of one of the Bank's best clients. The junior guy in Treasury at Lehman doesn't decide to engage in 105 transactions rather than deleverage. The desk officer for Mexico at a N.Y. bank doesn't decide to lend $80,000,000 in a single transactionto the country in 1982 just before they go bust. But are any of the real decision makers assigned the consequences? Nope again. Never have been.
The examples above are just a few of hundreds of bad decisions that were made. None of the decision makers were attempting to defraud or steal from the market place, unlike the examples of Enron and Berings which Carter mentions. These were just bad decisions which, while having corporate and worldwide consequences had little to no effect in a broad sense to those who really caused them to occur either through commission of responsibilities or most likely through the ommission of actions that could have been taken. The disgraceful corporate culture created and being allowed to flourish by the management of Bankers Trust in place at the time caused the near-forced sale of the bank, resulting in said management (many of whome having been removed) becoming multi-millionaires. Nice trade guys.
Last year or so I mentioned an old movie called, "A Walk in the Sun" and it's recurring ironic line, "Nobody dies" (look it up). If nobody dies, it is just a walk in the sun. It is always the people and in this business as in war, if nobody dies we will have more of the same and more wars. We'll talk about slaughter tomorrow and how, perhaps to avoid it as a necessity.
Those of us who have operated in the financial markets, especially as deal makers, will tell you it's not about the money. Ha! you say, when someone says it's not about the money it is. Not quite. The money is very, very important but in the end it's ego. The money is just proof that, "I did that," when nobody else could or would. It's the chase, the win, the rush that keeps these folks going, which is why so many retire at a young age if they have been successful, not because they have enough money (one never does) but because you can't keep doing it for too long. It has become a young person's game and it is the person that must be managed, taught monitored and yes, controlled.
Carter is correct in saying that unless one gets burned the individual's memory is short or non-existant. He also implies that these folks can't be taught. I disagree. Carter is a smart guy I am sure. Where he examines I haven't a clue, but if it is a place like the Fed he is certain to have a damn good education at the college level, perhaps even an advanced degree or two. Carter LEARNED, but perhaps he hasn't asked himself why he learned. The answer is simple; if he hadn't he would have failed and been kicked out. No more Carter the Examiner but Carter the drop-out. There were consequences to not learning.
Dcisions such as those that were made which caused the crisis were not made by some dopey French kid at a desk at Goldie who liked to text his lady friend as to how smart he was. Nope. They were made far higher up the food chain at Goldie and in other institutions involved. A Vice Predident at BT Co. Leveraged Derivatives doesn't set the policy that enables him to "Rip the heart" out of one of the Bank's best clients. The junior guy in Treasury at Lehman doesn't decide to engage in 105 transactions rather than deleverage. The desk officer for Mexico at a N.Y. bank doesn't decide to lend $80,000,000 in a single transactionto the country in 1982 just before they go bust. But are any of the real decision makers assigned the consequences? Nope again. Never have been.
The examples above are just a few of hundreds of bad decisions that were made. None of the decision makers were attempting to defraud or steal from the market place, unlike the examples of Enron and Berings which Carter mentions. These were just bad decisions which, while having corporate and worldwide consequences had little to no effect in a broad sense to those who really caused them to occur either through commission of responsibilities or most likely through the ommission of actions that could have been taken. The disgraceful corporate culture created and being allowed to flourish by the management of Bankers Trust in place at the time caused the near-forced sale of the bank, resulting in said management (many of whome having been removed) becoming multi-millionaires. Nice trade guys.
Last year or so I mentioned an old movie called, "A Walk in the Sun" and it's recurring ironic line, "Nobody dies" (look it up). If nobody dies, it is just a walk in the sun. It is always the people and in this business as in war, if nobody dies we will have more of the same and more wars. We'll talk about slaughter tomorrow and how, perhaps to avoid it as a necessity.
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