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Local News & Opinion
Ref. : Local Newsbriefs Travel
Letters
Ref. : Letters to the editor Open Letters:
03.05 Open Letter to Congressman Bart Stupak Health & Environment
Video National Health Care Systems In Other Countries 03.12 Slick Barry and the $100-Billion Medicaid/Medicare Fraud Claim 03.09 Kill Bill: Death to Obamacare! 03.09 Obama’s Rhetoric May Be “Fiery,” But His Health Care Reform Is Still Lukewarm 02.24 Obama’s New Plan 02.21 Time to Pass the Health Insurance Industry Antitrust Enforcement Act of 2009 Media Watching
03.16 WPost Blames Obama First, on Israel 03.16 Letter to the New York Times' Editor: Stovepiping To Persia 03.12 Cud and Complicity: Burying the Alternatives to Empire's Dominion 03.11 NYT and the ACORN Hoax 03.05 Sorry, Rove, Bush Did Lie About Iraq 03.03 It's Snow News 03.03 The Woeful Washington Post 02.28 The NYT Veers Neocon 02.18 US Media Replays Iraq Fiasco on Iran Ref. : The Daily Howler Legal Matters
02.26 America's Supremes: Court Over Constitution US Politics, Policy & Culture
03.11 Power Rangers: Policing the System With the "Fightin' Progressives" 03.09 Thinking About Countings 03.07 Unnatural Acts: Breaking the Fever of Militarism 02.25 Future Shock: A Better World Beyond the Imperium 02.24 The Last Flight of Joe Stack 02.22 Thinking About Sadie 02.18 All Systems Go: No Dysfunction in Profitable Afghan Enterprise High Crimes?
03.16 America's Secret Prisons 03.13 Palestinian Dispossession in East Jerusalem 03.12 Israeli Settlement Expansions Continue 03.11 Brutalizing Palestinian Children 03.08 The Russell Tribunal on Palestine: Barcelona Session 03.05 Targeting Israeli Apartheid 03.01 America's Permanent War Agenda 02.25 Global Sweatshop Wage Slavery 02.23 Israeli Unaccountability and Denial: Suppressing the Practice of Torture 02.22 American Genocides: is Haiti Next? 02.18 Israeli Abusive Administrative Detentions 02.16 MK-ULTRA: The CIA's Mind Control Program Economics & Business Non/Mis/Malfeasance
03.14 The Crisis in America's Telecommunications Network 03.09 The Business of Water: Privatizing An Essential Resource 03.05 Is the Recovery Real? 03.04 IMF-Style Austerity Measures come to America: What “Fiscal Responsibility” Means To You 03.04 Barry C. Lynn's "Cornered: The New Monopoly Capitalism and Economics of Destruction" 03.01 Thinking About Fees 02.22 Campaigning for State-Owned Banks 02.22 Social Security Will Fall To Obama Before The Taliban Do 02.19 Obama’s Stealth Entitlement Commission 02.19 Selling Out America to Wall Street International
03.15 Peace Process Hypocrisy: Stillborn from Inception 03.03 Muslim Disunity 03.02 Funding Israeli Militarism, Belligerence and Occupation 02.26 Iran Captures a 'Good' Terrorist 02.24 The Dubai Hit 02.22 Holland Has Had Enough: Killing of Innocent Civilians Goes On Apace in Afghanistan 02.19 The Placeman Cometh: New IAEA Chief Stokes Iran War Fever for the Bush-Obama Regime We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.
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ECONOMIC ANALYSIS:Thinking About Interventions
It is the large money center banks and the regional banks which were overly aggressive in their lending and investment decisions where the current problems reside. Community banks are not the problem.
I’ve been thinking about interventions. Actually I’ve been thinking about IndyMac, the media, community banks, FDIC insurance coverage, cash, and fear. Last week saw a frenzy of media coverage in the aftermath of the US government/FDIC’s takeover of the IndyMac financial institution. What I saw was both horrific and “pornographic” in the sense that “the stories were sensational with the aim to titillate/stimulate without providing any redeeming social importance.” You see, I have first-hand experience in financial institution intervention/receiverships, having worked for the FDIC/ RTC for over three years on the Savings and Loan crisis some 15 years ago. While “takeovers” are justifiably traumatic for the employees, management and stockholders; the depositors, borrowers, and customers—if they had played by the rules/regulations of the FDIC coverage—literally don’t have a thing to worry about! A government intervention keeps 99%+ of the prior staffing in place. A “managing agent” is installed as the chief executive officer, and “credit specialists” are put in place to oversee lending operations, credit restructurings, and asset sales. A lead investigator is assigned to coordinate the case development for potential negligence and fraud. An intervention is really an amazing feat/operation to behold. The government team of professionals and an army of workers—contracted from an independent outside public accounting firm—go in at the close of business on Friday night or, if applicable, at the close of business on Saturday. What happens over the following 48 or so hours is an institution-wide verification, gathering, and securing of items and documents. Cash, notes, investment securities, collateral, and pre-determined items are verified 100%. The teams have detailed assignment/mission lists and work non-stop to insure that the institution will open for normal business the following Monday morning. The institution actually re-opens as one of the safest places in the country to do your banking. The government team stays in place until the investigations are completed, the problems are fully resolved, a buyer for the remaining franchise/operations is found, and the residual sale is closed. Remember... it is stockholders—and not depositors—who ultimately take the real hit on the losses from any intervention/resolution. I found it unconscionable that the major TV/press media ran items with footage and clips of “the Great Depression bank lines” or headlined their stories with: “How Safe is Your Community Bank?” Community banks are not the problem in this present global financial crisis. I have personal accounts (or am the treasurer for organizations with accounts) at the six community banks in the area. I observe the FDIC coverage guidelines and do not have one bit if concern about any one of them for any reason. I personally know most of their management, officers, and directors. It is the large money center banks and the regional banks which were overly aggressive in their lending and investment decisions where the current problems reside. Remember... it is stockholders—and not depositors—who ultimately take the real hit on the losses from any intervention/resolution. We in the U.S. have the most pervasive and highest amount of depositor insurance guaranteed coverage on planet Earth. Individual accounts are covered up to $100,000 and, by varying the signatories/names on the accounts, that coverage can double, triple, or more. Furthermore, any retirement accounts on deposit are covered 100% regardless of the amount. Those are the rules! The California event raised questions about IndyMac’s not having the cash on hand to pay off the depositors who wanted to close out accounts and walk out the door with currency. This is not surprising, as financial institutions rarely even have 1% of their total footings (assets) on hand in actual cash—including their due-from-bank (correspondent) accounts. Cashiers' checks work fine! I really felt for Treasury Secretary Paulson and FED Chairman Bernanke during their last week’s testimonies before Congress. We have a good system for interventions/resolutions, with the best coverage for depositors on the planet. IT will work just fine—if, and only if, there is no fear-driven panic running amok. Even the safest, most solvent, and best-run institutions can be pushed over the edge if a fear-driven public decides to yank all their “safe and fully insured deposits” from them and go elsewhere. I’m Fred Cederholm and I’ve been thinking. You should be thinking, too. Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.
Copyright © 2008 The Baltimore News Network. All rights reserved.
Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent. Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own. This story was published on JuLY 21, 2008. |
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