Wednesday, February 04, 2009

Forest Through The Trees
A couple of news items are making me nervous about the state of the credit crisis. Obama's cap on executive compensation makes little sense on many levels. It does not apply to companies that already have taken TARP money - Citigroup and AIG come to mind - and has no clawback provision, among many faults I saw at first blush. It's more populist than policy. naked capitalism has an excellent summary.

Wells Fargo was forced to cancel a meeting in Vegas and Goldman Sachs canceled a meeting in Miami. Citigroup is getting pressure to renege on its $400 million naming rights deal with the New York Mets. I am of the opinion that the banks need to keep doing business. Canceling sales meetings does nothing to help the credit crisis. Citigroup's 10-year deal with the Mets seems like smart branding to me. Banks received tax payer money to stay in business, not stop doing business. (And what about the ancillary impact of canceling meetings to the economies of Las Vegas and Miami?)

Policy makers need to focus on the important issues, not sales meetings. Banks need to start lending, derivatives need to be fixed, loan securitizaiton needs to start again, and other issues relating to the credit crisis need fixing. The feds need to get TARP money into the economy and get the banking system working again. Focus on what's important, not what's populist.

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