A New Method to Recapitalize Our Banks

Our national and local economies are in shambles now because the investment firms and banks messed up.

America’s unemployment rate is 8.5 percent and it’s projected to go higher by many in 2009. The lenders and Wall Street firms caused our recession, in large measure, by making idiotic loans to unqualified homeowners – later bundled and sold as securities to naïve investors. I should know – I’ve been in the real estate lending business for over 20 years in southern California. Three or four years ago a chimpanzee could have qualified for a loan to buy a two-bedroom home in Chicago, San Francisco or L.A.

The excessive pay and perks top executives received at now-failed financial firms is incomprehensible.  And it was wrong.  These institutions were mismanaged and wealth was extracted at the expense of shareholders. And now the common taxpayer is bearing the burden of those mismanaged companies. That’s the bus driver in Los Angeles or city

worker in Des Moines. Lehman Brothers is gone yet the chief executive extracted some 500 million in compensation over several years. The same sort of thing happened at Countrywide, Fannie Mae and Merrill Lynch. No doubt our large banks and financial institutions need help today. They need capital to regain their footing; to get back on solid ground and to lend to help move our economy forward. The taxpayer should be upset with the massive government bailout funds paid to struggling institutions. They should be “madder than hell” at bonus payments recently dished-out too. We have every right to demand repayment of those funds.  But the people we should go after are not the new guys at the helm or middle-management – it’s those fellas that received incomprehensible compensation over the last five or six years. That’s who we need to track down. “Ted, the way to get capital for our financial institutions is to go after those who fleeced them to begin with,” a leading Los Angeles investment advisor says. “Let’s follow the bonus money and get it back from these narcissists. Let’s have Richard Fuld from Lehman Brothers or Angelo Mozilo from Countrywide each write a check for $250 million made payable to the U.S. Treasury,” he adds. “That would be a great start and it seems ethical to me.” Let’s follow the funds across the ocean through the recently opened bank doors in Switzerland. It’s time to give the Nebraska farmer, the small-town banker in Ohio or the migrant worker in California a break.