Sunday, October 26, 2008

The sale of National City, pt.2

I'm still looking for my last dividend check--the one for thirty two cents. The top three executives will get golden parachutes with a combined value of $40 million following the sale (adjusting I assume for the current value of the stock which must not be too terrific); Peter Raskind, Daniel J. Frate, John L. Garney.

Ohio's progressives, socialists and marxists will scream about greed and the failure of capitalism, but I won't. I owned a few shares for about 30 years and did nothing except open the envelope four times a year, endorse the dividend check, and take it to the bank. It was never huge--probably not more than $30-$50 a year, but it was more than the cost of gasoline to drive to the bank, which the most recent one wasn't.

Meanwhile, they were being paid big bucks to figure out how to manage demands that they live up to the crazy expectations of the law and regulations to loan easy money to people who may not be able to pay it back. A law, the Community Reinvestment Act, which started small and quietly during the 1970s, with good intentions. People whose homes may never appreciate, but may depreciate, to fund builders and city services which also jumped into "the American dream" bubble. Easy money--that's what government tampering with the banks and credit did for us. Even churches got into the act, although I don't think they did the political advocacy of the left wing, ACORN type organizations. They too set up corporations, hired people, fixed up homes, "stabilizing neighborhoods," "strengthening community," to help the poor, everyone from Mennonites, to Catholics to Lutherans. But they did it with government money so they'd qualify for loans.
    "The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being." "The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities," City Journal, Winter 2000
So yes, they were greedy, but when you try to strangle a business, any business, with regulations while also demanding that it perform as a sugar daddy social worker for the poor and low income, you just might find them looking for loop holes to outsmart those guys who float in and out of the beltway, who lobby, and populate endless think tanks.

It's Congress that I'd like to drop from a plane without a parachute, golden or otherwise. It was a stupid affirmative action scheme even back during the Clinton years, but there was time to remedy it. (Bruce Marks , primary culprit--story from 2004) Bush couldn't pull his people together when he had a Republican Congress, and the Democrat Congress blocked any effort, even those late ones, to fix the problem. If Gore had won in 2000, we'd be in exactly the same spot. Had you thought of that? We'd probably gone to war since the whole WMD meme started in the 90s with the Democrats, but even if we hadn't, the economic system still would have failed because the same policies chasing the same easy credit would have been there.

Now we're in a recession, and about to do the Hoover-Roosevelt two step all over again, only this time it will be Bush-Obama. Let's hope it won't take a decade of more tampering and 25% unemployment this time.

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