Fallout: The Financial Crisis

Hold CEOs of big banks accountable

Marketplace Staff Apr 8, 2009
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Fallout: The Financial Crisis

Hold CEOs of big banks accountable

Marketplace Staff Apr 8, 2009
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TEXT OF STORY

Kai Ryssdal: The government board that’s in charge of keeping an eye on the TARP is out with its latest report. And the verdict is mixed, at best. The panel says it’s still not sure Treasury Secretary Timothy Geithner has a long-term strategy for saving the banks, despite the trillions of taxpayer dollars that are on the line. Commentator Robert Reich says it is past time to start holding people accountable.


ROBERT REICH: Tim Geithner says he might fire the heads of big banks that are being bailed out, just as he disposed of Rick Wagoner, the former CEO of General Motors. And before Wagoner, the old heads of AIG, Fannie Mae, and Freddie Mac.

Geithner’s tough talk is designed to reassure a public that’s lost all faith in the bank bailout. At the rate the bailout money is being spent, Geithner will have to go back to Congress to ask for more. And, just as he did with the pending auto bailout, he’ll have to claim a scalp or two to prove he means business.

But that may not be enough to convince the public. After we’ve sent Wall Street $4 trillion so far — including $590 billion in direct federal spending, as well as trillions in loans and guarantees — the Street still isn’t lending much to Main Street.

There’s been a small uptick in lending to big businesses lately, but small businesses continue to be squeezed. Big banks are still hoarding cash, still paying their executives princely sums, still using corporate jets and entertaining themselves at fancy resorts. It would have been more efficient to bypass Wall Street altogether and lend the $4 trillion directly to Main Street.

So maybe Geithner really should fire many of them. Explain to me, for example, why Kenneth Lewis is still the CEO of Bank of America, after blowing the purchase of Merrill Lynch? Or why Citigroup’s Vikram Pandit is worth the $38.2 million he collected last year, after Citigroup so far has sucked up $52 billion taxpayer dollars? I mean, we taxpayers now own a big chunk of these companies. The least we can demand is accountability.

Yes, I know: Wall Street needs all the talent it can find, and we don’t want government bureaucrats running our banks. But we do need people who understand that when they take billions of dollars of public money they have public responsibilities: to forego big paychecks, to clean up their balance sheets, and to make the financial system work for the rest of us. If they don’t get that, they should join the millions of other Americans who have lost their jobs since the downturn started.

Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley.

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