Rob Coyte's Blog

This week saw the commencement of the Financial Crisis Inquiry Commission which has been set up to establish why the US economy went into tailspin. This is a similar thing to what was set up after the 1930’s Great Depression which saw the implementation of the Securities and Exchange Commission. Hopefully, it will be of substance not simply political grandstanding and corporate cover ups. There is some fundamental problems with our capitalist system and there needs to be changes made to protect the integrity of our children’s futures.

There will be a parade of CEO’s from financial institutions saying in no certain terms “it was not our fault” whilst we will also hear from regulators such as Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner. The Commission will be chaired by former Democrat Phil Angelides who made the remark recently “In 1929 people were throwing themselves out of windows; in 2009, they were lining up for bonuses”.

The final report will be released in December 2010.

President Obama is continuing to fight his war against the excesses of Wall street as he is now imposing a tax on the largest US bank’s and financial firms. I find it absolutely amazing that the industry is so adamantly and publicly against these measures using the argument we need to be able to attract and then retain talent. Well, if we have seen the handy work of the “talent” then they are not worth keeping, and this is a view shared amongst the broader community.

Obama clarified, “My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people”. Obama went on to say, “We want our money back, and we’re going to get it.”

Obama called “twisted logic” the criticism from the industry that the fee is unfair and warned major banks that trying to pass the cost on to consumers would backfire.  “I’d suggest you might want to consider simply meeting your responsibilities and I’d urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives”.

Surely it is time that shareholders need to act along similar lines to let these management parasites know that enough is enough. In my view the poor old retail shareholder needs to get the support of the large institutional shareholders as they are the ones with the power. Cynically, they are all part of the same gravy train so why would they rock the boat for their mates.

Rob Coyte | Monday, January 18, 2010
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