CEOs of failed banks need to go

I have to say that for once I agree with AP. Below is an article by AP writer Bruce Schreiner of Louisville KY. It is a disgrace, that CEOs of most failed banks and financial institutions were kept on the job. I believe that the main condition in receipt of bailout dollars should've been replacement of failed management. Please, when you meet with your congressmen and senators, demand action in replacement of the CEOs and the rest of the management teams in the financial institutions that received our tax payer dollars. Demand full accountability on the bailout dollars received and demand to see the repayment schedule. When you take out a loan, a mortgage, you are repaying according to a schedule. The lawmakers need to demand from the banks and investment houses repayment schedule. We, the taxpayers are entitled to know, when the first 700 billion will be repayed and at what interest. I am particularly interested in the repayments from AIG that received reported 128 Billion, over a third of the initial 350 billion. I haven't seen BO and co talking about accountability from AIG, while grilling and ridiculing the executives of our automotive industry. Keep in mind that the auto makers got only 14 billion combined, a little more then one tenth of what AIG got. If AIG is not repaying our money, then it is too big for it's own good and for our good and it is time for it to be broken into smaller companies that can be managed, that can be kept profitable, where we can get again some healthy market place competition in the insurance industry instead of a monopoly.
Orly
PS maybe, one of our readers in KY can contact this AP writer, Bruce Schreiner. He sounds like a decent guy and might be willing to keep an open mind and write about BO's illegitimacy for presidency.

Yahoo! Bookmarks Print By MATT APUZZO and DANIEL WAGNER, Associated Press Writers Matt Apuzzo And Daniel Wagner, Associated Press Writers – 2 hrs 12 mins ago AP – In this April 3, 2008, file photo, JP Morgan Chairman and Chief Executive Officer Jamie Dimon testifies …
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WASHINGTON – They've been bailed out, but not kicked out. At banks that are receiving federal bailout money nearly nine out of every 10 of the most senior executives from 2006 are still on the job, according to an Associated Press analysis of regulatory and company documents.

The AP's review reveals one of the ironies of the bank bailout: The same executives who were at the controls as the banking system nearly collapsed are the ones the government is counting on to help save it.

Even top executives whose banks made such risky loans they imperiled the economy have been largely spared any threat to their jobs, as Washington pumped billions in taxpayer money into the companies. Less fortunate are more than 100,000 bank employees laid off during a two-year stretch when industry unemployment nearly tripled, bank stocks plummeted and credit dried up.

"The same people at the top are still there, the same people who made the decisions causing a lot of our financial crisis," said Rebecca Trevino of Louisville, Ky., a mother of three who was laid off from her job as a Bank of America training coordinator in October. "But that's what tends to happen in leadership. The people at the top, there's always some other place to lay blame."

That workers and managers experience a recession differently is hardly a surprise. What's new is that taxpayers are now shareholders in the nation's bailed-out banks, yet they lack the usual shareholder power to question management decisions or demand house-cleaning in the executive suites.

Wells Fargo & Co., for example, once was among the top lenders of subprime mortgages, or loans to buyers with low credit scores. The company received $25 billion in bailout money and plans layoffs in the coming months. But longtime CEO Richard Kovacevich remains the company's chairman, and the board recently waived its mandatory retirement age for him. John Stumpf, the president since 2005, became chief executive in 2007.

"Our senior leadership team of our CEO and his direct reports have an average tenure of almost a quarter-century with our company," Wells Fargo spokeswoman Julia Tunis Bernard said in a prepared statement. "Our unchanging vision, values and time-tested business model will continue to guide our leaders and our team into the future, and are now more than ever a competitive advantage as our industry evolves."

Under the government's no-strings-attached bailout plan, taxpayers must take it on faith that bank executives will make better decisions this time around, said Jamie Court, president of the California-based group Consumer Watchdog.

"When you deal with the same dogs, you're going to end up with the same fleas," Court said.

The bailout list includes banks of all sizes — from Wall Street giants to small community banks. Some led the rush into subprime mortgages. Others followed.

Many executives on the list are small-town executives who don't earn anything close to Wall Street salaries and who suffered alongside their communities when the economy turned sour. The trouble with the bailout is that nobody in government ever stopped to figure out who caused the avalanche and who simply got buried, said University of Maryland business professor Peter Morici.

"If they got involved in questionable loans and contributed to the speculative bubble, they should be out," Morici said. "These people should be removed and banned from banking, unless we wanted to make them all janitors. But the question then is, 'Can they be trusted wandering around the offices at night?'"

Barack Obama as president-elect and some in Congress have suggested auto company executives should lose their jobs as part of the bailout of that industry. But there has been no such suggestion about banks. Congress twice authorized $350 billion in bank bailout money. Both times, lawmakers set few conditions on the money.

The president of the American Bankers Association, Ed Yingling, said he understands taxpayers are frustrated. But most banks had nothing to do with the subprime crisis, he said. As for whether taxpayers should demand management changes, he said that was never a condition of the bailout plan the government crafted.

"Are we going to have the American people saying, 'We're invested in you, so now we should look at your margins, look at every loan you make, look at your lending policies?' No. That was never discussed," Yingling said. "You can't micromanage banks."

In some cases the market held executives accountable for the mortgage crisis. When banks such as Washington Mutual, Merrill Lynch and Lehman Brothers were bought up, many executives lost their jobs. When the government took over mortgage giants Fannie Mae and Freddie Mac, directors and executives were fired.

But the financial bailout has resulted in no such consequences. AP's review of the more than 200 publicly traded banks that received federal bailout money found that about 87 percent of the top three executives in 2006 — typically the chief executive, operating and financial officers — still remain on the job.

And that number is deceptively low, since those few executives who left their jobs often did so because they retired — or died. Several stayed on as directors or in consulting positions.

Even banks that were involved in risky lending saw little turnover:

_JPMorgan Chase & Co., which invested billions in subprime mortgages, has the same leadership team, led by CEO James Dimon. Dimon made about $28 million in 2007. The company is shedding about 10 percent of its investment bank staff.

_Cleveland-based KeyCorp, which ran subprime lending subsidiary Champion Mortgage until late 2006, received $2.5 billion in bailout money. Its chairman and CEO, Henry Meyer, has been in charge since 2001. Jeffrey Weeden, the company's chief financial officer, and Thomas Stevens, the administrative officer who oversaw the risk review group, have been on the job for years.

KeyCorp has been cutting jobs over the past two years, including 200 announced this month at a Tacoma, Wash., call center. A company spokesman said the bank was too busy preparing its earnings report to answer questions about whether taxpayers should have confidence in the company's management.

"The on-the-record comment I would make is that we declined to comment even though we'd like to, because we don't have time," spokesman Bill Murschel said.

_Capital One Financial Corp., one of the nation's biggest credit-card providers, dove into the risky mortgage business when it bought GreenPoint Mortgage in 2006. GreenPoint made exotic loans to borrowers without verifying income or credit scores, then sold those loans to investors.

A year later, Capital One shuttered GreenPoint, cutting 1,900 jobs. CEO Richard Fairbank and his top executives were not among them. The company received about $3.5 billion in bailout money.

In Louisville, Trevino and her family are living mostly off credit cards and savings while she interviews for jobs. Her husband is in commercial real estate, which has slowed significantly. After what she described as a bare-bones Christmas, she said she looked over her household finances and realized they might lose their home.

"That's when I was just, 'Lord, I know you have a plan. Can you just show me? I'd really like to know,'" she said.

Trevino said she isn't upset that her old boss, Bank of America CEO Ken Lewis, is still on the job. There are others in the industry with greater responsibility for the crisis, she said.

Trevino agreed the federal government needed to rescue the banks but said there should have been some oversight.

"It is surprising that leadership can make decisions that lead to financial ruin for so many," she said, "and then get bailed out for it."

___

Associated Press writer Bruce Schreiner in Louisville, Ky