Is grassroots activism the solution to getting the financial crisis behind us for good? I came across this post from Arianna Huffington on moving your banking business from the TBTF (B of A, Citi, JP Morgan / Chase, Wells Fargo) to the Community Banks and Credit Unions.
http://www.huffingtonpost.com/arianna-huffington/move-your-money-a-new-yea_b_406022.html
Sure the Community Banks and Credit Unions are alternatives to the TBTF for basic banking services, but is this a solution to the problem that has grown since the 1980's?
Its a start.....simplicity is the mother of invention.
Thursday, December 31, 2009
Tuesday, December 29, 2009
Fall Newsletter of the Bucks County Economic Development Corp.
The BCEDC is an organization that I have been on the Board of for the past ten years. I am attaching the link to most recent newsletter that has articles on topical business ideas and updates on business created in Bucks County, PA supported by State and Federal lending programs.
Enjoy the attached Newsletter and I would encourage all businesses to get involved with the economic development corporation's programs.
http://www.bcedc.com/documents/FallWinter09Newsletter.pdf
Enjoy the attached Newsletter and I would encourage all businesses to get involved with the economic development corporation's programs.
http://www.bcedc.com/documents/FallWinter09Newsletter.pdf
Sunday, December 20, 2009
Job creation - Government & Banks (God help the US!)
The newly appointed B of A CEO Brian Moynihan in an interview on CNBC claimed to be in the "job creation" business. Well I guess since they have done a great job in home mortgages, credit cards, wealth management (destruction?) and business lending - what better leadership to focus on re-building and funding job creation in the US.
First, with all due respect to Mr. Moynihan, the President, Congress, etc - neither the Government nor the Banks create jobs. They do influence job creation or destruction through Policy (Government) and Funding (Banks). Neither creates lasting industries or meaningful jobs without trust as the foundation. Long-term commitment, consistency, and resolve contribute to an environment needed to attract capital to create private enterprises and jobs. Its a slippery slope, listening to the drama and conflicting initiatives coming out of Washington, Europe, and Wall Street are cause for concern that will impact generations to come.
Presidents Obama, Bush x2, Clinton and our Congresses, controlled from both Parties, have gotten the tax-payers into the Banking business, auto finance business, and auto manufacturing business. Both parties have had considerable influence in exporting industries to Asia, India, Central and South America along with the multiplier effect that occurs when an economy begins to recover.
History has shown that when Government's own, run, or exert excessive influence over private enterprise nothing good comes of it. Just take a hard look at what Fannie and Freddie have become, the turmoil in banking, healthcare, and education industries of recent vintage. All troubled industries that were undermined by significant legislative agenda's of both parties have created a toxic environment for creation, re-invention, and repair in all.
Ken Lewis's hand-picked successor and long-time employee, Mr. Moynihan believes that B of A is not too big to manage. The company has the considerable management talent to be entrusted with allocating the dominant market share of US deposit base. We should all take exception as the only reason for their very existence is tax-payer funding and debt subsidized by the US Government. In fact all the Too Big to Fail (TBTF) guys are all benefiting from this subsidy even Goldman Sachs, but that's another story. B of A's management under Ken Lewis was built on a foundation of growth by acquisition at all costs. Why? The bigger the Bank the higher the compensation for execs and of course, Ken Lewis.
B of A has been anything but a model of consistency with a strong ethical compass for customers (business, and consumers), shareholders, and non-exec employees. From the Merrill Lynch fiasco, to using the current crisis to exact unreasonable changes to facility terms, to calling loans in the small / mid-market businesses, and out sizing fees for services calls out the need to down-size the Oligopoly that is being created. Domestic US and local market share limits should be 5-7% for all TBTF banks.
The industry and policy need to get back to basics to restore the confidence demanded for private sector business creation / expansion.
NUFF SAID for now.....
First, with all due respect to Mr. Moynihan, the President, Congress, etc - neither the Government nor the Banks create jobs. They do influence job creation or destruction through Policy (Government) and Funding (Banks). Neither creates lasting industries or meaningful jobs without trust as the foundation. Long-term commitment, consistency, and resolve contribute to an environment needed to attract capital to create private enterprises and jobs. Its a slippery slope, listening to the drama and conflicting initiatives coming out of Washington, Europe, and Wall Street are cause for concern that will impact generations to come.
Presidents Obama, Bush x2, Clinton and our Congresses, controlled from both Parties, have gotten the tax-payers into the Banking business, auto finance business, and auto manufacturing business. Both parties have had considerable influence in exporting industries to Asia, India, Central and South America along with the multiplier effect that occurs when an economy begins to recover.
History has shown that when Government's own, run, or exert excessive influence over private enterprise nothing good comes of it. Just take a hard look at what Fannie and Freddie have become, the turmoil in banking, healthcare, and education industries of recent vintage. All troubled industries that were undermined by significant legislative agenda's of both parties have created a toxic environment for creation, re-invention, and repair in all.
Ken Lewis's hand-picked successor and long-time employee, Mr. Moynihan believes that B of A is not too big to manage. The company has the considerable management talent to be entrusted with allocating the dominant market share of US deposit base. We should all take exception as the only reason for their very existence is tax-payer funding and debt subsidized by the US Government. In fact all the Too Big to Fail (TBTF) guys are all benefiting from this subsidy even Goldman Sachs, but that's another story. B of A's management under Ken Lewis was built on a foundation of growth by acquisition at all costs. Why? The bigger the Bank the higher the compensation for execs and of course, Ken Lewis.
Not exactly the management team deserving of outsized market share of US deposits to deploy. The industry regulators have embarked on a consolidate at any cost to the TBTF shutting off new charter applications, limiting investor capital sourcing for Community and Regional Banks, and, enacting a limit on deposit rates that can be paid in the market.
B of A has been anything but a model of consistency with a strong ethical compass for customers (business, and consumers), shareholders, and non-exec employees. From the Merrill Lynch fiasco, to using the current crisis to exact unreasonable changes to facility terms, to calling loans in the small / mid-market businesses, and out sizing fees for services calls out the need to down-size the Oligopoly that is being created. Domestic US and local market share limits should be 5-7% for all TBTF banks.
The industry and policy need to get back to basics to restore the confidence demanded for private sector business creation / expansion.
NUFF SAID for now.....
Thursday, December 17, 2009
The Banking Revolution - Community Banks vs Shadow Bankers
Took a little time for the second post but had too many projects going at the same time. Better late than never as the saying goes.
"Those that do not learn from history are doomed to repeat it." We have not learned from regulatory changes tracing back to the 1980's.
The Shadow Banking system beginning with Money Market Funds, Commercial Paper, and Junk Bonds have morphed into a dizzying array of financial products that at the core created the crisis of confidence in our financial system. Today we are doubling down on a broken system that encourages delivering new financial products to the markets without any vetting for the need or the separation of risk and rewards. if this was not so, how did our financial system seize-up in September 2008?
Go figure, the Country needs new funding sources to leverage the bountiful liquidity heaped on the market from the Treasury and the Federal Reserve for enterprise creation (ie Jobs). At the same time the regulators are imposing a buy a bad existing bank "rule" to investors along with additional rules such as limits on deposit rates they can pay and extending the de novo to seven years (start-up period with increased Government oversight). Further, examiners of the FED, OCC, and FDIC are hammering the Community and Regional banks on credit quality and new deposit gathering rules that are akin to deposit caps that were abolished in the 80's. With the follies we have seen in the Shadow Banking markets (Money Market Funds, Collateralized Debt Markets, Commercial Paper Markets, SWAP Markets etc) you would think the Politicians and heads of our Regulatory Agencies would be looking for long-term solutions to the lessons learned.
Not happening - and in fact, just like the gambler who believes they are one hand away from their pay-day, they are doubling down instead of addressing the follies of their ways to date. Consider the FDIC and the FED's handling of the Wachovia bail-out. Initially Citi Bank was announced as the acquirer of the considerably troubled Wachovia Bank after a seemingly unsuccessful attempt by the regulators (FDIC and FED) of a shotgun marriage of Wachovia to Wells Fargo. The markets saw this as a hail-mary to bail-out Citi with taxpayer dollars. Although in the end Well's was the winning bidder, just the announcement of Citi as the stalking horse "buyer" damaged the trust needed by all market participants. Regulator's never can be viewed as choosing winners and losers by the markets and market participants. Yet they continue conduct themselves in a manner that contributes to the continued uncertainty in the markets.
Commercial Banks primary functions are to provide access to the payment system and leverage liquidity in the system by lending or investing the funds raised through funding sources (deposits, advances, debt etc). At this point I am struggling to understand the wisdom and motivations of anything in Washington. The drama and confusion over the past two years has exposed a bloated bureaucracy that believes the country's banking system needs to be reduced to ten banks. I do think we will see the separation commercial and i-banks as the risks are too great to tax payers from bad bets (trades).
As I think about a system with ten banks, I see one of two scenario's on the horizon. A new and improved version of the shadow banking system filling a void in job creation. The problem with this is the concentration of power as the ten big banks will be the leverage in the system filling a void. This is not an alternative as pointed out by Thomas Jefferson prior to the founding of America. I was incredulous when my history major son pointed out Jefferson's concern about the nation's bankers seizing control of freedom. Seems our founding fathers were obsessed with their freedom. No one currently in Washington, the State's, or local political office understand the passion of our founding fathers and the current populous, for that matter, for freedom.
The former Chairman of the Federal Reserve and current member of the Obama Administration's Economic Recovery Board, Paul Volcker's point of view is summed up as follows:
"We need to break up our biggest banks and return to the basic split of activities that existed under the Glass-Steagall Act of 1933 – a highly regulated (and somewhat boring) set of banks to run the payments system, and a completely separate set of financial entities to help firms raise capital (and to trade securities)."
The man see's the policy making playing field and more importantly understands the external influences that contributed to the global problem. Seems the Clinton Administration and Congress did not understand the risks of i-banking and the reasoning behind separating them from commercial banks.
The second scenario separates all i-bank and commercial bank operations (risky and less risky, respectively). The Too Big To Fail (TBTF) should be limited in deposit share to 5% domestically and locally. Start-ups are encouraged and approved by our regulating agencies with reasonable oversight. The notion of seven years of supervision is ludicrous. Frankly, the Regulators that started this one should be taken to the woodshed and replaced. Classical example of Regulators in need of leadership with appreciation of historical lessons or, candidly, an adult's oversight.
Time for all Policy-makers to take a step back, see the playing field, and reach for the re-start button. Support for Community and Regional Banks are part of the solution to on the ground intelligence required to properly manage risk.
NUFF SAID, for now.
"Those that do not learn from history are doomed to repeat it." We have not learned from regulatory changes tracing back to the 1980's.
The Shadow Banking system beginning with Money Market Funds, Commercial Paper, and Junk Bonds have morphed into a dizzying array of financial products that at the core created the crisis of confidence in our financial system. Today we are doubling down on a broken system that encourages delivering new financial products to the markets without any vetting for the need or the separation of risk and rewards. if this was not so, how did our financial system seize-up in September 2008?
Go figure, the Country needs new funding sources to leverage the bountiful liquidity heaped on the market from the Treasury and the Federal Reserve for enterprise creation (ie Jobs). At the same time the regulators are imposing a buy a bad existing bank "rule" to investors along with additional rules such as limits on deposit rates they can pay and extending the de novo to seven years (start-up period with increased Government oversight). Further, examiners of the FED, OCC, and FDIC are hammering the Community and Regional banks on credit quality and new deposit gathering rules that are akin to deposit caps that were abolished in the 80's. With the follies we have seen in the Shadow Banking markets (Money Market Funds, Collateralized Debt Markets, Commercial Paper Markets, SWAP Markets etc) you would think the Politicians and heads of our Regulatory Agencies would be looking for long-term solutions to the lessons learned.
Not happening - and in fact, just like the gambler who believes they are one hand away from their pay-day, they are doubling down instead of addressing the follies of their ways to date. Consider the FDIC and the FED's handling of the Wachovia bail-out. Initially Citi Bank was announced as the acquirer of the considerably troubled Wachovia Bank after a seemingly unsuccessful attempt by the regulators (FDIC and FED) of a shotgun marriage of Wachovia to Wells Fargo. The markets saw this as a hail-mary to bail-out Citi with taxpayer dollars. Although in the end Well's was the winning bidder, just the announcement of Citi as the stalking horse "buyer" damaged the trust needed by all market participants. Regulator's never can be viewed as choosing winners and losers by the markets and market participants. Yet they continue conduct themselves in a manner that contributes to the continued uncertainty in the markets.
Commercial Banks primary functions are to provide access to the payment system and leverage liquidity in the system by lending or investing the funds raised through funding sources (deposits, advances, debt etc). At this point I am struggling to understand the wisdom and motivations of anything in Washington. The drama and confusion over the past two years has exposed a bloated bureaucracy that believes the country's banking system needs to be reduced to ten banks. I do think we will see the separation commercial and i-banks as the risks are too great to tax payers from bad bets (trades).
As I think about a system with ten banks, I see one of two scenario's on the horizon. A new and improved version of the shadow banking system filling a void in job creation. The problem with this is the concentration of power as the ten big banks will be the leverage in the system filling a void. This is not an alternative as pointed out by Thomas Jefferson prior to the founding of America. I was incredulous when my history major son pointed out Jefferson's concern about the nation's bankers seizing control of freedom. Seems our founding fathers were obsessed with their freedom. No one currently in Washington, the State's, or local political office understand the passion of our founding fathers and the current populous, for that matter, for freedom.
The former Chairman of the Federal Reserve and current member of the Obama Administration's Economic Recovery Board, Paul Volcker's point of view is summed up as follows:
"We need to break up our biggest banks and return to the basic split of activities that existed under the Glass-Steagall Act of 1933 – a highly regulated (and somewhat boring) set of banks to run the payments system, and a completely separate set of financial entities to help firms raise capital (and to trade securities)."
The man see's the policy making playing field and more importantly understands the external influences that contributed to the global problem. Seems the Clinton Administration and Congress did not understand the risks of i-banking and the reasoning behind separating them from commercial banks.
The second scenario separates all i-bank and commercial bank operations (risky and less risky, respectively). The Too Big To Fail (TBTF) should be limited in deposit share to 5% domestically and locally. Start-ups are encouraged and approved by our regulating agencies with reasonable oversight. The notion of seven years of supervision is ludicrous. Frankly, the Regulators that started this one should be taken to the woodshed and replaced. Classical example of Regulators in need of leadership with appreciation of historical lessons or, candidly, an adult's oversight.
Time for all Policy-makers to take a step back, see the playing field, and reach for the re-start button. Support for Community and Regional Banks are part of the solution to on the ground intelligence required to properly manage risk.
NUFF SAID, for now.
Sunday, December 13, 2009
First Post.....what's this about?
As this is the first post to the Main Street Funding Blog I think it is important to establish that all posts are observations or information obtained by me through my network of contacts built over the past thirty plus years. The posts will be supplemented with a real-time gut-check of reading materials subscribed to or read from other resources. If significant or thought provoking in its entirety the source will be linked on the blog.
I am not a financial journalist so most posts will not be fact checked or edited by anyone. Some of my favorite blogs are:
The Big Picture @ http://www.ritholtz.com/blog/ (Barry Ritholtz);
Baseline Scenario @ http://baselinescenario.com/ (Lucien Martin), and;
Naked Capitalism @ http://www.nakedcapitalism.com/ (Yves Smith).
All are updated daily and generally compilations of news with their own take on items posted. I am always on the look out for new interesting sources of information, so any send any suggestions for me to give them try.
This is pretty boring for the first blog entry, so I will be following it up one that's interesting later today.
I am not a financial journalist so most posts will not be fact checked or edited by anyone. Some of my favorite blogs are:
The Big Picture @ http://www.ritholtz.com/blog/ (Barry Ritholtz);
Baseline Scenario @ http://baselinescenario.com/ (Lucien Martin), and;
Naked Capitalism @ http://www.nakedcapitalism.com/ (Yves Smith).
All are updated daily and generally compilations of news with their own take on items posted. I am always on the look out for new interesting sources of information, so any send any suggestions for me to give them try.
This is pretty boring for the first blog entry, so I will be following it up one that's interesting later today.
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