ABA Banking Journal - October 2008 - (Page 4)

Editor’s Column WILLIAM W. STREETER Editor-in-Chief Banking JOURNAL ABA USPS-544-030 OCTOBER 2008, VOL. C, NO. 10 Editorial and Executive Offices: 345 Hudson Street, New York, N.Y. 10014-7115 Phone: (212) 620-7210 Fax: (212) 633-1165 E-mail: ababj@sbpub.com Internet: http://www.ababj.com Published monthly for the American Bankers Association by Simmons-Boardman Publishing Corp. and copyrighted 2008 by ABA; Edward L. Yingling, President, 1120 Connecticut Ave., N.W.,Washington, D.C. 20036, (202) 663-5000. Title registered in U.S. Patent Office. With the exception of official Association announcements, the American Bankers Association disclaims responsibility for opinions expressed and statements made in articles or advertisements published in ABA Banking Journal. P.T. Barnum capitalism THE COUNTRY PAUSED LAST month to note the seventh anniversary of the Sept. 11 terrorist attacks. How ironic that the economic damage to the U.S. financial system that fateful day was far less than what we just witnessed. By our own actions we did what a group of hate-driven, cowardly fanatics could not do. It’s a black eye for free markets, free societies, and capitalism. And that’s a shame, because enemies of our country and economic system will use it to boost their own twisted views. We abused the freedom we so often take for granted, using it instead as freelicense for the biggest money grab the free world has seen in modern times. And the comeuppance is the historic spectacle of financial companies built on the principles of free enterprise turning—voluntarily or otherwise—to the government for a bailout. In the process we are creating a far more powerful central government. Now that it has accepted literally incalculable risk to the funds of its citizens, more oversight, intervention, and control will inevitably follow. Some of that is clearly needed. But one thing that rarely happens is having the government apply just the right amount of control. There is something—though it is admittedly Quixotic—that could help ease the burden of risk now borne by the government and the taxpayers, and might help keep regulatory/legislative reaction from being excessive, and restore some luster to our system in the eyes of the world. That would be for more of the private sector to step up voluntarily to help. To put it bluntly, staggering amounts of money were made by institutions, funds, and individuals in recent years from the financial engineering products and processes built largely around an out-of-control housing market—the same products that have been “deleveraging” with such devastating effect. A great deal of that paper profit, obviously, has evaporated, taking many companies with it, but not all of it by any means. As others have observed, the private sector happily rakes in the profits while the bubble is inflating, but once it bursts, the government gets left holding the bag whenever some institution is deemed too big, too interconnected, or too systemically important to just simply fail. How convenient for the hedge fund managers, short sellers, deal makers, mortgage brokers, GSE execs, lenders, and others—many far from Wall St., and some in this industry—to be able to reap the gains and stand aside when things get ugly. This is not free-market capitalism. This is P.T. Barnum capitalism, and the suckers are the taxpayers. These “winners” may well ask, “Why should we have to support the people who weren’t smart enough or quick enough to get out of the building before it collapsed? It’s all the Fed’s fault anyway.” The answer is that if they were honest, they would admit they were lucky to escape themselves. And also because it’s unfair to have the public at large saddled with hundreds of billions in debt from private-sector shenanigans. No doubt the bailout plan will recoup some of that money, but the process will still cost taxpayers plenty. At one point last month, a group of large banks ponied up $77 billion to be used to prop up any of their number that got into more trouble than they could handle. A commendable move. Too bad the Feds can’t broker something similar from a wider range of players to help defray the cost to taxpayers of the wreckage those players helped create and profited from. Don’t hold your breath. bstreeter@sbpub.com Editor-in-Chief Executive Editor Senior Editor Editorial Assistant Art Director Associate Art Director Art Production Manager Contributing Editors Leslie T. Callaway Lucy Griffin Mark Kruhm Lisa Valentine Advisory Committee Jeffrey S. Owen Production Director Circulation Director Publisher William W. Streeter bstreeter@sbpub.com Steve Cocheo scocheo@sbpub.com Lauren Bielski lbielski@sbpub.com Andrea Rovira arovira@sbpub.com Wendy Williams wwilliams@sbpub.com Phil Desiere pdesiere@sbpub.com Todd M. Blanchard tblanchard@sbpub.com Ed Blount Nancy Derr-Castiglione Karen Holliday Bill Orr Edward L. Yingling Virginia Dean Mary Conyers-Brown mbrown@sbpub.com Maureen Cooney mcooney@sbpub.com Gus Blumberg gblumberg@sbpub.com Subscriptions: Call 1-800-895-4389; or write to: Subscription Dept., ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010 Subscription rates: PRINT OR DIGITAL VERSION: One Year Commercial Banks/Holding Companies FREE to qualified subscribers in the US; Commercial Banks/Holding Companies (Canada) $50.00; Other Businesses (U.S. & Can.) $70; Foreign (Air Mail) $380; Two Years Commercial Banks/Holding Companies (Canada) $85.00; Other Businesses (U.S. & Can.) $115; Foreign (Air Mail) $710; BOTH PRINT AND DIGITAL VERSIONS: One Year Banks, Holding Cos., Financial Insts. - US & Can $75.00; Other Businesses - US & Can $105.00 Foreign - Air Mail Delivery $570.00; Two Years Banks, Holding Cos., Financial Insts. - US & Can $128.00; Other Businesses - US & Can $173.00 Foreign - Air Mail Delivery $1065.00 Single copy rate: $25.00 (U.S. & Canada) $100.00 (Foreign) : Reprints: PARS International Corp. phone: 212-221-9595 / fax: 212-221-9195 e-mail: SBPCreprints@parsintl.com. : Research: full text of ABA Banking Journal is available on Nexis, a proprietary electronic database http://www.nexis.com. ABA Banking Journal (ISSN 01945947, USPS 544-030) is published monthly by Simmons-Boardman Publishing Corp., 345 Hudson St., NY, N.Y. 10014-4502. Periodical Class postage paid at New York, N.Y. and additional mailing offices. Canada Post Cust. #7204564; Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2; Agreement #41094515. POSTMASTER: Send address changes to ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010. 4 OCTOBER 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.ababj.com http://www.ababj.com http://www.nexis.com http://www.ababj.com

Table of Contents for the Digital Edition of ABA Banking Journal - October 2008

ABA Banking Journal - October 2008
Contents
Editor’s Column
A Banker's View of FHA's "Hope for Homeowners" Program
Snapshot: Branch Sales Sag to Ten-Year Low
Covered Bonds Gain Interest after GSE Takeover
ABA Chairman’s Position
ABA Resources
Hot, Web, and Green
Rethinking Segmentation
Still Pushing the Envelope
Keep Regulation Functional
Capital Windfall?
Mortgage IT: Not This Year's Hot Property
Case in Point: Looking for Sales in All the Right Places
Put Your BSA/AML Program into Shape
Mailbox
Banker’s Mart
To Advertise/Index of Advertisers
Remembering Joe Kizzia, Veteren Editor of ABA Banking Journal
100th Anniversary: Then & Now
The Economy

ABA Banking Journal - October 2008

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