OK, here’s the lineup of those taken over or otherwise “assisted” by the US government and/or the Federal Reserve:
- Freddie Mac (known around here as Fredron).
- Fannie Mae (known around here as Fanron).
Here are others who are being absorbed, apparently at fire-sale prices:
- Merrill Lynch (by Bank of America)
- Countrywide (by Bank of America; seems like ancient history, doesn’t it?)
- Bear Stearns (by Chase)
By the way, I can’t wait for the next politician who throws brickbats at the banking and financial-services industries for overconcentration, given the fact that the politician-patronized Fredron and Fanron, aka Barney’s Rubble, created the conditions for it to happen. I predict it won’t be long.
Here are those who went belly-up after pleas for assistance or for an 11th-hour buyer were waved off:
- Lehman Brothers
(If I’m missing any biggies, let me know in the comments; please don’t e-mail, as I’m still digging through those after the 10-day computer fiasco and more recent power and Internet outages.)
Now, here’s the list of those who are going to want assistance, and apparently pretty soon:
- General Motors
Apparently, John McCain’s overexposure to Mitt Romney since the primaries caused the Arizona senator to very, very wrongly change his tune on assistance to the “domestic” industry — as if Honda, Toyota, Nissan and other plants aren’t “domestic” enough (Obama has apparently favored it all along). I predicted several weeks ago that a President McCain will be an infuriating, high-maintenance project. I believe that remains true, even with Sarah Palin on board to provide outside-the-beltway sanity.
Sticking to the auto biz for a moment: How outrageous is it that Ford, which made a politically-correct but stuck-on-stupid decision for two years to ignore a boycott that cost it almost a billion dollars (under a set of very conservative assumptions), appears to be on the verge of asking the entire country for a handout?
Finally, here’s the list of business who may come to Uncle Sam for assistance if their business heads south:
- Any business that can make a case that it’s too big to fail.
- Any business that can make a case that its failure will harm the near-term electoral prospects of any candidate for president, senator, Congress, governor, or dog-catcher.
In other words, there’s potentially no end to this, which is why it must stop, preferably before the Detroit automakers get their bailout.
The most troubling member in the lists above is AIG, because no one is making what I believe is a pretty obvious connection.
I can’t help but think that if the now-disgraced Eliot Spitzer hadn’t forced out Hank Greenburg in March 2005, the insurance giant would have been able to navigate the troubled waters that arrived not very much later. Instead, the guys at the helm who replaced Greenberg appears to have been way out of their league. Nobody knew AIG inside and out like Greenberg.
Here’s a reminder of what Spitzer did, and how he did it, from the March 11 Wall Street Journal (related BizzyBlog post is here if WSJ link doesn’t work):
….. Mr. Spitzer’s recklessness with the state’s highest elected office, though, is of a piece with his consistent excesses as Attorney General from 1999 to 2006.
He routinely used the extraordinary threat of indicting entire firms, a financial death sentence, to force the dismissal of executives, such as AIG’s Maurice “Hank” Greenberg. He routinely leaked to the press emails obtained with subpoena power to build public animosity against companies and executives. In the case of Mr. Greenberg, he went on national television to accuse the AIG founder of “illegal” behavior. Within the confines of the law itself, though, he never indicted Mr. Greenberg. Nor did he apologize.
In perhaps the incident most suggestive of Mr. Spitzer’s lack of self-restraint, the then-Attorney General personally threatened John Whitehead after the former Goldman Sachs chief published an article on this page defending Mr. Greenberg. “I will be coming after you,” Mr. Spitzer said, according to Mr. Whitehead’s account. “You will pay the price. This is only the beginning, and you will pay dearly for what you have done.”
Left unsaid, but obvious, is that Greenberg wasn’t indicted because he would have kicked Spitzer’s butt in court — which is why Spitzer avoided the inside of courtrooms like a plague. In the one case I’m aware of where someone stood up to Spitzer all the way through a jury verdict, the New York Attorney General was trounced.
My quick research indicates that Greenberg had at least three successors in the past 3-1/2 years (Frank Zarb (a caretaker), Martin Sullivan, and now-deposed Robert Willumstad.
Now there’s Edward Liddy. If he could get past the bitterness, and if regulators could admit that Spitzer’s publicity-driven ouster of him was wrong, Greenberg, even in his 80s, might have been a better choice.
Who’s at the top matters. So does drift at the top, even for a few months, especially at such a large and complex entity.
Note from taxpayers to Spitzer: Thanks for nothing.
Exit question: How unfair is it to blame Spitzer, his AG imitators in other states, and his fellow travelers in Washington who treated Fredron and Fanron as their personal piggy banks, for the financial system’s mess?
Exit answer: Very, very fair.
Parting thought: It appears that if the left can’t nationalize the economy the traditional way (through brute force), they’ll accept it on a piecemeal basis, as their regulations, systemic corruption, and legal harassment take companies and industries down.