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Larry Tabb: "The Heads Of All Of The Major Banks Should Be Fired"

Tyler Durden's picture




 

Financial Reform: A Colossal Failure of Leadership
By Larry Tabb, founder & CEO, TABB Group

The heads of all of the major banks should be fired.

The leaders of our industry have poured gasoline on the banking crisis and accelerated it completely out of control. It has gotten to the point where legislators and regulators seem to be doing their best to burn the industry down to the ground to rid it of the evils that caused the crisis in the first place.

I put this squarely at the feet of our industry's leaders. They ignored common sense, signs, hints, nudges and flat out requests to curb their risk taking to the point where  governments now are proposing rules that not only will force institutional break-ups and hurt our industry, but that very well may cripple the capital formulation engine Main Street needs to generate jobs. Talk about cutting off our proverbial nose to spite our face.

All that our industry leaders needed to do was come together, highlight the major gaps that led to the subprime crisis and come up with a solution to solve the most egregious issues. Yes -- in order to keep the industry whole and the world sane, some profitable business would need to be eliminated, sacred cows slaughtered and sacrifices made to appease government leaders and stop the gathering hordes from marching down the Street with torches and pitchforks.

But, no!  What do these guys do, instead?

First, during the worst of the crisis, they hunker down in a bunker scared as cockroaches under a spotlight. Next, they Hoover up as much cheap cash offered by the Fed and lend it back to the government, capturing more than 300 basis points on each dollar and generating billions in profits, but they don't lend a penny to consumers or businesses.

Then they pay record bonuses when many Americans are losing their homes.  They also fight the consumer financial products agency that stops institutions from creating financial products designed to blow up. They protest capital and leverage controls. They obstruct funding a bailout pool for resolving failed complex institutions so taxpayers don't have to bail them out again. And they marshal herds of lobbyists (ineptly) to fight the curtailment of even the most obvious of flagrant abuses.

So what did we get from all this lobbying?

We still have consumer protection rules, but now we are looking at the Volcker Rule, which bans proprietary trading; the Lincoln Bill, which moves virtually all OTC derivatives toward central clearing and exchange trading and cleaves off derivatives trading into a separate, independently capitalized subsidiary; and the newly proposed Brown/Kaufman amendment, which looks to cap the size of banks to 10 percent of national deposits and non-depository institutions to 2 percent of gross domestic product. Further, the SEC now is looking at civil actions against firms for their issuance practices for OTC derivatives.

Don't these guys understand that the more they fight financial reform, the more legislators and regulators will join the battle, the less support our industry will have, and the easier it will be for governments to pile on the rules and restrictions? And don’t they realize they cannot sit back and dismiss the question, “what will these guys find?”

Haven't we learned anything from the Spitzer and Giuliani sideshows? When regulators are digging through e-mail, there will always be one idiot that says something that will not look good on the front page of The Wall Street Journal, Financial Times and The New York Times. Can you spell, "Fabrice Tourre?"

While most of this is now water over the dam, our leaders (either new or existing) need to ratchet down the rhetoric, work within our community and determine which sacred cows need to be slaughtered so the industry and the global economy can survive. They need to offer these sacrifices to our legislators as a peace offering and work with the global community to ensure that our financial markets are structurally sound and will remain so, long into the future.

Otherwise, we will be playing right into the hands of our worst critics. 

And that will not help the industry or the global economy.

 

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Thu, 04/29/2010 - 16:50 | 324400 AccreditedEYE
AccreditedEYE's picture

It goes way beyond a failure of leadership pal...

Thu, 04/29/2010 - 17:00 | 324420 percolator
percolator's picture

You got that right EYE, this SOB doesn't get it they're all criminals and need to be locked up!

Thu, 04/29/2010 - 20:46 | 324740 pslater
pslater's picture

The real criminals are still in Congress.  The bankers are in business to make money and that's what they did.  If you don't want people to eat, don't set a table for them.  The collapse of regulation is what's to blame (see Madoff, Bernie, Stanford, Allen R., etc).  Chris Dodd should be going to jail not retirement and Barney Frank should be strapped over a railing in prison so the bro's can have their way with him.  Wait, he'd like that too much.....

Fri, 04/30/2010 - 02:33 | 324990 TheSettler
TheSettler's picture

+10000

Fri, 04/30/2010 - 11:03 | 325477 Adam Neira
Adam Neira's picture

Unless everyone wants to go back to an era of tribal pre-industrial primitivism a viable banking system is necessary to the healthy functioning the world economy. Of course there have been obscene abuses of power and many instances of corruption in the sector. However an objective audit is required combined with a viable reform plan. Regulation and oversight is required. The world needs more good bankers motivated by the idea of public service not personal gain. We should not throw the financial baby out with the bathwater.

Sat, 05/01/2010 - 14:48 | 327143 Nels
Nels's picture

The world needs more good bankers motivated by the idea of public service not personal gain.

And I suppose you do your job motivated by the idea of public service. 

The problem is that the process is broken, and it rewards corruption and attracts crooks.  This is not an either-or fix.  Hang the crooks, fix the process.  You can consult Deming if you want, but the fact is that the quality coming out of a given process is determined by the process.  Design a process for angels to exercise power (unlimited power, no oversight), and 90% of the job applicants will be demons.

Thu, 04/29/2010 - 17:02 | 324424 Jason T
Jason T's picture

Global Glass Steagall would do it.

 

Thu, 04/29/2010 - 17:03 | 324427 brooklynlou
brooklynlou's picture

Can you fire HAL 3000? It didn't work out so well the last time ...

Thu, 04/29/2010 - 17:05 | 324434 BlackBeard
BlackBeard's picture

What about the heads of government/government agencies?  After all, it takes two to make a 69....

Thu, 04/29/2010 - 17:06 | 324437 Rainman
Rainman's picture

It's very noble to ask for sacrifices from this crew, but sorry, they all know this baby is going to blow. This game is about the bonus pool.....one quarter at a time.

Thu, 04/29/2010 - 17:21 | 324463 Gordon_Gekko
Gordon_Gekko's picture

Not enough - by a wide margin. The banks need to be shut down and dismantled completely with all their management imprisoned for life.

Thu, 04/29/2010 - 17:27 | 324475 Dburn
Dburn's picture

I think Politicians are going to have to somehow have the fear of God in them to see the DOJ cut loose. Right now all of them feel like they're coasting through this. "we're working on the problem" a bit defensively.

"Really where were you last when the feeding troughs were opened up for these pigs? Where you saying No or were you saying 'now wait your turn, there more than enough for everyone'"

"Uh well we had a disaster to avoid"

"What makes you think we avoided anything?"

Thu, 04/29/2010 - 17:48 | 324505 cougar_w
cougar_w's picture

I don't think society would be safe from them if all they were was behind bars. Heck we can't even manage drug dealers, they keep selling from the Pen. Bankers would be worse still.

Thu, 04/29/2010 - 17:28 | 324476 Commander Cody
Commander Cody's picture

Ass-length dreads for everybody.  Nobody goes to the barber.  Poor barber.

Thu, 04/29/2010 - 17:39 | 324496 verum quod lies
verum quod lies's picture

It's like one thousand lawyers at the bottom of the ocean, a good start.

Thu, 04/29/2010 - 17:45 | 324502 cougar_w
cougar_w's picture

Oh I'd say he's a little nervous, yes.

But this is how he saves his own neck, and leaves the industry just the way he found it; toss that other guy under the bus. It gets interesting when the gansters start ratting on each other.

Throw all the bankers into a cage with a twenty dollar bill in the center and watch them tear each other apart to get at it. Blood sport entertainment at the end of an empire.

Thu, 04/29/2010 - 17:50 | 324512 Mitchman
Mitchman's picture

+10!

Thu, 04/29/2010 - 17:46 | 324503 Mitchman
Mitchman's picture

Problem is, we're all just p***ing into a hurricane.  Nothing changes.  SSDD.  Very depressing.  The average person in the allegedly greatest capitalist country in the world is an economic idiot.

Thu, 04/29/2010 - 18:21 | 324567 anony
anony's picture

Even if they were all as well-informed, self-motivated to learn all they can about it, like some of the more perspicacious here, what good would all that book learnin' do 'em?

What good has it done us?

We all know many things that would correct the global financial situation in a few broad strokes but can't do a thing about getting them done.

90% of even the least among the proletariat voted against bailouts and what good did that do?

The good folk of Massachusetts threw Dodd out and what did that do?

The zionists are in control as TheBamster clearly demonstrates by appointing only jews to top financial positions and Goldamn Sucks has a monopoly on appointments of key zionists at every important financial nexus in the world, and Clinton the master liar thinks Lord Blankfein didn't do anything illegal.

As long as AIPAC, the UJC, and ADL run this country no amount of economic de-idiocizing is going to help.   

Thu, 04/29/2010 - 19:01 | 324624 citizen2084
citizen2084's picture

Nothey didnt - big part of the problem. Prior to the 2008 election 99-1 called/faxed/emailed against the paulson banker bailout.  When elections rolled around they were not voted out.

Now the bast@rds are all quiting before they can be voted out. If voting could really change anything it would be illegal.

 

Thu, 04/29/2010 - 19:21 | 324647 Mitchman
Mitchman's picture

Interesting comment and some good insight.  But it doesn't hang together for me that the same guy who listened to the anti-semitic sermons of the reverend Jeremiah Wright for 20 years is going to be very much in the business of letting the Jews run the country.  It pays to remember that his A-A base, which voted 99.9999% for him, is also well-noted for its anti-semitism.  I thought all that International Zionist Conspiracy stuff went away with the John Birch Society- IZC's primary advocate.

So unless Obummer is pulling a Machiavellian stunt by appointing a lot of Jews so that when the s**t hits the fan we can have an American version of pogroms, I don't think the Jewish theory will hold a lot of water at Winged Foot Country Club, The Union Club or any other temples of real power where Jews are not welcome.  

Fri, 04/30/2010 - 01:07 | 324960 verum quod lies
verum quod lies's picture

Ah, the ad hominim attack of one who refuses to see the facts, or more likely doesn't like where they lead. Here are some facts:

1) Roughly half or more of top positions in U.S. finance firms are held by jews.

2) Jews voted roughly as a block democrat (roughly 75%); and that is why firms like Goldman gave more to the democrats than the republicans (and likely why they were bailed out and largely protected by Barry).

3) He is no genius; we don't even know what his grades were (that alone tells you they weren't good).

Put them all together, and who the hell do you think he is going to appoint to these positions? I think his appointments speak for themselves. You might try working some facts into your conspiracy (e.g., Wright is mostly anti-white, yet you focus on him being anti-Ashkennazi jew). Regardless, this isn't some guy who can be consistent in his beliefs, he is a cultural Marxist for Christ sakes. He is merely a creature of polically correct beliefs. He is our first affirmative action president. Given a choice between two white people, one being jewish, he will tend to pick the one who reminds him of the people who contributed to his current position. It's probably that simple.

 

Fri, 04/30/2010 - 12:07 | 325620 JR
JR's picture

The activity of the oligarchs, centering around the secret power of the New York Federal Reserve Bank, has created an American royal court.  The families with connections to this court have become a ruling class enabling the exchange of power among them to use the American capitalist system for their power and personal treasure.  These rulers now hold veto power over business ventures and individual opportunity in America.

Thu, 04/29/2010 - 18:17 | 324563 stickyfingers
stickyfingers's picture

Or we could follow our friends in the inscrutable East.

http://www.nytimes.com/2009/08/08/world/asia/08china.html?_r=1

Thu, 04/29/2010 - 18:34 | 324585 Missing_Link
Missing_Link's picture

They obstruct funding a bailout pool for resolving failed complex institutions so taxpayers don't have to bail them out again.

Wait, what?  Funding the pool would be done with taxpayer money in the first place.  The let the bastards fail if they pull this crap again plan costs no taxpayer money at all.

Thu, 04/29/2010 - 18:46 | 324602 Ripped Chunk
Ripped Chunk's picture

Filthy gluttons with black hearts run the banks.

Keep voting out incumbents until they take the vote away.

 

Thu, 04/29/2010 - 19:04 | 324631 buzzsaw99
buzzsaw99's picture

Fired? Shot out of a cannon over afghanistan.

Thu, 04/29/2010 - 19:08 | 324638 Everyman
Everyman's picture

Fired?  They should have to run the guantlet between 2 lines of shareholders and taxpayers that are allowed to beat them with tube socks filled with woodscrews!

 

Fired is the last thing they should get.  These people deserve so much worse,... they are crooks and theives.

Thu, 04/29/2010 - 19:17 | 324643 doggis
doggis's picture

at the risk of sounding rude - 'what f*cking planet are you from?' Can one say Savings and Loan, or maybe Junk bonds, or maybe pump and dump Tech bubble, Housing bubble - which has led to the ultimate DEBT BUBBLE - all thanks to wall street and their illustrious leaders through the years. your leaders historically are sociopaths!!! i say castrate your leaders and return wallstreet to its rightful place which is 5% of GDP rather than 40% as it is now - screw you and your tribeca loft and seaside house in the hamptons.

ahhh that felt good.

Thu, 04/29/2010 - 19:57 | 324685 SRV - ES339
SRV - ES339's picture

+1

But you forgot the claw-back... and I mean every bonus on Wall Street, for the last five years, even (come to think of it... especially) if it means liquidation of assets... no exceptions!

Finally, Mr Tabb's "change of leadership" does nothing... they're all greedy sociopaths. As bad as (shifty) Lloyd was the other day, the lower level guys (almost) made him look sincere and trustworthy!

Thu, 04/29/2010 - 20:58 | 324745 AccreditedEYE
AccreditedEYE's picture

Spot on with this. Its the culture. You can't "reform" it, you must BREAK it as we know it. There are 50 other Baby Squid with an eye on the captain's chair who are = to or worse than Blankfiend. You must dismantle the current system... However, there is no political strength for it.

Thu, 04/29/2010 - 19:29 | 324657 dumpster
dumpster's picture

who will fire the guys, that fire the bank chief

grab the janitor give him the authority .

he will sweep the place clean lol 

Fri, 04/30/2010 - 03:44 | 325021 dumpster
dumpster's picture

Donald Trump

 

"Your all Fired "

Thu, 04/29/2010 - 20:29 | 324725 alien-IQ
alien-IQ's picture

There must be perp walks...Plain and simple. No less is acceptable....AND I MEAN PLENTY OF PERP WALKS NOT JUST SOME FRENCH MID LEVEL FLUNKY!

Thu, 04/29/2010 - 21:11 | 324767 Mitchman
Mitchman's picture

But if everyone who deserved it took a perp walk then there'd be no one left to...  Oh.  I see.  Good plan!!!  +10!

Thu, 04/29/2010 - 21:15 | 324771 tpberg7
tpberg7's picture

Indeed, the evil acts have been committed and a price must be paid by the guilty.  Many heads must roll to make a clean slate.  Punishment must be exacted on those who wrought the damage.  Blood will be shed on this day.  There is no turning back.

Fri, 04/30/2010 - 00:45 | 324950 glenlloyd
glenlloyd's picture

Too little too late IMO. It starts with the premise that there is still a functioning financial system and I would tend to disagree with that. It may appear to be functioning but beyond the crunchy outer shell there's nothing but a rotten core.

He talks about needing to lend..hell no one wants to borrow and for good reason!

Fri, 04/30/2010 - 02:26 | 324986 Privatus
Privatus's picture

Yeah, firing the sock-puppets will change everything.

Fri, 04/30/2010 - 02:34 | 324991 polizeros
polizeros's picture

William Black. Control fraud. "Failure of the company is not a failure of the control fraud."

Those CEOs made hundreds of millions by forcing accounting rule changes, marking to fantasy, then paying themselves enormous bonuses based on the fantasy numbers.

That's what control fraud is. Aided and abetted by the government.

Fri, 04/30/2010 - 03:27 | 325008 The Alarmist
The Alarmist's picture

It is time for the mother of a disintermediations ... everybody, deposit all your wealth in the Treasury. Don't worry, unlike those evil banks we regulated and coerced out of business, we will always be there for you. Oh, and we are still AAA*

* Ratings subject to change in response to our whims. Please read the Terms and Conditions of your account carefully and pretend, like you do with the Social Security Trust Fund, that these really matter and that you really have a choice in the matter.

Fri, 04/30/2010 - 04:23 | 325040 Grand Supercycle
Grand Supercycle's picture

Previously mentioned EURO buying support has returned...

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