When you want to change something big, figuring out who decides is important.
That’s what floated through my mind as I read Secretary Geithner’s statement about enhancing the regulation of “2-big-2-fail” institutions. Does he owe any big favors?
Our financial crisis makes it clear that there will be a significant reform of the banks. It makes no sense for bankers who take insured deposits to play with that money in exotic markets and arcane structured securities. With my checking account? Puh-leese!
But if you’re going to change the way that big banks do business, a banker may not be your best reformer. He’s got a bunch of personal favors owed and owing that make it hard to be objective. That’s why I like Geithner and Bernanke for changing the system. Obi-Wan Bernanke can always go back to teaching about bank failures during the Depression. And Geithner-san can consult for companies doing business in Asia. That’s they both did before.
They never worked on Wall Street and seem willing to go against the flow in order to fix this mess. While that may spell turbulence in the short run, it’s positive in the long run. Because when you need to figure whose ox gets gored, the last person you want to decide is the owner of the ox.
Douglas R. Tengdin, CFA
Chief Investment Officer
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