Hang ‘em high

That’s the thought that came to mind when I read Phil Fresht’s indictment of the global bank crisis. Phil argues that government should bring errant bankers to book. As night follows day, the level of indignation shown by commenters was palpable and predictable. One makes the interesting observation:

…all the talk that has been going around in Governments around the world today is “whom to blame”. Not ONE constructive step, ONE concrete measure to ensure that such debacles do not occur in the future. While some programs have been put in place to stem foreclosures, revive housing and enthuse spending etc, nobody has seen any constructive debate around any measures for Balance Sheet control of the Banks.

Therein lies the problem. Who is getting a grip of the system? In Financial Week, which I have to admit is supplying some of the juicier commentary, one columnist asked: Is Obama bluffing on banks?

AIG has already been nationalized, in the sense that the Treasury controls 80% of the insurer’s common through a warrant. The U.S. picked up that warrant, along with preferred shares, in exchange for the taxpayer equivalent of debtor-in-possession financing.

But neither the Treasury nor the Federal Reserve—which is administering AIG’s life support—appear to be acting as if taxpayers are the debtors in possession of anything.

The same could be said for the UK, which seems far more concerned with castigating fat cat directors than solving the problems. I find it astonishing that among all the problems facing the Big Four, my Google alert for PwC continues to show not a jot of information from that firm about what’s happening in India following the Satyam debacle.

In the meantime, AccountingWEB.com (that’s the US equivalent of AccountingWEB.co.uk) is positively salivating at the prospect of the fallout from the bailout. In an email to subscribers sent 18th February, managing editor Gail Perry says of the stimulus arrangements:

…any legislation stapled together in this fashion will be fraught with loopholes and mistakes, and that will provide accountants with opportunities to communicate with the clients, explain provisions of the bill, and have additional client interaction when correction legislation is passed.

So once again, as is so often the case, we accountants can give thanks to our elected officials for keeping our profession alive and well.

I presume Gail thinks there will be a viable profession left after the impending fallout of civil cases against BDO, PwC etc

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• Lessons From Japan: Get Bad Assets Off Banks’ Balance Sheets (blogs.wsj.com)
• AIG suffers $62B loss, bailout revamped (money.cnn.com)
• Looking Ahead (nytimes.com)
• Fed considers plan to issue debt to relieve pressure on banks (telegraph.co.uk)

Tagged as: AIG, Federal Reserve