2nd Open Letter to Pres. Obama

Hi Mr. President:

I didn’t expect to be writing again so soon, but I saw a Wall Street Journal article announcing that Wells Fargo & Co. only reluctantly canceled plans to fete their top producing mortgage officers at two high-priced hotel casinos in Las Vegas, after receiving a $25 billion public funds bailout–this despite the public outcry that followed Citigroup’s attempted purchase of a luxury corporate jet soon after receiving a $45 billion bailout, and AIG’s spending almost a half million dollars on executive spas after receiving an $85 billion bailout.

What most surprises me is that all of the smart management people at Wells Fargo (and those other companies) didn’t realize that once a privately owned firm asks for public assistance, they shouldn’t act like they’ve got money to burn–at least until they’ve paid back the welfare grant.  Since these companies apparently don’t get the big picture,  someone has to explain things to them in very simplistic terms.  So here goes:

Let’s pretend that your brother calls one night and says he’s in desperate need of a $5,000 loan to pay his overdue bills, or his condo will be foreclosed and his car will be repossesed.  He explains that he made some bad investments, and lost all his savings.  Even though you have your own bills to pay and will need to tighten your belt to get by, you decide to help your brother out.  Your brother says it will take him three months to “get his head above water” and start trying to pay you back.  A week later, you see your brother and his unemployed girlfriend eating dinner in a very expensive restaraunt.  When you go in to say “hello” you notice that there’s also a very pricey bottle of wine on the table.  As you walk away, you realize that the three most likely explanations for your brother’s opulant meal are: (1) your brother lied to you about needing $5,000 to pay his bills; (2) your brother needed the money to pay bills but decided to celebrate getting the loan first, and worry about paying his bills later; or (3) your brother used the full $5,000 to pay his bills, but then decided to spend his earnings on a really expensive meal rather than starting to pay you back.

I think we all can agree that no matter which scenario explains  your brother’s behavior, you’d be really pissed off and want to beat him to a pulp.  Would it make you feel better if your brother said, “Look I put your $5,000 in a separate bank account, and used my payroll check to pay for the extravagant meal!”  If that doesn’t help, how about if he said, “I’ve really spoiled my girlfriend with expensive gifts and meals, and I was afraid that she would leave me if I stopped spoiling her.”  I don’t think so!!!

I hope this modest parable gets the point across to these captains of finance.  If they used bailout funds for those extravagances, shame on them!  If they put the bailout funds aside and used other revenue or savings, then perhaps they didn’t need the bailout funds after all, and shame on them!  And if their top managers or earners were threatening to go elsewhere for employment unless they received extravagant bonuses or entertainment, shame on the employees for being greedy during this national crisis and shame on the bosses for giving in their extortion.  As a wise Bloomberg columnist said on NPR, considering how poorly those firms performed last year the companies might be better off losing the benefit of their services.

Well, Mr. President, if you think my comments would help those financial institutions understand the big picture, I would encourage your staff to send the CEO’s and Boards of Directors a copy of this post, or an email with a link to this blog.

Respectfully,

Unabashed Truthteller