Comments on: The tragedy of Prince and Rubin http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: LoachDriver http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13362 Sun, 11 Apr 2010 15:15:45 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13362 Clearly, the author is mistaken. Bankers, wasn’t Chuck Prince the banker of bankers at Citi? are immensely overpaid for making bad deals.

If the author is even nearly correct aboutr Prince’s decision making while at Citi, he’s either a crook & a liar or was inept & out of his deepth & shouldn’t have been in the position in the first place. Or conceivably he was just a victim of bad luck. There appears to be no fourth choice. IMO it boils down to choices one, he’s a crook, or two, he was unqualified for the position. Between the latter two choices, I lean toward the first, he’s a crook.

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By: DoubleLiability http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13359 Sun, 11 Apr 2010 13:11:12 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13359 Prior to the establishment of the FDIC as the protector of depositors’ assets the banking law was one of “double liability” for the banks’ shareholders.

The shareholders will be jointly and severally responsible to pony up the shortfall between the banks’ assets and liabilities from their personal wealth, upto the par value of the stock.

This will certainly force the banks’ stockholders (and its managers) to avoid leveraging the bank’s deposits and creditors’ money flippantly.

Why not abolish the FDIC and bring back the notion of double liability of shareholders?

A good law review article can be found here:
http://www.grantspub.com/UserFiles/File/ Miller_and_Macey_2.pdf

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By: randymiller http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13347 Sat, 10 Apr 2010 15:33:10 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13347 And, it is time for Geithner to resign to go teach high school economics on a teacher’s salary. Maybe Gym class, because he might teach kids the wrong lessons in economics.

When he was being confirmed I think we had to sleep with the devil to keep the whole thing from coming down, but now that people like Michael Lewis have given us a clearer picture, it is time for Obama to retool his economic team. Summers stuck his head in the sand when he fought to eliminate Glass Steagall and fought regulation of CDS on the lame excuse that regulating CDS at that time would disrupt the existing CDS market.

There are a lot of people out there with a lot more sense than those two, so Obama needs to get better advisors. If Summers and Geithner are still working for Obama in 2012, I will not vote for him.

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By: randymiller http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13346 Sat, 10 Apr 2010 15:21:30 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13346 Somebody needed to look at Prince and Rubin in that hearing, after they said they had no idea these CDO’s were that risky, and ask this simple question “Are you two incompetent, liars, or both?”

Wall Street keeps saying they need these big paychecks to keep talented people. If Rubin and Prince could not figure out that taking Bbb mortgage backed bonds and repackaging them in a way that made a high percentage of them get a AAA rating required some sort of fraud, then they do not deserve minimum wage. They did not perform due diligence.

I think they are liars, I think they gave themselves “plausible deniability” and I know there were a lot of people in the Nixon White House who used that excuse, and still served time in prison.

They need to spend the rest of their lives in court, defending themselves against lawsuits and fraud charges. These guys make the clowns at Enron look good by comparison.

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By: iflydaplanes http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13318 Fri, 09 Apr 2010 13:56:07 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13318 @mwilson30058…”black African Americans”? Isn’t that redundant?

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By: Pfunk http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13309 Fri, 09 Apr 2010 09:05:46 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13309 Birds of Prey

Their shadow dims the sunshine of our day,
As they go lumbering across the sky,
Squawking in joy of feeling safe on high,
Beating their heavy wings of owlish gray.
They scare the singing birds of earth away
As, greed-impelled, they circle threateningly,
Watching the toilers with malignant eye,
From their exclusive haven–birds of prey.
They swoop down for the spoil in certain might,
And fasten in our bleeding flesh their claws.
They beat us to surrender weak with fright,
And tugging and tearing without let or pause,
They flap their hideous wings in grim delight,
And stuff our gory hearts into their maws.
–Claude McKay

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By: GrissfortheMill http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13308 Fri, 09 Apr 2010 08:09:44 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13308 PickandRoll…you are blinded by the profits. Prince was CEO of the company and he did not invest in a RATIONAL manner, and he ignored risk management principals, something he learned in his business classes. CITI bought up all these worthless securities, then continued to buy more after the danger signals were in place. An assest is only worth as much as the risk attached to it, this is a very basic investment rule. The CITI board of directors removed Prince a year BEFORE this thing blew up, knowing well he had over-leaveraged the company.

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By: mwilson30058 http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13307 Fri, 09 Apr 2010 06:33:30 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13307 I remember the joy and delight that the white female HR officer took in rejecting black applicants to positions in Citi. I remember the arrogance of the corporate executives at Citi. It still shows in the executive answers to the committee, but who really cares? After all big monies power and prestige went along with these jobs and it was not open to the ordinary african american. Its a shame that the same rejected African Americans unemployed and homeless must make blood out of stone and turn around and provide tax relief and support to an organization that instead of encouraging and growing the African American customer base must now support the New Indian Organization. The Indians, the Muslims, the Arabs don’t consider themselves black and I think it very offensive to ask black African Americans to take their hard earn taxes and save a white racist corporate organization. In this case racism, dishonesty, lies, the rich elite and corporate america have sold their solds to Wall street, made lots of money of the blacks customers, enjoyed the high life and now leave the eggs for the poor black americans to save. Good luck and please more lies, arrogance and falsehoods its corporate americas customary way of life.

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By: scampr http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13305 Fri, 09 Apr 2010 04:58:49 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13305 f bomb in reuterland???

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By: fixedincome http://blogs.reuters.com/felix-salmon/2010/04/08/the-tragedy-of-prince-and-rubin/comment-page-1/#comment-13304 Fri, 09 Apr 2010 04:34:02 +0000 http://blogs.reuters.com/felix-salmon/?p=3301#comment-13304 adding to pickandroll’s point: If you’re going to be on top of a massive organization with that kind of responsibility, then you don’t have the luxury of parochially worrying about saving your own job. You are a fiduciary, and if you have to risk getting axed to protect your shareholders, then so be it.

Likewise, Ken Lewis’ worst sin of all was allowing the threat of losing his job to influence his decision on the ML acquisition. I don’t think Jamie Dimon is a diety, but I could imagine him calling Hank and Ben on their bluff. I think Dimon would have quit before caving.

Sadly, this all comes back to the agency problem and the fact that boards and corporate governance are a shadow of what they should be. Would Chuck or Bob have levered up their own personal balance sheets anywhere near that much? What if their own economic interests were truly, and more deeply, bound up in the equity of Citi? Please.

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