US watchdog calls for bank executives to be sacked

[notesdev]

US watchdog calls for bank executives to be sacked

* James Doran in New York
* The Observer, Sunday 5 April 2009

Elizabeth Warren, chief watchdog of America's $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration's approach to saving the financial system from collapse.

Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade." She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said.

She said she did not want to be too hard on Geithner but that he must address the issues in the report. "The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous."

The report will also look at how earlier crises were overcome - the Swedish and Japanese problems of the 1990s, the US savings and loan crisis of the 1980s and the 30s Depression. "Three things had to happen," Warren said. "Firstly, the banks must have confidence that the valuation of the troubled assets in question is accurate; then the management of the institutions receiving subsidies from the government must be replaced; and thirdly, the equity investors are always wiped out."

[girl gone mad]

1. She's just a whiner.

:sarcasm:

I am thinking this is why Geithner finally changed is tune and said he was open to replacing management and BODs.

[tbyg52]

2. Somebody looking at the facts - what a concept!

Edited for inevitable stupid typo - although I may have invented a new word. What do y'all think "looling" should mean? ;)

[Po_d Mainiac]

3. That wasn't a typo...It's called a Freudian Slip LOL n/t

[truedelphi]

4. I am still lacking some basic knowledge here.

What sort of powers does she hold?

She was telling Senators last Tuesday that geithner and others do not even get back to her.

The Seantors said that they Had the same problem. So where are the teeth to her oversight?

Does she head a Committee, a Commission or something Better?

And if she is an overseer, what kind of overseer is Geithner been trying to point out we need. (Last week he said there woul dbe oversight committee appointed.)

[upi402]

5. remove them and fit them with

concrete boots? like that far removed?