7 Oct 2008
More fingers point at bank executives.
After the embattled Bush administration finally pushed through Congress the $700 billion bailout plan for the sick financial sector, doubts still persist about its future. It was during the debate on the bailout plan that the financial giant, Washington Mutual with assets over $300 billion came down on its knees like others before it. In a desperate move to prevent depositors from running on the bank, Federal regulators seized Washington Mutual and sold it to J.P. Morgan Chase for less than $2 billion. This was the biggest bank failure in US history. Spectacular developments like this increased the sense of panic and vulnerability and raised questions about US leadership of this strategic sector.
As the situation unfolds with shock waves spreading throughout the global banking sector, more angry voices are being raised all over the US and beyond. Many people want to know how the financial crisis came to grow to this mammoth size.
Congressional hearings on the financial crisis have kicked off while the Federal Bureau of Investigation (FBI) is carrying out parallel probes into the circumstances that led to the collapse of prominent US mortgage and financial giants. As of last count, more than two dozen entities are affected by the FBI investigations. Prominent amongst them are the mortgage firms Freddie Mac and Fannie Mae, the insurance giant AIG and the Investment bank Lehman Brothers. Reports suggest that the FBI is allegedly looking for potential fraud by the above quartet.
These are icons of the financial world that many had come to have faith in them and in most instances, looked upon their CEOs with adoring admiration. That faith has rapidly evaporated as company after company came crashing in rapid succession and putting the assets, the jobs and even the very future of millions around the world in jeopardy.
Politicians in Washington are accusing the lack of oversight and others are reeling at “greed” and “irresponsibility” but few are mentioning the apparent glove- in- hand relationship between such corporate giants and many of the political elites. Whatever will be the outcome of the FBI investigations/congressional hearings, it is obvious that virtually all sectors of American society have contributed in one way or another to create this scenario. Visualizing it as a reversed triangle, it is obvious to imagine the bank executives sitting on top and brokers and other middlemen, the government (for lack of oversight), and ordinary Americans that borrow beyond their means all taking their positions on the blame chart.
People around the world feel duped and betrayed by some of these tie-wearing bank executives on Wall Street. Many expect that the ongoing investigations/hearings should name, shame and punish some of them. With every passing day, these feelings are reinforced as more governments around the world scramble to shore up sinking financial houses and, as the deeds of the executives of the failed banks are exposed at Congressional hearings.
Lessons from the US financial crisis
Njei Moses Timah