FDIC WTF of the Day: To Oust or Not to Oust (Bank CEOs), That is the Question. Wait, is it?
Strange. Pay attention.
Bloomberg says this morning that FDIC Chair Bair is going to start ousting bank CEOs because, well, we're all Socialists now and suddenly the United States government has the right to do this since they are the ones paying the bills at the banks. Right?
May 15 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said some bank chief executive officers will be replaced within the next several months after the U.S. scrutinizes lenders subjected to tests of their financial strength.
“Management needs to be evaluated,” Bair said today on Bloomberg Television’s “Political Capital with Al Hunt,” to be broadcast this weekend. “Have they been doing a good job? Are there people who can do a better job?”
The FDIC and other regulators last week released stress tests results on 19 lenders including Citigroup Inc., Wells Fargo & Co. and Bank of America Corp., and ordered 10 to raise $74.6 billion in capital to withstand a “deeper and more protracted” slump than forecast by economists. Bair, in the interview, didn’t suggest the government would remove any CEOs.
“There will be an evaluation process,” Bair said. “We’re requesting it as part of the capital plan. And yes,” she said, responding to a question from Hunt about chief executives being replaced.
Chief executives at American International Group Inc., Fannie Mae and Freddie Mac were ousted by the Bush administration after the U.S. took control in September. General Motors Corp. CEO Rick Wagoner was forced out in March after the Obama administration rejected GM’s recovery plan. The CEOs of Citigroup Inc. and Bank of America Corp., which combined received $90 billion in U.S. aid, remain in their jobs.
Bair said regulators should oversee the “adequacy” of the boards of directors at banks receiving U.S. aid, Bair said.
Now, that being said, a strange e-mail arrived from the FDIC in my inbox via their PR team (I'm in it for the hot #bankfailfriday action) an hour or so later. Clarification or ass-covering? WTF is going on?
FDIC Statement Clarifying Bloomberg Article
| FOR IMMEDIATE RELEASE |
May 15, 2009
Andrew Gray: (202) 898-7192
Statement from the FDIC Office of Public Affairs, "The Bloomberg story referencing Chairman Bair's discussion of management and board changes is misleading and does not provide the proper context of her comments. Chairman Bair said that management changes could happen based on the capital plans that an institution must submit to the government. She did not refer to CEOs specifically and the comment was in the context of capital plans submitted by the institutions. Chairman Bair also did not suggest the federal government will remove the bank CEOs."
Transcript of the exchange from Bloomberg follows:
MR. HUNT: But in the same situation, or similar situation, the government already replaced CEOs at Fannie and Freddie and General Motors -
MS. BAIR: Yes, that's right.
MR. HUNT: And some people say, well, why is the head of Bank of America still there? Or why are some of these other banks' CEO's still there?
MS. BAIR: Right, well, obviously I don't comment on open and operating institutions. I think the review needs to go with both the management and the boards as well, absolutely. And management needs to be evaluated and is this the right skill set, have they been doing a good job, are there people who can do a better job, those kinds of questions.
MR. HUNT: Do you think some will be replaced in the next couple of months without getting into the particulars?
MS. BAIR: Yeah, I think there will be an evaluation process. We're requesting it as part of the capital plan and yes.
Well, I'm so glad we cleared that up...