re: Top Fed Official Resigns

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I wasn't negatively impacted in 2008. My revenue might have decreased, but I don't think so

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My portfolio took quite a hit.

While it's recovered now, I can't say my finances weren't impacted from the banking crash - and could've been much moreso without the bailout.

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I can't buy into bailing out CEO's whose sole responsibility to bto beat estimated quarter after quarter. And even if they don't, get paid enormous amounts at the cost of their shareholders, who they allegedly serve

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The demand in the market place for those CEOs in large part determine their compensation packages. Their performance determines the rest. Their fiduciary duty is to increase shareholder value, it is not to their employees, or the stability of the national banking system.

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On occasion my employees get a larger percentage increase in compensation that I do. Not often, but it happens.

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That's because you're looking out for the long-term interests of a small, privately held company. The CEOs were talking about are motivated by the short-term interests of their shareholders.

The nature of our system is growth for its own sake, with the hypothetical goal being monopoly. This is how we get these huge mega-corporations that can individually have major impacts on the market as a whole.

I too have a problem with bailing out these huge banks, but the alternative is to keep them from getting so large that they can have such devastating effects on our system. I'm not sure that's where we really want to go.

These are all very good points. I knew this stuff, but when I typed my response none of this entered my mind.

A couple of thoughts.

First with respect to my portfolio. It had an unrealized loss. I didn't sell anything at a loss, so the market's movement didn't harm me. I actually saw opportunity and made nice profits on both FNMA and FMCC. Some options on paper silver as well.

While I have no issue with demand, emotionally I place many in corporate leadership and mid-level management as very similar to government bureaucrats. This is emotional, and has no bearing on the fact the market mostly determines their compensation.

I agree with you on CEO's fiduciary duty. When the situation between the federal government and APPL was ongoing, I made a comment on here about AAPL's CEO breaching his fiduciary duty. It was a valid argument, and several investor type talking heads agreed with me. IIRC, my comment was met with a lot of criticism, and I think someone actually called me a stupid douche bag.


On your last point I am looking out for both the short and long term interest of a small business, but I was serious about my comments about being an employer has a moral and ethical obligation for employee's well being. While it might not be an economic thing, it is a personal value thing for me. I want them to make as much money as I can pay. Selfishly becuase if they are making more, so am I, but also in an unselfish manner.

We could have an entire conversation about what the answers might have been in 2008-2009, and forward. But my basic premise is that consequences should have happened to both depositors and bankers. I think had AIG properly reserved for what was essentially a policy of insurance, most of this could have been avoided. A large portion would have been mitigated. The only party I really understood being bailed out was AIG. And I wasn't happy about that. They got away with calling an insurance product a financial swap, and consequently never had close to enough capital to pay the subsequent "claims." At one time on IB I had looked a trading the futures contracts on credit default swaps. I'm not 100% certain, but the gentleman that shorted the housing market I believe shorted some swaps as well. It's like insuring a municipal bond offering. There are still players that do this, and most certainly at present mortgage lenders are insuring the paper they keep. It's fascinating to me, and I thank you for your post as I enjoyed thinking through it.