It may seem a petty matter, but the Cit Jet issue is now officially a fiasco. This follows on the expulsion of John Thain for the famed $87,500 carpet.
In both cases the common thread is that no amount of rationalisation can make the matter right. The rationalisation goes that the purchase was executed months or years ago and represented commitments that must be honored. In the case of the Citi jet if was further rationalised that they had sold two other jets and those funds almost made up the $50 million for the new one. Classic MBA / finance rationalisation, and in 2003 may have been even considered conservative.
Geithner forces Citi to cancel jet order | Financial Times
Bank rescue process to be more transparent
Mr Geithner’s action came as he raced against time to change public perceptions of the government’s bank rescue effort – the troubled asset relief programme inherited from the Bush administration.
The Obama team wants to move forward with a comprehensive bank clean-up and recapitalisation programme. Senior Wall Street executives said yesterday that they had been sounded out on plans for an “aggregator bank” that would purchase toxic assets from banks
Fast forward to 2008, TARP and a new government that, politics aside, is based on positive ideals and doing things right. I keep going back to the Umair vision of how good will beat out evil. While there is a risk of being overly Pollyannish on this, no-one can question that banking has been tarnished by the work of Investment Banking and their approach using cheap money to make enormous profits that seem disproportionate and at little personal risk, till now. The mood at the World Economic Forum validates that shift.
The point is, where to now? A good start would be to do good things and the right things. The Citi Jet decision represents a lost opportunity for Citi to display some leadership and they blew it. Now they have had their wrist slapped like a bad little boy.
Relevance to Bankwatch:
The psychology of smart banks and bankers has to take a new leadership role that disassociates itself from investment bankers. Lest there is any doubt at all simply remember this
- Investment banking = evil (think jets, carpets, first class etc etc)
- Basic banking = good
This simple formula will stand all decisions in good stead for the forseeable future, and may even result in some new business. Rather than resist the obvious directions being telegraphed from the Federal Government in the US that will obvoiusly represent a leadership beacon to other governments, time to get ahead of the pack with a valid strategy for the new order of finance we are entering.
Bankwatch 
If I ever write a book, Colin, it’s going to be called “The Entitlement Society”. Cuz’ that’s what we live in. Have-nots feel entitled to have everything they “want”. And worse, at the other end of the spectrum, the very well off feel entitled to their corporate jets, private designers and $30,000 toilets.
People can argue all they want over whether or not the cause of the crisis was Bush, deregulation, or Carter’s policies from the 70’s. I remain convinced that the root cause of the financial crisis is this pervasive attitude of entitlement.
@Ron .. a valid theme. I just read Niall Fergusons “The Ascent of Money” and that theme is supported by this and previous crises over the past 200 years. I appears we never learn from crises – we merely stumble out of them and on to the next.
@Colin: Exactly. (Which is why I’d like you to pass that message on to your friend @modernmod who seems to think Obama is the saviour who will change that all.
@modernmod has drunk the koolaid – give it time to wear off 🙂