Thursday, August 14, 2008

Putting Bankers Who Understand Banking In Charge

The last thing the government should be doing is baling out all these jokers that are writing off billions. They should be allowed to fail, if they can't figure out away to survive on their own. Clearly, they have no idea how to manage risk or how a bank should be run. After they are out of the way, bankers who actually understand banking will rise to the top and the banking structure will be much, much stronger.
Any bank that withstood the temptation to do the nutty deals that most banks were doing over the last couple of decades has some pretty solid people in charge.

They should be the bankers of the future that should be rising to the top right now. And they are out there. Consider this story written by Eric Dash of NYT:

As many of the nation’s lenders widened their loan offerings, Hudson City [Savings Bank]stuck to collecting deposits and issuing mortgages, preferring to operate as a mom-and-pop boutique instead of a financial department store. It continued to screen borrowers carefully, since it planned to hold their loans instead of selling them to outside investors. And it steered clear of complex investments its executives could not value, the kind that would later turn toxic as the housing market collapsed.

Now, the bank that flew under the radar screen has quietly racked up a market value of $10 billion, eclipsing troubled giants like Washington Mutual that have been swamped by mortgage and credit card losses in recent months.

And Hudson City’s stock has been on a tear. Shares have risen more than 51 percent since the credit crisis began last August. The KBW bank index, one popular measure of the financial sector, is down 40 percent over the same period.

Hat tip: Nick


  1. Bloggers are ruining the internet with their uninformed blathering.

  2. While I agree in principal to the idea of letting the free market decide who succeeds and who fails, there is some need to try to avert a total banking collapse, especially when the government itself created the problems by changing fiscal, monetary and regulatory policies.