Angry Days
There has definitely been no shortage of anger directed at the government — from bankers and consumers alike — for its response to the financial crisis.
The bailout packages to the nation's banks are routinely derided, while federal efforts to reduce foreclosures get blasted. The industry accuses policymakers of overreaching following the crisis. And regulators are the target of ridicule for closing local banks.
But the level of ire may have been more extreme during the crises of the 1970s and 1980s. Then, high inflation, losses in the farm sector, unemployment, a real estate crisis and various other economic factors contributed to some 3,000 bank and thrift failures through 1991.
Bill Isaac, a former Federal Deposit Insurance Corp. chairman, recalled that period last week while speaking at an FDIC symposium on the risks of escalating farmland prices. He said the response to the government's handling of the turmoil back then turned downright violent.
"The trauma of 21 and a half percent interest rates, widespread foreclosures on family farms, a deep recession with unemployment reaching 11% and scores of farm bank failures, is difficult to describe to those who didn't live through it," said Isaac, who now holds chairman positions with LECG Global Financial Services and Fifth Third Bancorp. The public, he added, was "understandably angry and frustrated, and a good deal of the anger was directed at the government generally, and at the FDIC."
"Tensions were very high. The FDIC's job was to take over failed banks and do its best to collect the failed bank's loans, including through foreclosures," Isaac said. "An FDIC field office in Nebraska was firebombed. In another case, a man walked into the Federal Reserve headquarters in Washington wearing a trench coat and sat down on the floor outside the boardroom on the second floor. Concealed under his trench coat he had a shotgun and dynamite strapped to his body. Try to do that today at the Fed."
Fee For All
Much has been written about how financial institutions will try to make up for lost revenue resulting from stricter regulations.
According to The Onion last week, a new round of "hidden bank fees" designed to do just that could be pretty extreme. For example, the fake news story reported new "coin-operated timers" for using safe deposit boxes at Bank of America. Other fees parodied included a "$2 fee if [a] Chase Rewards debit card is placed next to a debit card from a competing bank."
Wells Fargo, according to the satirical article, is charging "$10 to speak to a human teller, [and] $20 to speak to a cute one." Meanwhile, customers mistakenly believing there is a "y" in the name Citibank are subject to a monthly penalty by the bank. Customers of HSBC Bank USA must give the bank 10% of "all birthday money," and TD Bank is charging $1 anytime a customer enters a branch just "to warm up while out walking on a cold day." At Regions Bank, a "$10 Felix-the-Cat-opt-out charge will be administered to anyone choosing a check design not featuring silent-film-era cartoon character Felix the Cat."
Back to School
When he completes his post as watchdog of the federal bailout at the end of this month, Neil Barofsky is headed to the New York School University School of Law.
The law school, from which Barofsky graduated in 1995, recently announced he will become a senior fellow there starting April 1, working with both the university's Center on the Administration of Criminal Law and the Mitchell Jacobson Leadership Program in Law & Business. He will also teach a course in the fall on the government's response to the financial crisis. In December 2008, Barofsky became the special inspector general for the Troubled Asset Relief Program, known as Sigtarp. Before that oversight role, Barofsky spent eight years working for the U.S. Attorney in the Southern District of New York.
Kelly Promoted
Deutsche Bank recently promoted Frank Kelly, its top lobbyist in Washington, to head of communications and public affairs for the Americas. Kelly was previously the bank's managing director and head of government affairs-Americas.
Under the new role, in addition to managing government affairs, Kelly will supervise corporate communications for the bank's operations in the Western Hemisphere.
Kelly formerly ran the government affairs shop for Charles Schwab & Co. He also held positions at Merrill Lynch & Co. and the Securities and Exchange Commission.
