Success is the American Dream. And that success is not something to be ashamed of, or to demonize. Susana Martinez
Imagine you are running a business or household, and are in need of a loan. You go to your bank and set up an appointment with the loan officer. You show up in a finely pressed suit, along with all the documentation and paperwork the officer has requested from you. You engage in pleasant conversation, discuss the weather and maybe some sports, talk about your kids, and then proceed into the loan specifics. You can probably figure out this is the typical situation for people who are trying to find financing for their business, or maybe it is a personal loan. Consider a different scenario, again involving a request for financing. The borrower arranges appointment with the loan officer, and brings no documentation or paperwork. Upon sitting down and meeting the person who makes the loan decision, the applicant begins by insulting the loan officer with a disparaging remark. Which of these potential possibilities would seem to have more likelihood of success? It seems fairly obvious that the first one would be the approach needed to give the highest probability of obtaining the financing. Now, I’d like to bring up what took place this week in the House of Representatives, as it was instructive as to what is taking place in the body politic of our country.
Seven CEO’s of the largest and most critically important financial institutions in the United States, and for that matter, the globe, were brought up before the House Financial Services Committee to discuss what took place ten years prior and what risks were still in the system. Each representative of the House was allocated five minutes of time to ask questions of the CEO’s. Obviously, to compare a citizen or a business owner asking for a loan from a loan officer is not the same thing as a member of Congress being able to ask questions of a CEO. However, it was quite instructive to see our politicians in action because it illustrated in a vivid way the contentiousness that currently exists in our political environment. Usually, in these kinds of hearings, the mood is pretty professional, maybe a few tough questions during the sessions. Oh, no, not on this day. The CEO’s were put up there to be punching bags about every ill in the world. Anything that could be used to as a way to embarrass and humiliate those chosen seven was fair game. Wealth disparity, support and financing for the gun industry, CEO compensation, mortgage fraud, succession planning, too big to fail, living wages for salaried employees, student loans, and plenty more. Don’t get me wrong, there are plenty of legitimate issues that the CEO’s need to be asked about. A constructive approach would have been to engage with them prior to the hearing about issues which were important and get their input on how to address problems. In some cases, the politician did not know the current situation of the problem they were bringing up and screaming at the CEO’s about. It was especially bad when that is the leader in question, the dignified Maxine Waters, who led the interrogation. Mrs. Waters didn’t know that the CEO’s of Citigroup and JP Morgan Chase did not engage in student lending anymore. Unfortunately, the hearing was a perfect example of where the country is at politically, with too little substance and too much showmanship and opportunism to score points for the folks in the home district.
In the markets this week, those same financial institutions which were made the bad guys posted billions in profits. In the case of JP Morgan Chase, it was over 9 billion bucks in three months time. Disney rolled out its streaming service, priced at six dollars and ready for prime time in November. Investors ate it up as they bid up the Mouse House and sold Netflix, the clear target of this offering. In the oil patch, a massive acquisition of Anadarco by Chevron could lift Chevron to the pole position in the Permian basin. Jeff Bezos released the Amazon shareholder letter and proceeded to upset the CEO’s from Wal Mart and Ebay, who responded in kind. Here in Las Vegas, it is official, Caesars Entertainment is on the block and it appears Tillman Fertitta (think Golden Nugget and the Houston Rockets) and Eldorado Resorts are the main bidders, although anything could happen there because the largest shareholder is Carl Icahn. With nearly 20 billion in debt, owning Caesars is not for the faint of heart. Next week, the avalanche of earnings reports will come fast and furious. There will be plenty of evidence of the economic success of the largest companies in the country. Shareholders across the country, including pension funds and households who own stock in these companies, share in those profits. Hopefully, that will be remembered and thought of as important, versus demonized and used as a political tool.
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