With the headlines going from bad to worse, what to do with big bank management (and big bank shareholders)? Justice offers a clear suggestion: “Fire them. Fire them all.”

We’ll begin today’s rant with a “Dear Abby” letter I’d like to see.

Dear Abby,

I’ve been seeing a truly wonderful girl for some time now, and it’s time to pop the question. The trouble is my family... more specifically, my three wayward brothers. The first one is a piano player in a brothel. The second is an ex-drug dealer doing a stretch in maximum security prison. The third is a bank CEO.

My question is, should I tell her about the bank CEO?

I ask you, can these bankster pranksters sink any lower? It’s like a running episode of Three’s Company, except nowhere near as funny. Imagine Jack Tripper in a Savile Row suit and Brioni tie, wondering how to convince Mr. Roper (a.k.a. Ben Bernanke) that Chrissy and Janet need another $50 billion.

Just as with the original Three’s Company, it seems we can’t get through five minutes without a new level of dumbness materializing before our eyes.

And how much more money do these idiots need anyway? It seems every time I glance at Reuters or Bloombergthere’s another handout story on the feed. Just the other day it was Fannie and Freddie wanting another $30 billion to $35 billion. The day before that it was a Fortune piece on AIG’s bottomless maw. Let’s see now, put on a blindfold, throw a dart, what do we get... voila: Citigroup Raises $12 Billion in FDIC-Backed Bond Sale. You can’t make this stuff up, folks. Which giant merry-go-round rathole will the Fed, Treasury and FDIC be plugging with taxpayer money tomorrow, I wonder?

A Paen to Thain

And how about this whole John Thain debacle? Can you believe this garbage?

I don’t mean the allegedly evil sins of cupidity and avarice that put John Thain in the moral doghouse. No, I’m talking about the mind-blowing fact that Thain was the one tossed out on his ear, while Bank of America CEO Ken Lewis still has a job!

Let’s think about this for a second. Thain has been mercilessly skewered by all of superior moral fibre for... well, for acting like a heartless greedy banker. I’m confused. Is this not like cursing a leopard for having spots?

Sure, it was probably a dumb move on Thain’s part dropping a cool $1.2 million on office renovations with the entire global economy in meltdown.

And no doubt it was a double-sneaky, double-awful move Thain made paying out billions worth of Merrill Lynch bonuses in the nick of time, just before the Thundering Tu— excuse me, the Thundering Herd was sold lock, stock and barrel to B of A.

But putting all that aside, I ask you this: As CEO, did Thain not do right by his shareholders? And did Ken Lewis not do utterly and grossly wrong by his?

I mean just think about it for a second. In convincing Ken Lewis to write a check, John Thain managed to pawn off an asset essentially worth zero – a supbrime-deluged Merrill Lynch – for the princely sum of 50 billion dollars. And Ken Lewis was the greedy rube that hoovered the thing up, overpaying by his own admission in the bargain.

In the annals of shareholder-positive moves, getting 50 billion bucks for an imperiled company not worth a nickel (because of the embedded supbrime risks) has to rank up on Mount Olympus somewhere.

Conversely, paying $50 billion with baited breath – as B of A CEO Ken Lewis did – for a one-way ticket to toxic-asset wasteland has to rank as one of the dumbest moves ever. (Even if it happened to be a stock-based rather than cash-based transaction.)

And yet here we sit reading about Lewis firing Thain, even as Ken Lewis whines about Thain’s duplicitousness in selling him a rotten egg. What did you think Thain was going to say when you showed interest in buying his tottering garbage heap for 50 billion dollars, Ken? Did you expect him to be an Officer and a Gentleman?

But what I really want to know is, where are Bank of America’s shareholders in all this? Why are they not demanding Lewis be tarred and feathered for his gullibility – not to mention hubris – in whipping out the B of A checkbook to acquire Merrill at a pony-choking price?

Fire the Shareholders Too

I tell you what. I think all these bankster pranksters should be fired... and the big bank shareholders should be fired too.

John Thain may be a jerk, but he at least did right by his investors in unloading Merrill at a ridiculous price. In paying a ridiculous price, however, Ken Lewis proved himself to be a patsy. (I don’t know about you, but I’d rather have a jerk than a patsy running my bank any day.)

And because Bank of America’s shareholders cannot see this – because they don’t have the stones or the moxie or whatever you want to call it to throw Lewis out on his ear – they should be fired too.

“Whaddaya mean,” I hear some of you asking. “You can’t fire shareholders. How do you fire shareholders?”

I’ll tell you how. You do it by nationalizing these rotten swill pits and just being done with it. I mean good grief... speaking as U.S. taxpayers, we already have half our chips in the pot. So why not just go all-in and nationalize the big banks in full?

I wish we could stop tiptoeing around with these half-baked plans to “guarantee” this and “backstop” that.

I wish we could just say, “Okay you insolvent suckers, these dead-money banks are now 100% taxpayer property. Shareholders, bondholders, you get nothin’. Here’s a crying towel, go drown your sorrows.”

Anti-Capitalist, Are You Kidding Me?

“Oh,” some of you will say, “but wouldn’t it be anti-capitalist to nationalize?”

Puhleeze. We’ve already got socialism coming out of our ears... in the current form it’s called “socialism for the rich.”

All these plans that involve shoveling hundreds of billions at the banks in some form or another essentially wind up as taxpayer-funded support for existing management and shareholders... even as worthy small businesses that badly need loans are getting stiffed.

As a U.S. taxpayer, I resent the hell out of that fact. Why should I have to give a plug nickel to Ken “pig in a poke” Lewis or Vikram “Bandit” Pandit or any of these other jokers taking federal largesse as they teeter on the brink and refuse to extend a hand to the U.S. economy?

The thing is, we’ve already nationalized these rotten banks in a very real de facto sense. We just haven’t taken full control. And so the same idiots who created the problem are allowed to stay on as it festers. And I include existing big bank shareholders in this tirade.

I’m not talking about mom and pop shareholders here, but rather the institutional holders that sit on millions of shares in Bank of America, Citigroup and so on. Are these shareholders not owners? Are they not owners with clout due to the heft and weight of their stakes? Do owners not have a responsibility to speak up when management decides to go off the reservation and do something idiotic like, say, I don’t know, hubristically squander $50 billion on an asset worth zero in the midst of a meltdown?

The whole concept of an “ownership society” depends on the owners in question being responsible. Bad owners are bad for the country, especially when we’re talking about owners of major-league financial assets. It doesn’t work when the CEO goes rogue and the shareholders say “meh.” If these guys owned nuclear power plants, they would put Homer Simpson in charge.

Asleep-at-the-wheel shareholders are a huge part of how we got here in the first place. That’s why I say let the big bank shares go to zero in a mass nationalization... let the shareholders hang.

Dime a Dozen

Another utterly goofy anti-nationalization argument I’ve heard is that we need the existing Wall Street leadership right now.

There is supposedly a shortage of banking talent out there, and the folks running these institutions (Lewis, Pandit, et al) have to stay in there and keep doing the job for the good of the country.

Talk about a laugh-out-loud position. There is no more a shortage of bankers right now than there is of busted-out California real estate. (Care to buy an Inland Empire tract home? Tens of thousands to choose from, all on sale...) Didn’t Lehman and Bear collectively lay off tens of thousands of white-collar number crunchers? Haven’t the other surviving banks laid off many thousands more?

There are plenty of qualified out-of-work financial minds who would happily take a big bank leadership job right now – at a third of the going pay.

Oh, but whoever was brought in might do the job worse... And if the government took over the busted-out banks, the outcome would certainly be worse.

I ask you, how? How at this point in time could a Bank of America or a Citigroup possibly be run any worse than they have been? Right about now, I’m thinking Inspector Clouseau could get a leg up.

Drip, Drip, Drip

The whole thing is infuriating. Average Americans are skeeved by these never-ending bailout schemes because they strongly suspect – rightly perhaps – that they are being sold a bill of goods.

Fed and Treasury officials, meanwhile, fret over the possibility of Congress pushing through another “revolt” and refusing to release further rounds of precious bailout funds. The touch-and-go nature of releasing these funds could imperil the economic recovery, the resident financial wise men tell us. The public needs to resist less, they tell us, and think harder about what’s at stake here.

Hey Fed, hey Treasury, hey White House. If you want to make the American people feel better about a super-duper expensive rescue package, here’s one thing you can do to help get more buy-in: Throw the bums out. Fire the current big bank management – all the managers under the purview of Uncle Sam at least – and burn all the shareholders whose holdings would already be worth zero anyway if not for government guarantees. Then get down to the business of starting over from scratch with a real mandate for “change.”

In the real world, i.e. everywhere except Wall Street and Washington, people who screw things up beyond belief get fired. They do not pass go, they do not collect $200, and they certainly don’t get instant refills on multi-billion-dollar bailouts. They just get the sack, plain and simple. Why can’t these jokers who blew up our global economy be measured by the same yardstick as everyone else?

Imagine how good it would feel to hear President Obama (or whomever) say the following in so many words:

Okay, we’re done screwing around. No more of this drip, drip bailout funding for drips. The U.S. taxpayer already owns these skank-a-riffic banks – they’d already be zeroes if not for our backstops – so now we are simply going to formalize that fact. As of 9 a.m. tomorrow morning, all top level big bank management is fired. All existing shareholders, guess what, you have a new capital gains loss to carry forward. (Maybe you’ll think more about shareholder responsibility next time.) We are now in the process of vetting new, untainted private sector management. The resumes are flooding in – lot of out of work bankers around, who knew? And now that we no longer have the problem of entrenched leadership or nervous investors threatening to hamstring the recovery process, these taxpayer-owned institutions will soon be going about the business of responsible lending once again. And once a sufficient period of time has passed – the sooner the better we all agree – the big banks will be reprivatized and tendered back into the hands of shareholders. (Newly responsible shareholders we can only hope.)

What a breath of fresh air that would be. To know that all the tweedle-dees and tweedle-dums got what they deserved... that the word “accountability” still had a place, even on Wall Street... and furthermore to see the constipated-lending problem solved, all in one swift swoop of the axe, would be a truly great thing.

Dream On...

I’m not holding my breath, though.

The White House is working on a new and improved “plan” even as I write these words. There will likely be an announcement any day now. But given that Obama’s team of crack financial minds is almost wholly the spawn of Bob Rubin, the “change” in this particular area will probably prove less than the fistful of nickels in my Subaru coffee-cup holder.

In other words, chances are strong some form of “socialism for the rich” will prevail... if the Rubinites don’t hold sway, the institutional gumps sitting on huge piles of B of A and Citi shares will.

It’s too bad, really. For the sake of insider connections, existing big bank management and lazy big bank shareholders will likely be sheltered, though both deserve to be ridden out of town on a rail. Recovery would be the faster for it, in my humble opinion.

But as the once-upon-a-time funny Dennis Miller used to say, “That’s just my opinion – I could be wrong.” (Am I wrong? Let me know: justice@taipandaily.com.)

Other Related Topics: Banks , Currency Investments , Justice Litle

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