Bank Lawyer's Blog

An Old Pro Gets Back In The Game

Today's announcement that Texas investor Gerald J. Ford was pumping a half-billion dollars into troubled Pacific Capital Bank was interesting on a number of levels. First, it means that Ford's group grew tired of trying to break back into banking through the use of a shelf charter and the acquisition of failed banks from the FDIC as a "private equity" investor. As has been apparent for some time, the FDIC (and the Federal Reserve Board) have a bias against private equity and Ford's mama didn't raise no fool. He knew the sailing would be smoother once he was inside the system. A recapitalized Pacific Capital Bank, with a proven turnaround artist like Ford and his crew in charge, will be a bona fide player in buying failed banks going forward.

Second, he found a nearly busted bank, used his team's expertise to quantify the downside (at least enough to satisfy himself and his investors), and came up with a plan to have preferred stockholders (including the US Treasury Department as the holder of $180 million injected through a TARP investment), trust-preferred securities holders, and subordinated debt holders take a heck of a haircut so Ford could buy the bank at a price he's decided will protect him from any future hole that might be dug by bank's lousy loan portfolio (which you can expect the bank will now deal with aggressively). No FDIC assistance will be required, which must make Sheila Bair a happy camper, although the Treasury will take a blow. However, the alternative for Treasury Department and the other trust-preferred securities holders and subordinated debt holders was to recover nothing if the bank tanked, which the latest public filings by the bank indicated was a distinct possibility. At least this way they salvage something, and if Ford works his magic as he did with First Gibraltar and First Nationwide/Golden State "back in the day," the right they will be granted as part of the plan to purchase additional shares might make up, over the long term, for a good portion of their short-term losses. Although nothing is certain in this area, I can't imagine that Ford would have gone this far if he didn't have a pretty good idea that the necessary approvals will be forthcoming.

Unfortunately, a sour note was struck by accusations that word of Ford's investment might have leaked prematurely from some source, which leakage profited certain traders in options on the bank's stock. 

“It’s more than fishy,” Ophir Gottlieb, a trader and head of client services at Livevol Inc., a San Francisco-based provider of options market data and analytics, said of the put- trading surge. “It’s completely anomalous.”

If there was wrong doing, I hope the Feds catch the crooks. Creative capitalists like Ford need to be encouraged to make more lemonade out of the lemons of distressed banks. As former Federal Home Loan Bank Board General Counsel Tom Vartanian observed, "There are a lot of these transactions out there percolating and to see some of them getting done is a very positive step in terms of recapitalizing banks.” Such transactions save banks, save jobs,  and help recapitalize the banking business without a further siphoning of the FDIC insurance fund. The last thing we need are leaches such as crooked short-sellers putting a damper on this activity.

Au Contraire, Mon Frère

Last night's post generated a forceful dissent from Robert L. Viering, a Principal of River Point Group in Monticello, Minnesota. Bob's a former community banker and current community bank consultant who disagreed with what he thought was my too-lenient attitude toward community banks who "over-indulged" in commercial real estate lending. Although I don't feel compelled to offer any blowhards other than myself a forum on this blog, inasmuch as Bob didn't scream "Eat Goldman Sachs Synthetic CDOs and Die!" (which is a refreshing change of pace from most of my e-mail), and since Monticello is a suburb of Minneapolis, where so much of my wife's "tribe" resides ("Yah, Sure!"), I decided to post his response and let those of you who agree with his point of view read something other than the half-baked snark you usually trip over in this corner of cyberspace. Plus, it further demonstrates that "community bankers" are like everyone else: get two of them in a room and you've immediately got three opposing points of view.

I'm one of your daily followers and a community bank consultant that was a banker (CEO community banks, chief lending officer regional banks etc.). My last stop as a banker was in the NW suburbs of Minneapolis, an area hard hit by the housing/development problem.

While I follow your blog and enjoy it, I don't necessarily agree with all your views.  Personally, I get very tired of hearing bankers say that they loaded up on commercial real estate because it was the only thing available in their market and that the big evil banks took the other business away from them.  No bank is forced to loan money.  These banks made the choice to make commercial real estate loans because of the fees and rates developers are willing to pay.  AS I can tell you from first hand experience, many bankers believed that real estate secured loans are some how inherently more secure than traditional commercial and ag loans.  These bankers deluded themselves into believing that they were making safer loans that yielded a higher return and they were, therefore, smarter bankers.  What they failed to grasp is that the lesson we learned in Econ 101 that there is a correlation between risk and return and it is valid.  Too many years of good times dulled their sense of risk.  Every bank has the choice of what type of loan to make or not make a loan.  There is an ability to have some level of diversity in every market or to concentrate in a niche that is far less volatile than commercial real estate.  Commercial real estate paid better than other types of loans.  This was a choice about making more money in the short run not about lack of choices.

Banks like other businesses fail because of poor decisions they made.  It's OK for banks to fail.  I work with livestock producers and one standard management practice is to cull unproductive members of the herd. Banks failing is simply culling the herd of poorly managed banks. 

Bankers need to re-learn how to make C & I and ag operating loans and get over the idea that only real estate loans are good.  This is what Ms. Bair is talking about.  Community banks are critical in getting small businesses started and expanding.  But, they cannot any longer make ill conceived loans because they have ever increasingly valuable real estate securing the loan to bail them out.

OK, enough ranting for today...I want to see bankers and others start admitting that we did this to ourselves.  No one forced us to make bad loans, we need to take responsibility for our decisions.

Thanks again for your fine blog.  I truly enjoy it!

Right back at ya, Bob.

It's The Same Old Song

Fox Business News ran a decent article (as hard as that may be for some left-leaning readers to believe) by Darryl R. Isherwood not long ago on community and regional banks and their commercial real estate loan problems. It supports some of the viewpoints spouted on this blog, such as the fact that small banks concentrated so heavily on commercial real estate lending because of a lack of practical alternatives.

Analysts say that as mortgages and consumer lending became more lucrative, larger banks snapped up the bulk of the business, leaving little but crumbs for smaller banks. In need of revenue, the community banks turned to commercial real estate loans, a natural fit given the banks’ connections within and knowledge of the communities they serve.

A booming housing market made construction loans for multi-family residential properties a gold mine, while low unemployment made office construction loans a stable revenue source.

But if commercial real estate was a great fling in good economic times, it became a harsh mistress as the economy began to crumble.

“The real problem is the regional banks just didn’t stop,” said Jim Kaplan of Audit Integrity, an independent research firm. "They started over-lending and loan-to-values on commercial real estate got way out of whack. The prices overshot the mark because people could borrow money cheap.”

Banks were left holding the proverbial bag as the equity owners walked away from properties, leaving the banks as proud owner of real estate worth a fraction of the loan value.

“Right now they are extending and pretending on the hopes that the property value recovers,” Kaplan said.

If many small banks are "extending and pretending," it's because many of them don't wish to die, which would happen to them (as it has already happened to hundreds of their brothers and sisters during the past two years) if they "mark-to-market" their CRE loan collateral. "Death Wish" was a heck of a hit for Charles Bronson back in the day, but most of us who are sane prefer not to commit suicide. Besides, the FDIC and some of the other federal regulatory agencies give lie to the "extend and pretend" mantra. As many smaller banks have discovered, not recognizing CRE losses is not in the federal regulators' playbook.

Mr. Isherwood also alleges that the problem was exacerbated by an influx of newly chartered banks. The management officials of many of those banks, Mr. Isherwood contends, were poorly equipped to underwrite commercial real estate loans and went hog-wild in search of "easy earnings." If that was the case, the regulators have closed that barn door after the horses. It's harder now to snag a new bank charter than it is to find the word "compromise" uttered by a member of the US Congress.

The article also discusses the "guidance" issued by the federal bank regulators in 2006 that "recommended that any bank with a concentration of commercial real estate loans over 300% of total capital employ heightened risk management for the loans." As any community banker with CRE in its portfolio knows, the "guidance" has become a de facto "rule," notwithstanding public verbal assurances to the contrary from certain regulators. "Heightened risk management" has come to mean "a plan to immediately reduce commercial real estate loan levels to below 300% of total capital.

The biggest (bitter) laugher for small bankers comes near the end of the article, when Isherwood discusses Sheila Bair's public utterances about community banks.

The concern, FDIC chairwoman Sheila Bair told a gathering of community bankers last month, is that as more banks fail, less money is available for lending to small businesses, the largest catalyst of job growth in the United States.

“Community banks are essential to the economy, but many of them are experiencing acute credit distress,” Bair told the bankers. “Community banks are doing more than their share under difficult circumstances to provide the capital that will be needed to create jobs in the recovery. Small businesses create two-thirds or more of all net new jobs. And they overwhelmingly rely on credit provided by community banks.”

Well, Sheila, quit forcing these banks to mark-to-market all of this illiquid collateral that has no current "market" other than vultures, or get behind a plan to let them amortize the losses you're forcing them to recognize over a ten-year period for regulatory capital purposes rather than taking the full amount of the loss immediately. That will help alleviate a lot of the "acute credit distress" for many of them and let them "provide the capital that will be needed to create jobs in the recovery."

Yes, we know: we're a broken record. Get used to it.

Big Auditing Firms Rocked By Repurchase Risk

A couple of weeks ago, we mentioned that blogger Francine McKenna of re:The Auditors has been on the case of the nation's largest accounting firms about their failure to properly catch and force clients to disclose a major risk of mortgage banking: repurchase risk. Yesterday, she had some more to say about the subject and none of it was good for KPMG and its auditing cohorts.

If you are a regular reader of this site, you may remember the first time I warned you about the poor disclosure practices surrounding repurchase risk.  It was all the way back in March of 2007 and I was referring to the lack of disclosures surrounding New Century Financial.

[...]

New Century failed. There was a very detailed, well-done bankruptcy examiner’s report on that one, too.pointed the finger at KPMG for not heeding the advice of their own experts, a la Andersen/Enron. Instead of the KPMG partner telling the client that their models for estimating potential losses were flawed, the partner told the staff to shut up and move on. Mr. Missal

KPMG is now being sued for $1 billion for its sins at New Century.

[...]

I warned you again seven months ago that another KPMG client, Wachovia/Wells Fargo, has the same poor disclosure of repurchase risk.

[...]

The latest announcements of potentially material losses due to forced repurchases of mortgages from Fannie Mae (Deloitte) and Freddie Mac (PwC) were made JP Morgan and Bank of America – both audited by PwC.

[...]

Maybe ya’ll should kick the tires a little more on Citibank’s big comeback.  Citi is the only big money center bank left that is audited by KPMG. Recent testimony before the Financial Crisis Inquiry Commission says their underwriting standards fell apart between 2005-2007.

This rock has just been overturned and what is crawling out from underneath it is not favorable for the nation's largest auditing firms. Francine's warning us that not only will large financial institutions who originated and sold subprime, Alt-A, option ARMs and other wounded ducks to Fannie, Freddie and other investors (and who are still solvent) during the height of the craziness in the early-to-mid 200s continue to suffer for their sins, but so will their auditors. In fact, the auditors will suffer more, because while many of their sick-mortgage originating clients like New Century have gone to dwell in the land of fire and brimstone, the big accounting firms are still standing, still insured, and--for now--still possessed of deep pockets. There's nothing more a plaintiff's trial lawyer loves than a defendant with deep pockets and a paid up malpractice policy.

If "ya-all" (or "y'all") are interested in keeping up with this train wreck as it continues to play out, keep following Francine.

Bad Luck Or Just Deserts?

If a bank is going to try sending a "tricky" notice to customers that can be logically interpreted as trying to get them to do something that will line the bank's pockets while emptying the customers' pockets, the last thing the bank wants to do is send the solicitation to a customer who is a colleague of a reporter for the American Banker. Unfortunately for JPMorgan Chase, that's exactly what happened.

JP Morgan Chase mailed notices to former Washington Mutual customers who were being issued Chase-branded debit cards in which Chase strongly suggested that the customers "always select 'credit'" when paying with their debit card.

"We know it's confusing," JPMorgan Chase wrote in a box highlighted as being "important."

"It's not a credit card, so the money still comes out of your checking account. But by choosing 'credit,' you won't have to enter your PIN in public."

That sounds like Chase is doing a good deed for the customers, doesn't it, warning them of the "safer way" to use the debit card? The problem is that experts disagree.

The problem, security experts said, is that PIN debit transactions are actually much more secure than signature debit purchases.

Signature debit is considerably more lucrative for a debit card issuer, however.

[...]

[S]everal security experts, when read the Chase letter by a reporter, said the company had implied that it's safer to use a signature when paying with a debit card — which the experts said is not so.

"From a technical security standpoint, there's no question about it, a PIN adds a level of safety, which is why ATM transactions have required a PIN for years," said Avivah Litan, a security analyst at Gartner Inc.

But banks do collect higher interchange fees from merchants on signature debit transactions.

"PIN is actually more secure, but PIN does not generate as much revenue to the bank," said Adil Moussa, an analyst at Aite Group in Boston. "If they get you to use signature debit, then they are going to make much more money."

On a $100 transaction, for example, it's the difference between making 5 cents to 10 cents versus $1, Moussa said.

A spokesperson for Chase said the supposed purpose of the notice is simply to "reassure customers of the security and safety of using their debit cards." The sounds of explosive laughter were immediately heard throughout many corners of the banking world, including within this small rabbit warren.

Chase is likely to dodge any legally supportable claim that the notice is deceptive, notwithstanding that those in the know claim that it smells worse than roadkill on an Amarillo highway at noon in mid-August.

JPMorgan Chase is factually correct in stating that a consumer won't have to enter his or her PIN in public if "credit" is chosen at the time of checkout.

But "if you're not going to use your PIN in public, where are you going to use it?" asked J. Craig Shearman, vice president for government relations at the National Retail Federation.

As many banks (and other businesses) have discovered, just because marketing material passes your lawyer's eagle eye without changes doesn't mean that, from a public relations standpoint, it's not going to come back and leave teeth marks on your corporate hide.

How did this attempt to do what big banks do every day to consumers throughout the land I like to call "America the Beautiful" (usually without the benefit of Vaseline, dinner, or a movie) land on the front page of one banking's major trade dailies (which story is now outside the American Banker's subscription-only firewall)? According to Christopher Wood, Online Editor of SourceMedia (the publisher of the American Banker), a colleague of reporter Sara Lepro received the notice and put her on the case. Obviously, Sara's the kind of reporter who digs deep.

Bad luck for Chase. Good luck for those of us who enjoy this kind of exposure of too-big-to-fail marketing tactics that most generously could be described as "unwise."

Internecine Warfare

While most of the focus of the mainstream press has been on bashing Big Bad Banks, especially in light of today's clobbering of Wall Street "banks" by "The One," behind the scenes a bitter war has been waged between the trade associations that represent community banks and the trade associations that ostensibly represent all commercial banks but more often than not seem to align themselves in lock step with the interests of the largest banks. Nothing typifies the kind of bitterness that's manifest in this bank-association-versus-bank-association rumble better than Cam Fine's blog posts on the subject of too-big-to-fail. Mr. Fine is the CEO of the ICBA, the nation's largest trade association for community banks. Cam's not afraid to mix it up.

In a post earlier this week, he expressed his frustration over the fact that many community banks are falling for the pitch of many bank trade associations that all banks need to oppose the entire financial reform legislative proposals, including reforms that would put a leash on the too-big-to-fail Wall Street and commercial banks. Cam believes that breaking up the largest banks is an essential reform that benefits community banks and he (as well as individual state independent community banks associations) has been urging community banks to wake up and smell the coffee before it's too late.

Sadly, many community banks blindly follow the “we must all speak as an industry” siren song written by the best public relations people Wall Street can buy. 

And when the song has been sung to Wall Street’s satisfaction and this regulatory reform bill is finished, community banks will again find themselves on the short end of the stick, laboring under staggering regulatory burdens, scrounging for capital, struggling with narrowing margins and facing more bailouts of Wall Street titans.  And all the while, the “shadow” banking industry will skate, and Wall Street will add however many hundreds of staff are needed to comply with new regulatory burdens imposed by the existing agencies.  They will continue to pay themselves ever greater bonuses based on their burgeoning profits, while community banks are assessed higher and higher premiums to pay for Wall Street’s sins.

Sometimes in a war, the enemy of your enemy is not, in fact, your friend. By the time you realize it, there's a bullet in your back.

We Interrupt This Program

We don't usually do public service announcements on Bank Lawyer's Blog, but Carol Kaplan of the American Bankers Association was so nice about her request that we couldn't refuse. The ABA is looking for "lost bankers" in order to hold a reunion and we thought it would be a decent thing to do to bring you this banker-related Amber Alert. Here it is:

ABA is searching for graduates of two schools:  the ABA Stonier Graduate School of Banking, and the National School of Banking (run by the former America's Community Bankers).   In 2008, ABA merged with America's Community Bankers, and thus the two schools were merged.  The new name is the ABA Stonier National Graduate School of Banking. (Phew!)

The Stonier School has been around for 75 years, and the National School of Banking was started 50 years ago.  So....this June, the newly formed merged school is celebrating a combined 125 years of graduate education in banking.  We're planning a very big reunion in June in Philadelphia at the Wharton School, which is where the classes are held every year. 

Naturally, over so many years, we've lost touch with many of our graduates, many of whom may be retired now.  In any case, we're hoping you might be able to help us get the word out that we're looking for graduates to invite them to the reunion.  Here is the info on the reunion: 

MAJOR SEARCH UNDERWAY FOR GRADUATES OF STONIER NATIONAL GRADUATE SCHOOL OF BANKING

             WASHINGTON – Celebrating a combined history of 125 years of excellence in executive education, Stonier and the National School of Banking are launching a major search for more than 21,000 graduates.   The American Bankers Association’s Stonier National Graduate School of Banking is planning a special reunion for alumni and other leaders of the financial services industry at a special two-day event to mark the occasion in June 2010 in Philadelphia.

             Most of the schools’ graduates hold (or did hold) the title of vice president or senior vice president, while one in five is an executive vice president, chairman or CEO.   Ten percent of graduates represent regulatory agencies.  In every case, they reached the pinnacle of their careers or are the rising stars of their organizations and come from more than 45 states and 15 countries.

             “We want to keep track of all of our graduates,” said ABA Executive Vice President Doug Adamson, “but after many years, we’ve lost touch with many of them, especially those who have retired.  This is a way to bring everyone together again, talk about the old days, and reflect on how banking has changed over the years.  We hope to hear from all of our graduates.”

             Any graduate – from the schools’ inception to the present day – is invited to attend the reunion and is urged to contact Candace Boone at [email protected] or 202-663-5416 as soon as possible.   

We will return you to your customary snark fest tomorrow.

Adaptation = $$$

Although many community bankers bemoan the write downs and loss reserves that have resulted from a cratered economy and zealous regulators trashing commercial real estate, some folks outside the baking industry think that banks haven't been beaten up enough on CRE loans. One of those is Texas banker Andy Beal, the subject of a number of posts on this blog. Beal, a bank owner himself, has made boatloads of money by doing what other bankers don't do. Mr. Beal definitely marches to the beat of his own drummer, and that drummer has made him one of the country's richest people.

Over the last couple of decades, Beal has bought loans with hair on them for a very cheap price, then shaved those loans and squeezed healthy profits out of them. He's one of the folks who knows what he's doing with bad commercial real estate loans. As we noted three years ago, a number of savvy investors have raised funds to buy "scratched and dented" CRE loans from banks that should be under pressure to get them off their balance sheets. That worked well for Beal and others for a few years, but according to Beal, in 2010 the deals have evaporated.

“Why were there so many great opportunities 12 months ago that are gone today?” asked Beal, owner and CEO of Beal Financial Corp. "There’s a sense that anybody who sells is dumb, and anyone who hangs on is going to save some money.”

According to Beal and other financiers, reasons include a surplus of deal-hunters looking to make a killing, sellers with incentives not to sell and an active government hand in the economy.

Those forces mean diminished opportunities for buyers like Beal, and delayed reckoning for the lending and real estate industries.

Some bankers agree that there's too much money chasing these deals, which tends to drive up prices.

“There’s just so much money out there chasing (distressed assets),” said Joe Goyne, president of Pegasus Bank, a 3-year-old Dallas community bank. “They’re not going to make anything more than normal returns.”

Others blame the regulators for being too lenient and "allowing them to continue carrying bad loans on their books as if they were worth their full value." Ask the former owners and employees of failed banks like Charter Bank about that theory and be prepared to be run out of town on a rail. That simply doesn't conform to what we (and others) are seeing from our side of the table (while admitting that we're hardly unbiased).

To the contrary, I think that if asset values on the books have been hammered sufficiently by the bank, its auditors, and its bank examiners, and the bank doesn't fail, why would the bank then sell all of the upside to an outside investor? It might as well hang on to the loan, work it out (or foreclose as a last resort) and take whatever upside might be realized as the economy recovers.

Others think that FDIC loss-sharing encourages buyers of failed bank assets to hold onto the loans and get maximum value, which is definitely a change from the "good old days" when the RTC absorbed all the losses on the CRE of failed banks, liquidated the loans and assets at fire sale prices, and the the buyers had plenty of incentive to turn around and sell those assets for a below market price because the initial purchase price was so low.

“Back in RTC days, the government was taking all the loss on those notes,” said Keith Cargill, president of Dallas-based Texas Capital Bank. “The incentive for the owner of the note was to liquidate the note at whatever price.”

Now, the FDIC is using a different technique in which the government and the buyer of a failed bank agree to share potential losses on bad debt.

“Today, the owner of the note is incentivized to get the maximum value on that asset,” Cargill said. “It obviously slows down the sale of those assets, but it doesn’t depress the market price to what people can get on a quick sale.”

Therefore, it appears that much of the money that used to be made by buying assets outright from distressed banks and the "government liquidator" is now going to be made by buying failed institution assets in FDIC resolution transactions. Not surprisingly, Mr. Beal already figured that out and is well into that game.

This year, Beal is spending less time buying loans and more time acquiring whole failed banks. His Beal Financial Corp., through its affiliates, acquired a failed Alabama bank in December and a New Mexico bank in January.

“There are good opportunities out there in failed banks,” Beal said. “It’s a tougher decision because you have to operate these banks in markets you don’t know well.”

It's not amazing that when the herd is running one way, the guys who make the most money are running another way.

Community Banks Get A Bi-partisan Boost In Colorado

The push to craft federal legislation to allow privately-owned community banks to write off commercial real estate loan losses over a ten-year period got an apparent shot in the arm in Colorado. Democratic Rep. Ed Perlmutter and Republican Rep. Mike Coffman are reportedly working on a bill that would allow not only banks but credit unions to do that just that for regulatory capital reporting purposes. Perlmutter's a freshman, but he's on the House Financial Services Committee, which helps. It also helps that he styles himself as a "centrist." He comes from a well-known Colorado family that's been hip-deep in the real estate development business in Colorado for decades, so, he understands what's at stake.

“It’s what we did in the ’80s for the agricultural lenders,” Perlmutter said at a business education event held April 9 at Moye White LLP in Denver. “If we operated under the same rules in the ’80s that we’re operating under today, we probably would have lost almost every bank in Colorado.”

He also understands that this type of temporary "forbearance" is distasteful to some federal banking regulators.

“What they fear is that we’re postponing the inevitable by allowing it to be stretched out,” Perlmutter said. “But we’re beginning to see the light at the end of the tunnel, and I want people to get to that light.”

As Perlmutter asserts and as we discussed in a prior post, there's precedent for this approach.

Barbara Walker, executive director of Independent Bankers of Colorado (IBC), said that amortization would allow banks more leeway to work with struggling borrowers. The IBC, along with related community banking organizations, has been lobbying Congress for similar legislation since December.

“Temporary amortization kept family farms and ranches across Colorado and our country alive in the late 1980s during that economic crisis, and we believe it will work to sustain Main Street today,” Walker said.

I'm pleased to see that the IBC has been working with other community banking trade associations and community banks on this effort for the last few months. I wish a few more would jump on the bandwagon.

Coffman's a former Marine who took an unpaid leave of absence from the Colorado House to serve in combat during the First Gulf War. He's also ran a successful property management firm in Colorado for over twenty years, and serves on the House Small Business Committee. He appears to be a politician with a solid understanding that community banks are the major lenders to small businesses, which, in turn, are the major engine of job creation in this country. Perlmutter and Coffman appear to grasp the fact that for every dollar of capital a bank with a 10% Tier 1 capital requirement loses, that's $10 less money available for lending. They also appear to be the type of guys who can put aside poisonous partisan bickering for the greater good. We need more of them. Many more of them.

I hope this deal is for real. The following paragraph near the end of the article gives me pause.

It’s not known when the forbearance bill would be introduced, if at all, according to Leslie Oliver, a spokeswoman for Perlmutter. It’s still a work in progress, and no further details were available.

Eight more community banks bit the dust last Friday. There's no time to lose, guys. Keep pushing forward.

In The Banking Biz, Everyone's Rodney Dangerfield

I get no respect. The way my luck is running, if I was a politician I would be honest.
--Rodney Dangerfield

Whether you're a banker or a bank regulator, college students across the country have made it clear: we don't want your stinkin' speeches.

J.P. Morgan Chase CEO James Dimon and others may think he did the right thing for the nation by acquiring Washington Mutual and Bear Stearns, as those financial institutions teetered on the brink of collapse in 2008.

But Dimon is no hero in certain corners of Syracuse University campus, where he is scheduled as the commencement speaker. (Hat Tip to Dealbreaker)

“He is a figurehead of an industry that has failed the American people in a lot of ways.’’ said Ashley Owen, a Syracuse senior in a phone call from campus. “I personally know students who have had to drop out of school because their parents have lost their jobs in the financial crisis. To have Dimon as our commencement speaker is really insensitive”

A journalism and geography major from central Massachusetts, Owen and about 800 other Syracuse students, alumni, parents and “friends of the university” have signed a petition protesting the school’s choice of Dimon as the keynote speaker. They are asking the school to rescind the invitation, and are planning a protest on the campus green for this week. Dimon was picked from a short list of possible of speakers recommended by a student committee.

Owen is likely to have a lot more faith in "an industry that has not failed the American people in a lot of ways": the federal government.

After several minutes into the interview, Owen apologized for having to get off the phone. She had 20 more pages to finish of Karl Marx’s “Das Capital” for a class assignment.

“I realize it is not so easy to toss capitalism out the window,’’ she said. “But I don’t know how these huge banks can operate for the benefit of the people. I think when things are too big, you can’t see how they are operating to benefit you, the individual.”

Unlike big government which, when it's "huge," clearly and transparently operates "to the benefit of you, the individual."

No, it's not easy to "toss capitalism out the window," but we're working hard at it these days. Don't give up hope, Ms. Owen.

You'd think young people who loath the Leviathan of Big Business (while embracing the ever-expanding change we were always waiting for) would love one of the champions of big government solutions (including the notion that the FDIC is the most logical bloated federal bureaucracy to "resolve" Too-Big-To-Fail financial Mastodons like the one run by Mr. Dimon). Yet, even at Sheila Bair's home-away-from-home, the University of Massachusetts (where she's "on leave" from her academic position while trying out her populist academic theories on real, live Americans who own and work for banks, and where she's likely to cocoon when she's through inflicting herself on FDIC-insured institutions), some youngsters would just as soon pass on her commencement day words of wisdom. According to one university newspaper columnist, Sheila Bair "will bore us all."

As a quick aside, it should be interesting seeing if the ceremony draws more people than the all-but-inevitable protest over the University once again choosing to honor a Bush administration appointee who played a controversial role in an ongoing disaster.

Honestly, I don’t care. Unless the 2011 speaker is Stephen Colbert I know I will neither attend nor miss my graduation.

This leader-of-tomorrow then veers off into a strange rant about gold and the FDIC. Apparently, the young man has spent a lot of time listening to Ron Paul instead of the more beneficial endeavor of listening to Les Paul. I doubt he's read William Jennings Bryan's "Cross of Gold" speech or, for that matter, could distinguish "William Jennings Bryan" frm "Anita Bryant" (although that's just my opinion; I could be wrong). Betcha he's current on Megan Fox, though.

No doubt about it: this country's future is in good hands.