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Don McNay

Don McNay

Posted: January 10, 2010 06:58 PM

A Dream That Wall Street and Washington Answer to Main Street

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We're trapped in a world
That's troubled with pain.
But as long as a man
Has the strength to dream,
He can redeem his soul and fly.

-Elvis Presley

Another scandal is breaking on Wall Street. When AIG was bailed out by the taxpayers, Timothy Geithner's New York Federal Reserve allegedly told it to alter a Securities and Exchange Commission disclosure.

The Federal Reserve bureaucrats did not want Americans to know that AIG was funneling some of the bailout money to pay off debts at Goldman Sachs. At 100 cents on the dollar.

Geithner is now Secretary of the Treasury for the United States of America. His friend and predecessor was Henry "Hank" Paulson, who left his job at Goldman Sachs to become Secretary of the Treasury.

There might be a connection here. A connection that cost American taxpayers billions of dollars.

The same week AIG was bailed out, Paulson let Goldman's rival, Lehman Brothers, go bankrupt. I guess Lehman didn't owe Goldman Sachs any money.

It looks like Paulson and Geithner took extra care, and apparently gave improper or illegal instructions, to make sure Goldman stockholders got the best of it.

In the era of Watergate, what AIG and the New York Federal Reserve did was called a cover-up. People went to jail. President Nixon was forced to resign. It would seem that the AIG story could be bigger than Watergate. The amount of money involved is much larger.

Normally when a public company lies on an SEC filing, like Enron did, you would be expecting regulators to be hauling people off to jail. If they were told to lie by government officials, the bureaucrats should be breaking rocks somewhere, too. But we are not seeing that on the AIG front. So far, at least.

Insider Washington is blowing off the AIG story.

The paper that broke the Watergate scandal, the Washington Post, has the AIG story buried on an inside page. Its lead story is whether or not Senator Harry Reid racially slurred President Obama two years ago. Whatever Reid said or didn't say, taxpayer billions are not involved.

The "watchdogs" in the Washington media have become so jaded about insider "back scratching" that something like the AIG scandal apparently doesn't get their interest.

When you read books like Andrew Ross Serkin's Too Big Too Fail, you learn something that some of us figured out long ago -- that Wall Street and Washington operate as an insider, "good old boys club." The rest of America is not invited to the party. But the rest of America is expected to pick up the tab.

Washington and Wall Street only think about Main Street when they fear that some non-insider might notice their actions. That is why the AIG cover-up was important. It was the type of outrageous act that might incite Americans to march on Washington and demand change.

It takes a lot for the average American to get inspired into political action. Few people have the time. Most of us are busy earning a living, feeding our families and trying to figure out how to cope in a rapidly changing economy.

For decades, the Washington and Wall Street crowd has counted on us being distracted. They have been able to pass legislation to help their insider pals, soak up campaign contributions and hope that we stay distracted with trivial issues and "gotcha" campaign ads. In the real lives of real Americans, what difference does it make what Harry Reid said two years ago? Please.

I don't care if we can't find Obama's birth certificate. If they boot him, Biden takes over. I don't care what the father of Sarah Palin's grandchild has to say about anything. Both stories have had way more "inside the beltway" attention than the possible cover-up at AIG and the Federal Reserve Board.

Distracting us with meaningless trivia has worked for Washington and Wall Street for a long time. Then they pushed matters too far and let the economy go to hell.

Once people started losing their jobs, their houses and their retirement plans, they got interested in Washington and Wall Street. And they don't like what they are seeing.

Peggy Noonan wrote a brilliant column in the Wall Street Journal about how President Obama has squandered his political capital on issues like health care reform and climate control, instead of focusing on the economy.

Noonan, a Republican, notes that the Republicans have not been shining stars, either. The GOP strategy has been to let Obama fail but not to offer alternative ideas.

Too much time is spent on gamesmanship. Not nearly enough is spent on solutions.

Those of us on Main Street want to start hearing some answers. Or, at least, see a glimmer that the inside dealings between Wall Street and Washington are slowing down.

Obama wants to blame George W. Bush's administration. Bush wanted to blame Clinton. All are correct. Previous presidents screwed-up big time. It is time for someone to step up to the plate and start fixing the problems we have.

I'm not looking for leadership from the insiders in either the Democratic or Republican parties. Both have the same fat cat campaign contributors. Both have former staff members, friends and family members who serve as lobbyists. Both have too much invested in the status quo.

But there is an echo of hope coming from the outer fringes of both parties.

Most great movements start on the fringes of the political spectrum and eventually become mainstream.Very often movements will boil under the surface and then flash in an instant.

The civil rights movement sparked when a tired Rosa Parks refused to give up her seat on a Montgomery, Alabama bus.

A conservative grassroots movement sprung up when CNBC commentator Rick Santelli sparked the Tea party movement with some heart-felt comments. I happened to be watching CNBC when Santelli made his remarks, and the reaction was stunning. He hit a nerve.

Arianna Huffington is sparking a movement from the left side of the political spectrum. She is encouraging people to take all their money out of "too big to fail" banks and put them smaller banks in their communities.

Arianna is on to something. Martin Luther King, Jr. organized a boycott of the buses in Montgomery after the Rosa Parks incident. He learned that when you smack a politician or business in the wallet, you get their attention.
.
I would like to participate in Arianna's movement but I am way ahead of her. Since age 16, I have always banked in community banks. My first was the Bank of Ludlow, Kentucky. The bank president was a family friend. He taught us how to save and how to borrow responsibly. We knew the name of every person in the bank and they knew us.

Ever since, I have managed to find banks where I have a personal relationship with the local president or a high ranking officer. Customer service makes up for not having a branch in Hong Kong.

Also, community banks don't have the ability to funnel tons of campaign money into Washington. As Arianna has pointed out, just getting the money out of the hands of Citigroup, Bank of America, Chase, Wells Fargo, and other "too big to fail" banks gives the average Americans leverage.

The other thing that would give average Americans clout is tearing up their credit cards. Almost all credit cards are directly or indirectly issued by the big banks.

I don't see why banks need government bailouts when they are making 36% in interest and charging huge fees. You will be doing yourself, and all of America, a favor when you tell the credit card companies to kiss off.

The Washington Post is telling us to not bother. A headline in the business section says, "Ordinary Americans Lack the Power to Hurt the Big Banks."

The gist of the article is that banks are "too big for Americans to hurt." Therefore, we shouldn't even try. If the banks are supposedly so strong, why did they need the American taxpayers to bail them out last year?

The article quoted a banking consultant and a guy who used to write for Portfolio magazine. Not exactly objective sources.

I don't think the Post is going to be picking up any Pulitzers for hard-hitting exposes on the bailout or AIG scandals. Like the rest of Washington, they hope those of us on Main Street will quietly go away.

Something tells me it is not happening this time. Too many people are hurting. Washington and Wall Street keep ignoring Main Street and keep promoting their own agendas and funneling more money to their buddies.

It has to stop. We can elect new leaders, make some noise and move our money to banks who appreciate us.

Elvis Presley had it right. As long as people have the strength to dream, they can redeem their souls and fly. They can dream of honest government where the concerns of the average American are being heard.

That dream comes from Americans voting at the ballot box, voting with their pocketbooks and voting by to move their money to banks that care.

Elvis came from a small town and changed the entertainment world.

If we are going to change the financial and political world, leadership needs to come from small towns too.

Don McNay, CLU, ChFC, MSFS, CSSC is one of the world's leading authorities in helping people deal with "Big Money" issues. McNay is an award winning, syndicated financial columnist and Huffington Post Contributor. He will be launching a syndicated radio show on the Wallingford Broadcasting network in the next few weeks. You can read more about Don at www.donmcnay.com McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983 and Kentucky Guardianship Administrators LLC in 2000. You can read more about both at www.mcnay.com McNay has Master's Degrees from Vanderbilt and the American College and is in the Eastern Kentucky University Hall of Distinguished Alumni. McNay has written two books. Most recent is Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field.


 
 
 

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