SMART MONEY IS ON U.S. INDEPENDENT RALPH NADER LIKE VOTERS THIS NOVEMEBR little American's !!!

WE INDEPENDENTS SUPPORT RALPH NADER'S HONESTY & ABILITY 2 KNOW A FLAMING PINTO FROM AN EXPLODING GM SIDE~SADDLE PICK~UP TRUCK !

BOTH AMERICAN POLITICAL PARTIES SHUN HONEST PARTY POOPERS LIKE RALPH NADER, BUT ALL us little Americans GETTING STEPPED ON BY ELITE AMERICA RESPECT THIS VERY SPECIAL MAN WHO LIVES TO BETTER AMERICA AND NOT HIS OWN DEEP POCKETS !

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Of Big Banks and ShoreBank by Ralph Nader

by Ralph Nader

August 13, 2010

The Obama Administration’s treatment of its current majority ownership of bailed out General Motors and its standoffishness toward the pioneering but troubled ShoreBank, a community bank based in Chicago, are lessons in how the Big/Bad fare in Washington, D.C., as compared with the Good/Small.

Having shed its bad assets and abandoned its common shareholders, the new GM emerged from bankruptcy in 2009 with a clean balance sheet and lots of taxpayer cash. For the first two quarters of 2010, it has signaled a comeback by reporting over $2 billion in profits.

In return for a federal infusion of well over $50 billion, the government took a 61 percent ownership stake. The Canadian government received 10 percent ownership for its financial assistance, and the United Auto Workers received 17.5 percent ownership in return for major concessions and a two-tier salary scale starting at $14 an hour.

The Obama administration exercises its trust duties on behalf of the taxpayers by repeatedly saying it would not use any powers of majority ownership at all. The Obama administration is urging GM is issue stock sooner than later so that the government can sell its stock and get out of the company completely.
GM’s CEO Edward E. Whitacre Jr., former CEO of AT&T, agrees. In recent weeks, he has been telling the press that GM is losing sales because of its moniker “Government Motors.” Not known for his graciousness, he did not add that without the government a bankrupt General Motors would not have any sales at all.

There are serious consequences for Obama’s absentee management style. First, he did not prohibit GM from lobbying, as was required for the bailouts of Fannie Mae and Freddie Mac. As a major member of the Alliance of Automobile Manufacturers, GM has been part of a lobbying force that seeks to weaken auto safety legislation now moving through the House and the Senate. Historically, GM has been the most strident in its opposition to mandatory pollution control, fuel efficiency and safety standards. The company’s strategy for decades has been to defeat, delay or weaken efforts to clean your air, safeguard your motor vehicle and get you more miles per gallon of gasoline.

Now, when the government, as a majority owner, can at last tell GM to support long established national policies in these three areas, Obama is hands off. The new GM is free to return to its old obstructive ways.
Moreover, GM’s recovery is just beginning. It has cut its costs very significantly so that its breakeven mark is at a low production volume by historical standards. Starting from nearly rock bottom sales volume, GM is making money in the U.S. and booming in China. So why would Obama want to sell the government’s share so early when waiting a couple of years will make a nice profit for the taxpayers and, in the meantime, restrain GM’s opposition to innovation-driven regulations for the health, safety and economic well-being of consumers?

Now, consider ShoreBank’s predicament. This bank broke ground since its founding in 1973 by providing loans for lower-income homebuyers, apartment building owners and small businesses. Year after year, this community bank proved it could make money by opening up markets that the big banks chose to red-line in Chicago and later in Detroit and Cleveland. Hundreds of articles and news reports heralded its success.

Then the Wall Street-produced recession struck the country. Through little fault of its own, many of its hard-pressed lower-income debtors began to miss or default on their loans. ShoreBank started to register losses–$119 million in 2009. Unlike the big banks, ShoreBank did not deal in risky speculative derivatives—like credit default swaps, collaterized debt obligations or subprime mortgage lending.
Washington is drawn irresistibly to bail out the big banks’ wildly speculative, toxic paper investments with no redeeming social value. George W. Bush took the taxpayers to levels of corporate welfare beyond the dreams of corporate avarice.

Neil M. Barofsky, the valiant special inspector general for the Treasury Department’s Troubled Asset Relief Program (TARP) reported that the giant AIG bailout ($182 billion) gave its trading partners—bonus-rich Goldman Sachs, Merrill Lynch, Societe Generale and other banks—100 cents on the dollar for their notorious credit default swaps. Had AIG defaulted, it would have been a fraction of that sum.

Barofsky’s report denounced the Federal Reserve for not negotiating strongly with the banks. Incredibly, the Fed gave the banks $27 billion in taxpayer cash and let them keep $35 billion more in collateral already posted by AIG. Barofsky declared that these vastly overpaid sums were way “above [these contracts’] market value at the time.”

Compare these amounts to what ShoreBank needs in additional investment to provide liquidity and adequate capital reserves to ride out the recession. It projects losses of about $200 million before returning to black ink and another $300 million or so to support future operations.

The community bank has raised $150 million in pledges from several Wall Street firms—a little p.r. redemption here—and it needs $75 million in TARP funds from the Obama administration.

At this writing, Washington is balking and the Bank, willing to shink down further, finds its hopes dimming.
The Chicago Tribune editorial “Still Worth Saving” put it well:

“ShoreBank, for many years, showed that operating honorably in low-income neighborhoods could pay off for everybody. One way or another, we can’t let its shining example disappear.”

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