Clarifying press inaccuracies to help clean up the banking system
Today, I came across two attempts to clarify allegedly misleading articles in the press. Both clarifications were made in regard to how the banking system clean-up in the U.S. is proceeding. I will present them to you in as neutral a tone as I can muster. However, I should say I am sceptical as to why these clarifications were deemed necessary.
The first is in regard to a Bloomberg News article that quotes FDIC Chairperson Sheila Bair (the FDIC cal her a chairman, but I’ll call her a chairperson). The FDIC issued the following statement which I received via e-mail:
Statement from the FDIC Office of Public Affairs, "The Bloomberg story referencing Chairman Bair’s discussion of management and board changes is misleading and does not provide the proper context of her comments. Chairman Bair said that management changes could happen based on the capital plans that an institution must submit to the government. She did not refer to CEOs specifically and the comment was in the context of capital plans submitted by the institutions. Chairman Bair also did not suggest the federal government will remove the bank CEOs."
Transcript of the exchange from Bloomberg follows:
MR. HUNT: But in the same situation, or similar situation, the government already replaced CEOs at Fannie and Freddie and General Motors –
MS. BAIR: Yes, that’s right.
MR. HUNT: And some people say, well, why is the head of Bank of America still there? Or why are some of these other banks’ CEO’s still there?
MS. BAIR: Right, well, obviously I don’t comment on open and operating institutions. I think the review needs to go with both the management and the boards as well, absolutely. And management needs to be evaluated and is this the right skill set, have they been doing a good job, are there people who can do a better job, those kinds of questions.
MR. HUNT: Do you think some will be replaced in the next couple of months without getting into the particulars?
MS. BAIR: Yeah, I think there will be an evaluation process. We’re requesting it as part of the capital plan and yes.
The original article did not leave a lasting impression, but the FDIC statement did, so I looked it up. Bloomberg says:
Federal Deposit Insurance Corp. Chairman Sheila Bair said some bank chief executive officers will be replaced within the next several months after the U.S. scrutinizes lenders subjected to tests of their financial strength.
“Management needs to be evaluated,” Bair said today on Bloomberg Television’s “Political Capital with Al Hunt,” to be broadcast this weekend. “Have they been doing a good job? Are there people who can do a better job?”
The FDIC and other regulators last week released stress tests results on 19 lenders including Citigroup Inc., Wells Fargo & Co. and Bank of America Corp., and ordered 10 to raise $74.6 billion in capital to withstand a “deeper and more protracted” slump than forecast by economists. Bair, in the interview, didn’t suggest the government would remove any CEOs.
“There will be an evaluation process,” Bair said. “We’re requesting it as part of the capital plan. And yes,” she said, responding to a question from Hunt about chief executives being replaced.
Chief executives at American International Group Inc., Fannie Mae and Freddie Mac were ousted by the Bush administration after the U.S. took control in September. General Motors Corp. CEO Rick Wagoner was forced out in March after the Obama administration rejected GM’s recovery plan. The CEOs of Citigroup Inc. and Bank of America Corp., which combined received $90 billion in U.S. aid, remain in their jobs.
Bair said regulators should oversee the “adequacy” of the boards of directors at banks receiving U.S. aid, Bair said.
You can read the rest of the article at your leisure. The link is below.
The second article involves MatlinPatterson, a hedge fund, and Ambrose Evans-Pritchard, a journalist at Britain’s Daily Telegraph. I linked out to a provocative piece by Evans-Pritchard that Naked Capitalism and Zero Hedge also picked up, in which Mark Patterson allegedly calls the bank bailouts a ‘sham.’ Well, it appears that Mr. Patterson never said any such thing. According to Zero Hedge, representatives at MatlinPatterson contacted him, stating:
The posts are based on a factually incorrect article that appeared in the UK tabloid, The Telegraph.
We have contacted The Telegraph, which has removed the article from its own site due to the fact that it fabricated, misquoted, and misstated MatlinPatterson’s position.
Just to be clear, The Daily Telegraph is one of four well-respected national dailies in the U.K. It is considered a Conservative Party newspaper. The four former broadsheets are The Times, The Guardian, The Telegraph, and The Independent. None of these newspapers is a tabloid.
As for the original article, it was removed from the Telegraph website as a result of complaint from Mr. Patterson and his firm (see post at Zero Hedge). Naked Capitalism has a quote from the original here. I should also point out that the financial website Seeking Alpha has taken down an article which was based on this disputed article by Evans-Pritchard. (See article here.)
The alleged misstatements may indeed be misstatements. But, I mention all of this because it does smack of censorship. I thought you would be interested.
Bair Says Some Bank Chiefs Will Be Replaced in Months – Bloomberg.com