Wednesday, February 18, 2009

Open Letter From The Banking Establishment To The Taxpayer

The Naked Capitalism Blog posted a very funny article entitled 'An Open Letter To The Western Banking Establishment' (click the link to read it first).

It started:

Dear Western banking establishment,

I notice that your unauthorised credit facility from international lenders of last resort now totals approximately $10 trillion. As a taxpayer and therefore your largest shareholder I would be grateful if you could repay this facility at your earliest convenience. I have charged you an additional £30 for this letter and a monthly unauthorised overdraft fee of £28. If you do not repay this facility shortly I will have no choice but to become further massively impoverished along with legions of fellow taxpayers for multiple generations to come.....

No doubt this would be a response:

Worlwide Taxpayer

Re: Unauthorised overdraft facility

Thank you very much for your letter concerning our overdraft facility. We appreciate that it has gone over the allowed limit but we had to get bonuses paid to our top executives and star traders before any interference by governmental authorities.

This sorted, we can now assure you that we are working diligently to repay the debt owed and we would very much like to tell you how your funds are being put to use.

1. We have spent some of the money on consultants, and some other very clever people, to analyse our previous business plan to see if they can suggest any changes.

Unfortunately, as it turns out, lending money to people was, ultimately, a flawed plan and cost us lots of money so, in the spirit of improving cash flow and the ability to secure payment of our overdraft, we have suspended all lending.

It may be that this could complicate the financial system further, but we are very keen to make sure that we do not lose anymore money; bonus time is only 8 months away.

2. You will be happy to know that we have come down very hard on expenses. We have halved spending on water by limiting our offices to one water machine per floor instead of the two we had in our heyday. We are aware this is a sacrifice but I can tell you that all in our firm fully support it.

I personally now clean my own shoes having let my company paid valet go. He shall be missed, but we all have to pull together.

Our executives have also made many personal changes to their daily routine. The executive dining room, for example, is now only open between 12 and 6pm and we have all decided to eat our stakes rare to save on cooking bills. (Jenkins in compliance has gone the extra mile and only eats steak tartar, would you believe! He is such a team player.)

3. Reference your comments on strategists and economists, we have to agree, publishing unsolicited comments in the financial press is not helpful. We have canvassed all of our economists and have found that, although many have experience of brothels through Brother Spitzer, none play the piano.

We have set up a company wide working group with outside lawyers and consultants to assess the viability of having them all learn to tickle the ivories. Thank you very much for your input in this process.

4. Your views on there being 'no real need to have 18 different banks' on your high street is a radical idea which we feel deserves further investigations. Following your suggestion we have set up a company wide working group with outside lawyers and consultants to assess the viability of this impressive, if unorthodox idea.

5. The 'monstrous pile of credit' issue is one where we may have to disagree. The simple fact is, we are a bank, we do lots of complicated banking type things which I won't bore you with, and as a bank we pay our people big bonuses, without the 'monstrous funds' given to us, how would we pay these bonuses?

I think you have underestimated the affect on the wider economy if such bonuses are not paid. What, for example, would happen to Porsche, Lamborghini, Bentley, Aston Martin etc? Surely you are not suggesting in such bad times for the auto industry that you would cut off the very clients these poor companies depend upon.

Think of Crystal, Spargo's, the Ivy in London, Harrods, Moet & Chandon, Versace to name just a few. To underfund the banking industry could, I am afraid to say, cause these companies fatal financial hardship.

Also what would happen to the property market in areas like Seventh Arrondissement in Paris, TriBeCa in New York and London's Kensington Palace Gardens? Homes in these areas go for several million dollars, without the banking community to pick up these properties we could see a meltdown in the neighborhood with management consultants moving in all over the place. I mean would you want one living next to you?

6. I thank you for your quotes from Garet Garrett but I found it hard to understand what it meant. I mean 'panacea for debt is credit' who really knows what that means and it is relevant now that we don't lend? I think not.

7. The news on the UK government encouraging lending to buy homes is, quite frankly, a shock to myself and my colleagues. Suggesting the purchase of an asset that is falling at a rate of 17% per annum is outrageous and you are right to bring it to our attention. We have several securitised mortgage obligations that these people could be buying that have already fallen by far bigger amounts than that.

8. Your suggested slogan for our investment management departments is “When it comes to moral hazard, we’re Number One. We helped trigger the biggest financial and economic collapse in history through our imprudent lending and investment. Between 18 million and 30 million jobs throughout the world are almost certain to be lost. And more than 50 million jobs throughout the world are now in jeopardy. As a result of our investment expertise, we’ve lost billions, and those of us that still exist and aren’t owned by the taxpayer are technically insolvent. Now, how can we help you with your finances?”

This is genius. Honesty, integrity and some scary numbers, simply brilliant! We have set up a company wide working group with outside lawyers and consultants to assess the viability of putting this to jingly music, sung by a baby. We will then post this on YouTube and feel sure it will go viral.

I must say, when your letter arrived at my mansion I was a little worried that it was another gift from Bernie Madoff or even a letter from some awful riff raff saying cruel things about us. Your letter, however, was constructive and thoughtful.

I enclose a company check for £58 to cover your expenses and hope to be able to report how we are getting on with the repayment of our debt soon. As you will see, we are committed to making it work this time and you can rest assured your money is in good hands.

Charles Richard Oliver Olsen-Klarke
Merchant Banker

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