Integrity

INTEGRITY

According to Webster the definition of integrity is:

1: firm adherence to a code of especially moral or artistic values: incorruptibility

As the economy continues to spiral downward and the Washington elite flounders at answers, one word resonates in my mind. INTEGRITY. As I mentioned in my earlier post this whole meltdown was caused by DEBT. So what fueled the debt? Some would say greed but I propose it was a lack of integrity. This lack of integrity was abundant at all stages of the process, from the borrower to the broker to the banker to credit rating agencies to Wall Street and ultimately, to Washington, D.C.

What’s interesting to me is we demand integrity from our spouse or significant other, from our pastor, from our accountant and our doctor. But we do not demand integrity from athletes, entertainers, the media and politicians. Why do they get a free pass? Especially the politicians who are foolishly and arrogantly throwing our money away and racking up debts that will shackle the next three generations? When are we going to hold our Senators, Congressmen and our President to the same standards of integrity that we expect and demand from our spouse and Doctor?

America, it’s time to raise the bar for those we elect, for those who are in leadership positions and most of all, ourselves. It’s time WE demand the same level of integrity in our candidates and leaders that we demand from our Pastors. We must elect those whose actions speak louder than words, and who have faith in something bigger than a government, and who have the integrity to put the interests of the United States in front of their own.


God Bless, Art

The Economy

THE ECONOMY

I’m not saying I have a boring life or anything, but I spent 3 hours on Sunday watching the bank hearings from this past week on c-span. No, I did not miss the Daytona 500. To begin, some of the questions posed to the bank leaders were pathetic. Like how much did you make in salary and bonuses for 2008? Only to be followed up by what did you make in 2007? The best question I heard came from a congressman from N.C. He asked all the leaders, “What can the government do to fix or speed up the recovery from this recession?” It was the only question that did not reek of class envy.

I wish I were on the panel because I would have jumped all over the answer. First, you can lower the corporate tax rate to 15%. Second, you can eliminate the capital gains tax rate for three years. Third, you can triple the investment tax credit, sir. Fourth you can instruct the SEC to quit reviewing FAS 157 and suspend it immediately. FAS 157 is the infamous “mark to make believe” accounting rule. Fifth, create a substantial tax credit for hiring new employees for the next two years.

We are in our current economic situation because of one word. DEBT. And just between you and me, creating more debt, whether it’s at the corporate level, the individual level or at the government level is NOT going to fix the situation. Spending more that you earn is a recipe for disaster, again at any level. Loaning money to people who can never pay it back is also ludicrous. I will admit there are situations that call for the PRUDENT use of debt, notice the key word there, but we as a nation passed prudent about 30 years ago.

As a Nation and as individuals we can and we must get back to living within our means. We must quit spending more than we earn. It’s ok to tell our kids no we cannot afford something. We must get out of debt as soon as humanly possible. Cash is King. The single greatest wealth-building secret is to pay your self first. Put 5 or 10% (whatever you can afford) in savings or in an IRA, 401K account and leave it there. Learn to live on 90% of your earnings. For some, all you would have to eliminate is Starbucks from your life. Trust me, the two trillion dollars our government has spent in the last two weeks is only going to make matters worse. Be prepared. God Bless, Art

Leadership

LEADERSHIP
I was going to title this “Where is the leadership in Charlotte today?” But after much thought I figured it was best to just title it Leadership. When I moved to Charlotte in 1979, which makes me a Charlottean just about, this city could count on four or five guys to get things done. I’m thinking of guys like Bill Lee, John Belk, Johnny Harris, Hugh McColl and Ed Crutchfield to name a few. If something “good” needed to be taken care of the in the city these “guys” got it done. Whether it was roads, utilities, developments, recruiting, arts, quality of life or anything else, you could count on these guys putting Charlotte first. These “men” knew if they put what was best for Charlotte first, everything else would fall into place.

I have jokingly said to my friends over the years that Charlotte was “Babylon”. Babylon as you recall was at one time the wealthiest city in the world. One of the best books you can ever read, which I recommend all to read, is “The Richest Man in Babylon”. This book will change your life if you will only follow its simple principles. I will discuss this in another blog soon.

Charlotte over the years has evolved into a banking center, which is not a bad or evil thing, but has created a culture of climbing the corporate ladder and an attitude of what’s best for me or “what’s in it for me” mentality. Where are the leaders of Charlotte today? Or better yet, where are the leaders of America today? Where do you turn today for integrity and truth? Who is willing today to stand up and say this is what needs to be done? Is government the answer to our economic problems or the cause of them? Is Free Enterprise the enemy now? Are the free thinkers and free talkers soon to lose their freedom all for the sake of our presumed economic security? I would love to bring Paul Revere, John Hancock and Benjamin Franklin back and see their reaction to the government today. I’ll bet anybody they would lead another revolution. But more importantly, when are the “men” living today going to get the courage, stand up today and say enough is enough? I say it’s time to quit hiding behind the illusion of security and a salary which could be eliminated tomorrow and probably will and get back to those principles that made America great! Speak up, write, get involved and tell the congress and senate, we don’t need the bailout! We need less government, not more. We need freedom and the pursuit of happiness, not more taxes and regulations! Just turn your TV. off and do something! Do something now!

How Ken Lewis can save B of A and his job

How Ken Lewis can save Bank of America and his job.

What is it going to take to keep Bank of America from becoming The United States Bank of America? It’s really very simple for Ken Lewis to keep his job and the bank from becoming “nationalized” as if it already hasn’t happened.

Step One. Sell Merrill Lynch immediately. I just don’t believe you can merge stockbrokers with bankers. The cultures are so different and trying to cram down the B of A way to a bunch of commission brokers is not going to sit well. Now Art who is going to buy it? The one potential buyer is Goldman Sachs and maybe Morgan Stanley. Who else is left? But forget the culture meltdown, I still say who knows what is on the huge balance sheet of Merrill’s? Which might explain the stock price of B of A. Sell it for whatever you can get, transfer the government guarantees and payback a portion of the bailout money.

Step Two. Raise 50 billion in capital asap. Get on one of the remaining B of A jets and head to Abu Dhabi or China and make friends with the oil rich now. Pay the U.S. government back the $45 billion bailout and get them out of your business today. It is absolutely insane but predictable for the government to be capping executive pay and telling the bank to stop sport sponsorships. I guess O’bama wants the U.S. seal popping up all over the next super bowl.

Plan B. Bring Hugh McColl out of retirement.

Is Merril Lynch the next Golden West?

I wrote this back in October of 2008 and just wanted to post it since I just started this blog.

Is Merrill Lynch the next Golden West?
I had a discussion with a friend and banker at Wachovia this week. After asking if we were hiring and then sharing the roller coaster of his career and net worth tied to Wachovia’s stock price over the past 10 days, he made a comment that has stuck with me. In a tone of shock and disbelief he stated, “I can’t believe one decision by one person could bring down the 4th largest bank in the country”.
It made me wonder if we are not going through the exact same thing again, “one man, one decision and the largest bank in the country” with BofA. Is Merrill Lynch the next Golden West? Now understand I have no ill feelings at all with Ken Lewis and how he has performed as CEO of BofA. It just seems like there are a couple of similarities between the two transactions. First, both are huge deals, 24 Billion and 50 Billion. Second, both are quick over the weekend announcements. Third, it appears to be another decision made with the lack of board involvement, at least publicly.
The print and news media has flooded us in the past two weeks about the potential impact to Charlotte of losing Wachovia. So now the powers to be are scrambling to minimize the effect of losing the second largest employer in the city. So I must ask are we again ignoring the impact of one man, one decision at the largest bank in the country? Should we not at least be asking what due diligence has and will be done on the Merrill acquisition? What risk is BofA assuming with this deal? Has Merrill’s Trillion Dollar balance sheet been adequately investigated and analyzed in light of our recent $700 Billion bailout of financial institutions? Because let’s face it Charlotte, if BofA is wrong about the value of Merrill’s Assets, we will all be asked to anti up again to bail out an institution “too big to be allowed to fail”. Can Charlotte handle the loss of TWO financial institutions? I hope two years from now “The tale of two Kens” has a different ending.

Art Townsend
Rock Hill, SC
B of A Stockholder