more than a modest proposal...

[acroyear]

I, Cringely . The Pulpit . Off With Their Heads! | PBS:

Enough of this crap. What if Jack Welch was the U.S. banking czar? [...]

Right now all the bankers are afraid to lend money because they are afraid of failure. As the new banking czar Jack [Welsh, of GE] would much rather have them be afraid of HIM. If the bottom 10 percent of bankers were fired every year and the bottom 10 percent of banks had their branches and deposits redistributed, wouldn't they be more afraid of THAT than of making bad loans? Their motivation would still be to make GOOD loans, but the penalty for making NO loans would be there, too.

Our problem then is that we're throwing money at something we should be handling using a different regulatory tool -- licensing.

U.S. bank regulators should go to all the banks this afternoon and say, "You aren't making loans, which is part of the definition of what it is to be a bank. If you aren't acting like a bank by tomorrow we'll take away your banking license and transfer your deposits to another bank that WILL make loans."

Problem solved overnight.

It's only one part of the problem, of course, but this solution will cost a lot less than $700 billion. It will cost nothing.

And if you think it won't work, then you don't know Jack.

Certainly, the commenter criticize Cringely for simplifying Jack's approach (and not noting that beyond a certain point, cutting 10% is no longer cutting "dead weight"), but it does have a point - nobody's lending money out of fear, but activing lending money, especially the short-term loans that Wall Street depends on, is the only thing that is going to at least cushion the system away from the paralysis that will guarantee a real crash.

But of course, that's regulation, which is a more dreaded R word than recession, even though it's the only thing that'll help rebound from one.

Comments

I haz an opinion!

[tchwrtr.livejournal.com]

Psst. That's GE, not GTE. As in General Electric.

And at the time of his running of GE, it worked, in its way. It was applied evolution. Keep the best, cut the rest. New blood is always coming in to refresh the lines, and so keep the best, cut the rest. (ask me about this sometime in person)

I kinda like that approach with banks, but then my husband also made a POINT of making sure that in our mortgage was a line saying it would never ever be sold. The guarantee to stick with us through the long run said to us that the bank was willing to take a chance on us because we were a *good* chance, and that they were in the habit of taking good chances as opposed to high risk moves with other people's money and the property they live on.

I do wonder why we don't get a crackerjack CEO in there to run the company, er, country, in the black.

Re: I haz an opinion!

[acroyear70.livejournal.com]

you know, i was making that mistake 18 years ago (when GTE was my phone company). (post is fixed now)

the trouble is the arbitraryness of some numbers. some people are, basically, less efficient on their own, but have soft-skill sets that can be critical to keeping departments running well, be it analysis, training, or simple motivation.

at ISX, i knew the situation was bad when we let go of one particular person. he was an IT guy who never finished college (came to the company straight out of the military), wasn't a "great" engineer, did most things "by the book", and all that.

but he had one thing I will respect him for forever: no project he worked on ever failed.

ever.

not in the 4 years I worked with him.

looking at efficiency / productivity of "projects over time", he was among the least productive employees we had. but from a customer relations standpoint, where the customer is happy when "shit works", people like that are absolutely vital.

working with him, it's not that i consciously decided to "work better". i simply worked better. he had a soft-skill (as my current company calls it) that can never, ever, be quantified in any way that looks good to a bureaucrat, but there you go.

"Peopleware" also talks about these kinds of people, the ones who seem average (or less) in personal productivity, hard technical skills, and performance but are able to coalesce a group into a machine able to turn out one success after another, to the point that they don't even realize it's happened to them.