FRIDAY JUNE 18, 2010

Political Theatre

The Congressional drubbing of BP CEO Tony Hayward was an embarrassment for our country.  Members of Congress from both sides of the aisle took turns whacking Mr. Hayward.  No Congressman showed any true interest in explaining how the Gulf oil spill happened or how the well would be contained.  This was political theater at its worst.  It is disgraceful that the chairman of the committee announced before the hearings that Mr Hayward would be "sliced and diced."  So much for fair and balanced!

There is no question that BP should be held responsible for the environmental clean-up.  And, at least until the politicians force the company into bankruptcy, the company has the willingness and the ability to pay for the clean-up.  That is why I am disappointed that BP capitulated to the political pressure and agreed to the $20 billion "trust fund" and eliminated its dividend.  Obviously, BP had little bargaining power in this "negotiation" with the White House. Nonetheless, there is little in the law to suggest the White House had the authority to demand this fund's creation or the elimination of the dividend.  The politicians justified this by saying the fund would guarantee the payments would be made.  Many cheered the politicians on as they went after the oil company.

I would suggest that investors be careful of what they ask for.  What industry in next in the cross-hairs of the politicians?  GM and Chrysler bondholders...evil Wall Street banks...exploitive insurance coimpanies...greedy oil companies...who's next?

But I must admit.  Watching the political theater gave me an idea.  How about we create a fund into which the government can deposit all of our Social Security contributions!  That way, those pious Congressman can't spend it on frivolous political pork barrel projects?  Oh wait, we tried that! Never mind!   Maybe we can hold a hearing where the public can cross examine Congress and find out where all the money went!  

POSTED AT 1899-12-30 14:59:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

RECENT POSTS

Better Unemployment Number

The "Safety of Bonds" Myth

Just like that!

Ugly August

Bright Side of Double Dip Fears

All eyes on Wyoming

Lack of Business Confidence

Are bonds forecasting a double dip?

Are rates too high?

Slowdown?