Good Old American Ingenuity!

Last week, I wrote about Don Davis, the president of Centrue Bank in St. Louis who picked up his ball and went home after legislation passed the US House of Representatives limiting the salaries of bank executives whose banks were recipients of TARP monies (either willingly or under duress as the FDIC was encouraging banks, even those like Centrue with strong balance sheets to take TARP money to increase their capital). This afternoon Fox News reports that Rick Wagoner, CEO of GM will be stepping down immediately at the request of the Administration.

A White House official told FOX Business that Wagoner was asked by the Administration to step down as a precondition for the company to continue to get help with its restructuring.

The idea that our government can cherry pick the businesses that survive, the salaries that executives can make, and the conditions under which people can continue in their positions is, frankly, frightening! While the two aforementioned individuals also had something to do with government bailouts, it is not a far stretch to imagine that this kind of meddlesome behavior could extend to companies and people who have not been bailed out. They may simply have rubbed someone the wrong way or said the wrong thing to the wrong person. They may have espoused the wrong philosophy. They may have unknowingly made an enemy who is now exacting a twisted revenge. In the case of Wagoner, it may be that he is on the wrong side of the UAW to whom Obama owes a great debt of gratitude for his election and perhaps Wagoner has seen fit to call BS on the UAW and its monstrous pension, legacy healthcare and wasteful pay for no work clauses in the union contracts.

"This does not surprise me... Rick has seen good and bad times and it seems that a fresh face is needed,” said Mike Green, president of United Auto Workers Local 652 in Lansing, Mich. "There are a lot of smart, capable people inside GM and this will not muck up anything moving forward."

Or could it be that Obama is playing good cop, bad cop with the UAW so that by removing Wagoner they can also justify strong arming the UAW into concessions under the same threats.

A source told FOX Business that the Obama Administration is likely to set a hard deadline for GM and Chrysler to meet their restructuring goals, which include getting bondholders and the United Auto Workers union to agree to major concessions. If they don’t meet those goals by the deadline, the source said, the auto makers would likely be allowed to enter into bankruptcy protection.

So it is with some degree of pride that I read in the St. Louis Business Journal on Friday March 27, 2009, that Don Davis is giving the middle finger salute to the Administration and TARP and has already lined up a couple of partners, $10million dollars in capital, and is looking to buy a bank! He and his partners have joined forces and pooled their own money and are looking for a small bank in which they can take an ownership interest and......BEGIN LENDING!!!

"The time is perfect to buy or merge with a small bank," Davis said. "So many good people can't get capital right now. I have capital. We can raise another $5 million easily, and once you get $15 million, you can get $20 million." He said the money he and his partners have raised can be an alternative to government bailout money for a bank in need of capital.

"The advantage to buying a bank, instead of starting one....is that you can get into the business immediately. The regulators are not in the mood to hand out new bank charters. Davis' plan to buy a small bank is smart because small banks are more likely to have fewer problem loans. Dan Hogan, a banking consultant, said Davis and his partners are doing what good capitalists do----they adapt! "If you change the rules of the game, a capitalist will learn the new rules and win the game--unless you keep changing the rules."

Perhaps Rick Wagoner can do the same and like the Phoenix rising from the ashes, rally entrepreneurial individuals to take Saturn back as its own quality brand in the USA while GM goes bankrupt under its own weight and the weight of the UAW. Capitalism and American ingenuity is still alive in spite of the fact that TARP monies have put Chris Dodd and Barney Frank in charge of your bank and a tax cheat in charge of the IRS.