Wall Street Bets Obama Will Fire Bank CEOs Next Says CNBC Reporter
CNBC’s New York Stock Exchange floor reporter Bob Pisani told viewers of CNBC’s March 30 “Street Signs” the market’s actions, with the Dow Jones Industrial Average (DJIA) dropping as much as 300 points, are reflect, in part,that the government is going to force bank CEOs out as they did with Wagoner.
“Look, the main concern here today is Geithner’s comments that some banks are going to need a lot more capital,” Pisani said. “And for everybody who says why haven’t they fired anymore bank CEOs yet – why hasn’t the government done it, wait – they’re going to.”
“The Street basically believes there are going to be several of them fired at this point,” Pisani said. “We don’t know who. It may not necessarily be the biggest ones. You may see smaller ones. But the government has set up everything just like they did with the auto companies to basically start dismissing some CEOs of banks now and I think you’re going to see that happening and that whole issue is weighing on it.”
According to Pisani, although the government is wielding its power in unprecedented ways, it’s “good and healthy” because now there some certainty in the market that can be priced in.
“But ultimately all of this is good and healthy,” Pisani said. “It’s about time they got to the day of reckoning with the auto companies.”
David Lutz, the managing director of Stifel Nicolaus, explained the move to pressure bank CEOs out is more of a psychological gesture, since a lot of the CEOs of banks at the helm during the height of what is believed to have caused the financial crisis have already been dismissed or have resigned.
“I think it is probably a headline which is going to make people feel better out on Main Street, but it’s not going to do anything as far as Wall Street’s concerned,” Lutz said. “And possibly quite bigger of a concern Congress should be looking at is the boards of directors at these banks.”
The real solution according to Lutz is to clean up the financial institutions’ boards of directors.
“You know, you can blame the CEO, but the boards of directors are supposed to be the police on duty,” Lutz added. “So I think you know, as we saw with GM – I think you’re going to see a lot more board seats might be pressured out by the government and that would ultimately be positive and could have, you know, a longer term effect as opposed to a CEO who might have been in place only for a couple of quarters.”