A reader e-mails: “I am a very loyal fan of your blog and I appreciate all that you do! Attached is a letter from my bank’s chairman Mariner Kemper to Henry Paulson explaining why we refused to be bailed out. I am so proud to be an employed at an institution that stands up to socialism (and didn’t
follow the lemmings off the sub-prime mortgage cliff).” Kemper is CEO of UMB Financial, which refused to take additional capital under the U.S. Treasury Department Capital Purchase Program.
November 3, 2008
Mr. Henry M. Paulson, Jr.
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Paulson:
As I reflect on the financial crisis that has gripped our nation, I feel compelled to write to you.
Government action was clearly needed to help shore up the nation’s financial institutions. I applaud you for taking quick action. However, I am gravely concerned with the actions that have been taken and their long-term implications for both our industry and the impact these measures will have on the moral fiber of our future leaders.
First, the rescue was more of a bailout. Its results will have made the large institutions larger and harder to manage and regulate. Secondly, as the system is repaired, these institutions which took such actions to bring the system down will be rewarded with new capital and clean balance sheets at the taxpayers’ expense. Meanwhile, financial institutions such as UMB will be penalized for operating with sound principles. Our first order of business is to protect our depositors’ liquidity. As a result of your actions, those who abused the system get stronger and those who protected their shareholders’ interest and those of the Deposit Insurance Fund will pay the price.
Lastly, I think it is inappropriate to use taxpayers’ funds to inject into healthy private enterprises. What message are we sending our future leaders? Is there no reward for doing the right thing? It seems there is only penalty. The reward seems to be for the reckless.
I believe that under a new administration, the CPP will become a political issue. I am afraid the new capital being used to shore up balance sheets and make acquisitions will not be looked upon favorably, as its original intent was to free up liquidity for extending credit.
Please while you go about the hard work of repairing our nation’s financial system, do not overlook the opportunity to restore dignity and respect for sound and responsible business principles.
If you don’t stand up for the good guys, who will?
Thank you for your consideration.
Yours very sincerely,
Chairman & Chief Executive Officer