Recently Treasury Secretary Tim Geithner, Treasury Secretary told CNBC that the treasury was starting to sell its holdings in CITI and hoping for a profit of $7.5 billion. But wait a minute …
First the U.S. Government invests $45 billion in a big rush and we – you and me, the American taxpayers – get to own 27 percent of the company. Now that CITI is doing well and we can finally have a voice in promoting some social agenda within this institution, all he talks about is getting out and making a profit on the investment. Not so fast, Tim! Geithner isn’t representing a profit-making investment fund looking for quarterly returns. He’s representing the United States citizens, and we certainly should have a few ideas to discuss with the board of CITI while we are stockholders.
If Geithner doesn’t have any new ideas about how government and business can work together to improve our society I can put together a small group to advise him. I’d ask Alexander Friedman to join it. Mr. Friedman just published an
article for the Financial Times titled “How banks can better help the world’s poor” and it had a few ideas for starters. One was to invest one percent of their balance sheet to support businesses that help the poor – like RHD’s
Brothers’ Keepers business or our
SQA Pharmacy business.
“If we are to make true progress in tackling our most pressing social problems and live up to our moral obligation to help those in extreme poverty … we need to stop separating investment decisions from philanthropic giving,’’ Friedman writes. “The building and giving away of wealth should not be seen as disparate sets of skills. The world’s problems cannot be solved either by unfettered markets or by limited pools of philanthropic dollars.”
Indeed, unfettered markets generally do a poor job of doing any social good. Paul Volcker, chairman of the Economic Recovery Advisory Board and former chairman of the Federal Reserve, recently said in a speech at Washington D.C.’s Peterson Institute that the financial sector adds perilously little social value, despite what its proponents claim.
The current economic crisis forces government involvement in the financial sector. We ought to demand that these institutions, in which we are now shareholders, do some social good in a way that benefits average Americans. Simply abiding the status quo, as we’ve seen, tends to work out badly for everyone.
What would you suggest banks do, if you had a voice that would be heard?