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Going Where The Money Is

Question: What do Willie Sutton, Cristina Kirchner and Barack Obama have in common?
Answer: They all target banks, because that’s where the money is.

Question: Of the three, who is the only one to make peace with the bankers?
Answer: Sutton, the career criminal. Before he died in 1980, he made a television commercial for New Britain Bank and Trust Co., promoting the bank’s credit card that included a photo ID with the tagline, “Now when I say I’m Willie Sutton, people believe me.”

Perhaps there is still time for the two presidents mentioned above to bury the hatchet with their bankers, but it is not looking good at the moment.

Kirchner, the president of Argentina, is in a standoff with her country’s central bank over her attempt to grab $6.5 billion of Argentina’s foreign reserves to service the country’s debts this year. When the bank’s president, Mart√≠n Redrado, refused to fork over the money, she fired him. An Argentine court promptly reinstated him on the grounds that only the country’s Congress could sack the central bank chief. Kirchner’s party lost control of Congress last year, so she lacks the strength to get her way through the legislature, but Kirchner has vowed to appeal the court decision. Her own political future is in doubt unless she can find the money to maintain her government’s social spending.

In Washington, the story is much the same. Obama, presiding over staggering budget deficits, struggling to finance the health care and other social spending he wants, and facing a bleak future for his party in this year’s congressional elections, yesterday targeted about 50 of the nation’s largest financial institutions for a special tax aimed at raising at least $90 billion over at least 10 years. Obama cast this as an effort to make big banks pay for the federal bailout of the financial system last year. He challenged the bankers to take the money out of their own bonuses, which, in his most presidential tones, he labeled “obscene.”

These large banks already have repaid (with interest) most of the federal money they received, and the Treasury stands to make significant profits from selling its stake in the banks on the open market. The bailout’s costs, which remain to be determined, will come from other companies that were rescued, namely American International Group, Fannie Mae, Freddie Mac, General Motors, Chrysler and the auto companies’ finance arms.

No sense going after them, though; they don’t have any spare change. In that group of corporate wards, only AIG would even potentially be liable for the new tax, and federal taxes are not a big concern for a company in which the federal government owns about 80% of the stock.

The banks, not AIG, are Obama’s target. With banks announcing hefty profits — the very profits the government needed them to make so they could restore their capital and resume lending — the political wisdom of Willie Sutton is self-evident.

Sutton denied the famous story that a reporter once asked him why he robbed banks and he replied, “Because that’s where the money is.” He said the exchange never happened and the reporter made up the quote. But he did not disavow the sentiment.

“Go where the money is,” Sutton wrote in his autobiography, “and go there often.”

I can think of a couple of presidents who agree with him.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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