In the Oscar winning film Goodfellas, beleaguered restaurateur Sonny Bunz appeals to the Don Paulie Cicero for help in dealing with his mob related troubles at his restaurant.  In the end, he asks the Don to become a 'silent' partner in the business.  Don Paulie then proceeds to use the business to his own ends, ultimately destroying it.

The executives at all the major banks, and those at General Motors and Chrysler are learning the hard lessons of poor Sonny Bunz - when partnering with Don Obama, you give up control, while Obama uses his new-found power to his own ends.  

In our Corporate travels, we subjectively observe that most business leaders are inherently lazy.  They follow the path of least resistance, like electricity.  We are a short-term oriented society - it's not just that business runs on quarterly cycles, as business is often criticized for taking the quarter-to-quarter short-term view - most all of us are just as guilty of 'shorttermitis'.  Vast numbers of us fail to consider the longer term consequences of our collective actions, and have a very strong preference for taking the least painful path, even if that path may hint at doom later.

In the case of the finance industry, and particularly the big banks, most really didn't have much choice but to partner up with the Federal Government and accept T.A.R.P. money.  Their case is special,  and it's special because banks are the absolute center of the economy.  Collapse of the banking system was/is not an option.  We understand that, though we certainly take issue with how the collapse was (thus far) prevented.  We can almost always count on Government screwing up whatever it touches, and the TARP bailout was no exception.  TARP billions flowed from Federal coffers and want it or not, the Feds rammed TARP money down the throats of Banks across the nation. 

After the transition of Bush to Obama, TARP liability took a decidedly negative turn in the eyes of bankers big and small.  TARP meant the Feds claimed greater control over banks, especially as it related to compensation.  Many bankers baulked at what the Obama Administration wanted them to do - chop compensation, reduce and/or eliminate bonuses and so forth.  Some banks wanted to give the TARP money back so they could retain control and not have to take pay cuts and all the rest.  For some small banks, the Feds took the TARP money back.  However, (surprise, surprise) for the larger banks, the Fed refused to take the TARP money back.  Now that the Government is a "silent" partner in these banks, the bankers are discovering the hard way that de-partnering from the Fed is not entirely unlike de-partnering with the mob.  It's just more challenging.

And there's more!  In the middle of the headline grabbing T.A.R.P.  solution, the news broke that the US automakers were experiencing an almost unprecedented decline in auto sales, raising doubts that G.M., Ford or Chrysler could withstand the decline.  The specter of bail-outs were raised, and the "big three" flew in on their nice corporate jets to beg for the Government to partner with them, just as fictional character Sonny Bunz had done with the Don.  There were warnings of millions of jobs to be lost if the auto industry did not get a bail-out of it's own.  Ford subsequently reported they didn't think they needed a bail-out, and Chrysler's' story is murky because they are no longer a publicly traded Company, but GM was the biggest and reportedly the most in trouble of the car manufacturers.

The executives at GM (and we assume Chrysler too) had other options besides a mega billion dollar bail-out from the Feds.   But that other option involved declaring bankruptcy, and that was a painful path fraught with difficult dealings - a seemingly high resistance path even though it would have freed GM from the UAW contract, and would have put their huge pension liability on the table as well.  There is also, a general phobia among executives about having to go to bankruptcy on their watch.  Many in the top echelon regard that as a career ending stain.  Federal money, we have no doubt, appeared to be the path of least resistance to the executives at these firms.   And in exchange for "partnering" with the Federal Government, it cost the GM CEO his job, whether the Board of Directors or shareholders wanted it or not.  In addition to 'requesting' the head of  GM on a pike, Obama and his capos made it clear that they want to call the shots over what GM builds, and what GM spends it's money on.  And no doubt that includes compensation and bonuses too, of course.  Partner with the mob, and the mob takes over.  Partner with the Fed and the Fed takes over.  Getting away from the mob is easier than getting away from the Fed.

Thus, it turns out the seemingly more painful option of no government assistance and bankruptcy was the better option after all.   And because GM leadership took what they perceived as the expedient route, they got what they deserved.  Unfortunately, we lowly taxpayers are now along for the ride.  We are destined to be screwed as consumers, by having cars we don't want to buy forced on us, and we will be screwed as taxpayers when Obamamotors takes the place of GM.  Indeed now after all the hub-bub, the Obama mob is talking about a "controlled" bankruptcy (note to readers:  all bankruptcies are "controlled").

Throughout the TARP mess, and through the on-going collapse of the auto industry, none of these executives have had the chops to take Obama head-on.  To call him and his crew out on his false public statements and on the dirty dealings going on to take over the banking industry in a non-nationalization nationalization, and his Stalinesque dictation of terms. 

Obama is nothing more than a public servant, and a poor one at that.  And all these ivy league captains of industry are afraid of him, and for all the wrong reasons.  Once again, we look about for counterbalancing leadership to offset the massive incompetence (or worse) of the Obama Administration, and see none.  While this is certainly discouraging, we predict here and now that effective opposition leadership will emerge, we just hope before it's too late.

In the meantime - beware of asking Don Obama for financial aid. 

Bada-bing.