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Mornings unPHILtered - Explaining the proposed bank tax
Fee would affect 'Wall Street' banks
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    The first guest on Monday's “Mornings unPHILtered” show was Ed Sibbald, director of Center for Excellence in Financial Services at Georgia Southern University's College of Business Administration. The first subject he talked about with host Phil Boyum was a new bank tax that is being proposed for the nation's 50 largest “Wall Street” banks.
    These banks use international sources for much of their funding, which contributed to the bank collapses that started in 2008. Sibbald said the biggest banks were involved with the mortgage-backed securities, which in turn were backed by the federal agencies Freddie Mac and Fannie Mae.
    What caused the problem, Sibbald said, was the use of securitization. This involved selling of mortgage to a consolidator, who in turn sells it to an investment banker who then issues a bond. At each step each party collects a fee but does not assume any of the financial risk.
    Eventually the federal government had to step in to prevent the collapse of these largest banks, to prevent the take over by foreign countries which had invested in these securities. Sibbald said there was a danger of a worldwide financial collapse under the worst set of circumstances.
    Most people know that banks like SunTrust and Synovus received federal funds, but what is not known is that the federal government also guaranteed their issuance of debt in the marketplace. This ensured money would flow freely again.
    Although the banks paid for their upfront loans, there is some $340 billion of federally guaranteed debt in the market. Banks took this money at five or six percent less interest than they would have had to pay had their debt not been guaranteed.
    They then invested the money and made huge profits.
    From a public relations standpoint, these largest banks, Sibbald said, are “tone deaf and (have turned) a blind eye to what their actions should have been” with a rate of ten percent unemployment.
    The proposed tax is to penalize the use of these funds in a socially-irresponsbile fashion, in a way that looks awfully similar to their behavior which helped precipitate this crisis to begin with. Sibbald said if nothing else, these bonuses are morally reprehensible.
    Community banks are in a totally different situation. First of all, the local community banks in Bulloch County will not be affected by this tax. Community banks are mostly privately-owned and don't qualify. The federal government did lend 23 banks in Georgia some sort of assistance to the tune of $3 billion dollars.
    2010 will be the last full year where local banks have to deal with commercial real-estate loans on their balance sheets. Most of these banks have committed several billions of dollars to help grow the community, and unfortunately many of these properties have lost significant values.
    Therefore, the banks loan portfolios are not looking very solid at the moment. Sibbald said that this situation hasn't arisen since the end of World War II. Regulators have been reviewing these banks, and some have been put under administrative controls to help get them onto more solid footing.
    The next guest was author William Rawlings Jr., who will speak at Ogeechee Technical College today at 9:30 a.m. and then at Bulloch Academy later in the day. He is the author of the book, “The Mile High Club,” which is his fifth novel, and a murder mystery.
    The main character, Matt Rutherford is a small-town slacker in a small Georgia town. The book revolves around the investigation of the mysterious death of his ex-girlfriend. Rawlings was raised in Sandersville. He attended Emory, Tulane, and then Johns Hopkins University studying medicine.
    Rawlings said his lecture will address how people aren't reading the way they were before, and how many in the 35 and under age group by and large don't read at all. In addition, he said, many titles are now available in some form of electronic media, and there are numerous lawsuits over ownership rights in this electronic day and age.
    Nathan Deal, U.S. congressman and a gubernatorial candidate, will be on Tuesday's “Mornings unPHILtered” show.
        “Mornings unPHILtered” airs live Monday through Friday from 9 a.m. to 10 a.m. on and also simulcast on WWNS-AM 1240 on the radio. You also can listen anytime at on


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