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5 Banksgiving Day Turkeys

The Motley Fool is celebrating the Banksgiving season with this tongue-in-cheek series skewering the worst banking offenses. Check it all out by clicking here.

With Thanksgiving upon us, it's hard not to have visions of delectable turkey, stuffing, and mashed potatoes dancing through our heads. But when it comes to Banksgiving Day, we've got turkeys of an entirely different feather on our minds.

There have been a lot of folks involved in bringing us to the unenviable economic position that we're in. I'm going to lay out the case for five of them below, then you can vote for the true Banksgiving Day turkey in the poll that follows.

Ben Bernanke
To start with, as chairman of the Federal Reserve, Bernanke was a key player in the bailout of the U.S. financial system. That bailout may have saved the system for the time being, but it also seems to have fanned the flames of risky behavior among finance companies.

And speaking of risky behavior, the Federal Reserve has kept its key lending rate near zero, which is allowing newly dubbed "banks" like Goldman Sachs (NYSE: GS  ) and Morgan Stanley (NYSE: MS  ) access to free funds for what are essentially massive trading operations.

And it's still unclear exactly what part Bernanke played in the jamming together of Merrill Lynch and Bank of America (NYSE: BAC  ) . Did he take a page out of the Gestapo's book to force Ken Lewis to move ahead? We may never know for sure.

Lloyd Blankfein
Financial crisis? Looking at the bottom line, it seemed like Goldman Sachs was -- and still is -- prospering even as its competitors were heading for the great trading gig in the sky. And so it would seem that we'd have little room to criticize the company's CEO.

But looks can be deceiving. Recently, TARP's inspector general suggested that Goldman was full of something other than honesty when it said that a failure of AIG (NYSE: AIG  ) wouldn't affect its bottom line. Meanwhile, it has been shown that the company's slogan -- "our client's interest always comes first" -- may be a bunch of hot air, as the company freely bet against the mortgage market even as it sold mortgage-backed products to its clients.

Today, though Blankfein suggests that his company is doing "God's work," it has become the frightening poster child for risky operations and banking excesses.

Average Joe
At the other end of the spectrum from Goldman Sachs, we've got good ol' Average Joe. Whether he was running up his credit cards with reckless abandon or leveraging himself to the eyeballs trying to house-flip his way to kingly riches, Joe played a big hand in bringing us to the brink of crisis.

There are a lot of reasons for Joe to be more sober today, including an unemployment rate of more than 10%, a 401(k) with a big hole in it, and a housing market in tatters. But has Joe really learned from all of this? Will he be able to resist the next get-rich-quick craze that sparks up? Or will he greet the other side of the recession with a "Whew! Glad that's over!" and whip the Visa (NYSE: V  ) card right back out of its holster?

Robert Benmosche
When it comes to the financial bailout, AIG was the mess to end all messes. Nearly $70 billion of bailout money has gone to AIG at this point, outpacing Fannie Mae (NYSE: FNM  ) , Freddie Mac, and General Motors by a good margin.

While Benmosche wasn't responsible for AIG's downfall, he hasn't exactly dealt with the company's 80% owner (Uncle Sam) with grace. Early in his tenure at AIG, he drew a good deal of attention to himself by saying that New York Attorney General Andrew Cuomo "doesn't deserve to be in government" and referring to the folks in Washington as "crazies."

More recently, Benmosche threw a temper tantrum over pay restrictions from Obama's pay czar and threatened to jump ship. While he quickly did a 180 and claimed he's committed to staying at AIG, there seems to be a pretty good argument for the turkey title here.

Vikram Pandit
Despite needing $45 billion of bailout money and billions more in toxic loan backstops, Citigroup (NYSE: C  ) looks great today. That is, if you look at it the right way. CEO Vikram Pandit and the rest of the management team have split the company up, cordoning off the nastiest parts of the bank into what it calls "Citi Holdings," while putting everything that appears functional into "Citicorp."

Pandit now faces the daunting task of managing the unraveling of Citi Holdings while making sure Citicorp is on solid footing, all while dealing with the shifting demands of the government -- which, by the way, owns a third of the bank. When I think about the fact that Pandit is doing all of this for a 2009 salary of $1, I can't help but picture poultry.

So what do you think? Who is the biggest Banksgiving Day turkey? Place your vote below, then let everyone know why by visiting the comments section.

Ready for seconds? Check out the rest of our Banksgiving content by clicking here!

Fool contributor Matt Koppenheffer owns shares of Bank of America, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants.

Read/Post Comments (5) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 25, 2009, at 4:45 PM, stockmajor wrote:

    I have no vote. I don't think that any of the above are "turkeys". I hold respect for all of them.

  • Report this Comment On November 25, 2009, at 5:15 PM, sgerse wrote:

    I vote for MF's Million Dollar Portfolio as my biggest turkey of the past year.

  • Report this Comment On November 25, 2009, at 5:44 PM, TARPedBanks wrote:

    How could you miss:

    "I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They're not in danger of going under."

    - Congressman Barney Frank, House Financial Services Committee Chairman

  • Report this Comment On November 27, 2009, at 11:32 AM, Threedollarbill wrote:

    I think there is enough turkey and dressing to spread around, and the above share a part, but I don't think the Average Joe is respondsible for the current mess. He may have added to it a small fraction, but certainly wasn't as respondsible as Congress or CEOs/directors et al. that don't do their job or are not transparent or just crooked or don't know their job--oddly, they fire the Average Joe for such performance.

    I don't understand why Obama/Congress doesn't do something to prevent large companies like AIG and others into smaller units, so that if they fail in the future, they CAN go under, rather than a tax bailout. I'm no economist, perhaps there's a reason (lobbyist?).

  • Report this Comment On November 29, 2009, at 10:49 AM, georcole wrote:


    I think that the collective stupidity of Average Joe was far worse than any of those other people.I am not saying that the others were brilliant by any means, but it takes two to write a contract, and Average Joe should've been paying more attention to what they were signing. Every house they bought, credit card purchase they made, etc. was a contract they signed. If you want to help the big names on the list to hurt us less, pay off all your debts and only use cash. If nobody borrowed money, except for things like a house which would take too long to save up the total purchase price, the banks wouldn't be able to be so stupid. If they then did stupid stuff, we, Average Joe wouldn't be so affected. Since Average Joe is deeply in debt, he contibuted mightily to the problem. People need to take responsibility for their own actions.

    As to breaking up the large banks, that is a very popular complaint and is not without warrant. I feel that some sort of "restructuring" should be done, but since I do not feel that I know enough on the topic, I will not get any more specific than that.

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