>CEOs, lies and tickertape
A colunn by Andrew Ross Sorkin in the New York Times examines whether financial CEOs can tell the truth about the state of their companies. He notes that Wachovia CEO Robert Steel told CNBC just two weeks ago that the bank had “a great future as an independent company.” Wachovia’s banking business was sold to Citigroup on Monday. Was Steel lying? Was Lehman CEO Richard Fuld lying about the prospects of that, now defunct, bank? Maybe yes, maybe no.
Clearly, financial CEOs are trying to reassure investors, who these days don’t need much to head for the door. Being negative, realistic or telling the “truth” could result in the proverbial run on the bank. Truthfully.
At the same time, maybe, just maybe conditions facing banks are moving so quickly that CEOs truly don’t know what the future of their institutions holds. The Wall Street Journal reports that Wachovia executives and directors bought $30 million of Wachovia stock this year. They, surely, didn’t foresee selling the bank for $1 per share. Steel himself bought $16 million of stock when he was appointed CEO. Similarly, insiders at AIG and WaMu also bought shares in their companies and, presumably, lost big.
See a related Hedge Lines entry on this topic.