Sunday, January 31, 2010

This is not progress: Move Your Politician’s Money?

 From The Baseline Scenario:

what happens when the location of political candidates'own money starts to matter. As early as this fall's primaries, expect to hear people ask politicians in debates and through various kinds of interactions: (1) where do you, personally, keep and borrow money, and (2), in all relevant cases, where did you put public money when it was up to you?

Make them put the money where their mouth is? Seems plausible for demand deposits, notes and revolvers; however, who you gonna call when you need to place $3B of callable notes in the muni mkt? Hopefully not your friendly neighborhood credit union. Investment Banking: somebody gotta do it.

Don't government agencies have to use the service provider of least-cost that meets all of the stated deliverables? What happens when Mayor Joe Corrupto decides to do all the town banking through the local Bank that his biggest campaign donor is heading?

Don't get me wrong, I think the idea makes a tiny bit of sense. But only if local banks can provide the same or better service for equal or lesser cost than TBTF banks. Any other way is just begging for favoritism and corruption.

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