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Politics and business
Apr. 8th, 2008 01:25 pmI see that Ingrid Matthäus-Maier has resigned as the head of KfW, the state-owned bank that backed IKB, the German bank that was the first manifestation of the subprime crisis (see EHAL, July 2007).
KfW owned more than a third of IKB and, as I mentioned at the time, its $3bn bail-out seemed remarkably large for a small bank -- possibly an indication of further troubles to come elsewhere. Well, that bit turned out true.
And so, Mrs Matthäus-Maier has gone.
Mrs Matthäus-Maier was a political appointment. In the 1990s she was a finance spokesman for the SPD. She was appointed to the KfW board in 1999 and became CEO in 2006.
KfW has so far pumped $11.3bn into IKB, under the current global principle of "No bank shall fail". Although it owned 38% of IKB before the crisis, it will own more than 90% soon enough, because the private sector knows better than to throw good money after bad. The public sector, unfortunately, doesn't worry about this so much, mainly because it's the public's money that is being spent rather than the money of the people who make the decision.
Political appointments to positions of financial responsibility in the private sector are invariably a prelude to disaster, because a political appointee just doesn't think along the right lines.
It's interesting that the instinctive response of a one-time public servant was to say "I'm sick". You see many departures from private companies when the CEO has royally fucked up, but you very rarely see them citing "ill health" as the cause of their departure. This is basically an admission of "the pressure's too much for me .. can I have a nice non-executive sinecure please .. that public sector wasn't so bad after all...".
There are a number of CEOs who are vastly over-rewarded, but the plus side of this is that, eventually, they get found out. The ones who get vast rewards and are still in place a decade later survive for a reason, and that reason is that they have made a damn sight more for their backers than they have made for themselves.
Then again, it would be a laugh to see Alistair Darling given a shot at trying to run British Airways for a year...
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KfW owned more than a third of IKB and, as I mentioned at the time, its $3bn bail-out seemed remarkably large for a small bank -- possibly an indication of further troubles to come elsewhere. Well, that bit turned out true.
And so, Mrs Matthäus-Maier has gone.
“The turmoil concerning . . . IKB and the ongoing discussion about me of the past months have led me to feel I no longer have the full health I require for the work,” she said.
Mrs Matthäus-Maier was a political appointment. In the 1990s she was a finance spokesman for the SPD. She was appointed to the KfW board in 1999 and became CEO in 2006.
KfW has so far pumped $11.3bn into IKB, under the current global principle of "No bank shall fail". Although it owned 38% of IKB before the crisis, it will own more than 90% soon enough, because the private sector knows better than to throw good money after bad. The public sector, unfortunately, doesn't worry about this so much, mainly because it's the public's money that is being spent rather than the money of the people who make the decision.
Political appointments to positions of financial responsibility in the private sector are invariably a prelude to disaster, because a political appointee just doesn't think along the right lines.
It's interesting that the instinctive response of a one-time public servant was to say "I'm sick". You see many departures from private companies when the CEO has royally fucked up, but you very rarely see them citing "ill health" as the cause of their departure. This is basically an admission of "the pressure's too much for me .. can I have a nice non-executive sinecure please .. that public sector wasn't so bad after all...".
There are a number of CEOs who are vastly over-rewarded, but the plus side of this is that, eventually, they get found out. The ones who get vast rewards and are still in place a decade later survive for a reason, and that reason is that they have made a damn sight more for their backers than they have made for themselves.
Then again, it would be a laugh to see Alistair Darling given a shot at trying to run British Airways for a year...
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