What a Day

Yesterday minus 20 years I had my 60 minutes of fame: I received my doctorate.

Thnx Roger, Guy, Jaap, Frans, and a few others for granting me my final university diploma. One question posed at this exam (by Guy) will always be on my mind. He asked: 'all the attention for performance measurement, does that not evoke massive hysteria among finance professionals to do better (= to be more greedy) than their competitors, and does that not lead to a financial community that is not servicing money transactions only, but tries to live luxuriously on the proceeds of their risky ventures?' (In short they receive bonuses and do not care about risk).

Uhhmmm, what Could I Say in response. Something like: I do not believe finance people are That greedy, but if they are, they share a common goal: be/act/trade efficiently.... 20 years later I know better. Indeed finance professionals as well as professors (the first 7 letters of both words are the same, but please do not let yourselves be confused, they both Think the same.

I got my doctorate, I had a party that same evening/night that (at the time) had all the characteristics of a marriage, with the exception of a bride... But I enjoyed it. Hope you did too.

Yesterday minus 0 years marked the end of the DSB (Dirk Scheringa Bank), a small bank that was presided over by its founder, Dirk Scheringa, who ruthlessly forced non-finance-educated people into contracts beyond their potential, capital wise that is. He sold his clients mortgages and demanded that these same clients bought capital insurance with provisions as high as 85% of the insured sum. He sold loans with the compulsary added extra of high penalty cost whenever the client would opt out and refinance elsewhere. In short, he sold financial products to financially illiterate people that believed in their saviour Dirk S who was a former assistant accountant and a policeman before becoming a self-made banker .

Today the DSB filed for bankruptcy, forced to do so by its regulators. These regulators (the dutch central bank and the 'Authority on Financial Markets' or AFM) showed to be incompetent during the last 5 years, yes FIVE years, by not acting against near criminal intent, against outlawed double sales (meaning: you cannot have ONE of our product UNLESS you also buy another), against practically everything a bank should NOT do. The dutch central bank's president is Nout Wellink, migraine victim as I am, who will step down from his position in one of the coming months, because of negligence shown in his decision making actions.

Pieter Lakeman is MY hero. Back in the 70s (former millennium) I had the pleasure of working with him on a number of cases (mostly power-related law suits on the effectiveness and strenghts of worker's counsel legitimacy regarding reorganisations as well as mergers and acquisitions). He (Pieter) is 67 now, I am his junior with only 60 to my name/age. Pieter is the financial Don Quijote that I always wanted to be. October 1st 2009 he participated in a TV news item on the DSB case and told DSB-clients to get their money out as soon as possible, which in fact induced a bank run that ultimately resulted in DSB's filing for bankruptcy. The bank run ran to about 600 million euros until yesterday early morning. After that the curators stepped in and froze every single transaction to or fro DSB.

Pieter and Arnoud Boot, a finance professor from Amsterdam appeared on THE dutch talk show, and Pieter easily won as Arnoud unmistakingly lost the debate. Arnoud, one of the OLD SCHOOL economists with no academic future whatsoever, babbled about generics, while Pieter had an easy job talking about specifics, finishing Arnoud as a non-informed amateur. Great job or should I say: GREAT performance.

All is well that ends well. An active DSB is more dangerous than a dead one.