Willy Sutton Never Had it so Good....

It is said that Willy Sutton, the famous depression era bankrobber, was once asked why he robbed banks. His response was reportedly, "because that's where the money is."

Looking a little farther north from Hong Kong, I see that there are tens-of-thousands Willy Suttons operating in China. Some are unfortunate as this story narrates:

Lord knows there are enough of them, from crooked bank chiefs to million-dollar heists by input clerks. But way out front is Xiao Hongbo, who led an anonymous life as a lowly deputy branch manager in Sichuan before his scam was revealed. His reward for embezzling HK$4 million [US$ 500,000] to support eight mistresses? A bullet to the head.

[Just a little note here, according to Amnesty International, China executes more people than the rest of the world combined. But the exact number of executions is unknown since it is regarded as a state secret]

Beijing disparages such scoundrels as the "wayward few" but in truth most who have been caught with their fingers in the till have been either unlucky or victims of political expediency.

The 'wayward few?' Who are the mandarins in Beijing trying to fool? This poor fellow was executed for crimes that many local and national officials are also guilty of. Maybe they were angry since he stole so much money that it raised the profile of the thievery that they themselves were doing. Therefore, like the Queen of Hearts in Alice in Wonderland...."Off with their heads!"

Willy Sutton's bank robberies were usually spectacular affairs.

Sutton was an accomplished bank robber; it was usual for him to carry either a gun, a pistol or a Thompson submachine gun. "You can't rob a bank on charm and personality," he once observed, but had a professional's pride in having never used it. He stole from the rich and kept it, though public opinion later turned him into a perverse type of a Robin Hood figure.

But robberies in China are not spectacular but mundane affairs and are ones that are slowly draining the life blood out of the economy from the pockets of the working people

banks virtually single-handedly control and disburse a US$1.5 trillion (HK$11.7 trillion) pool of savings, stored up by 1.3 billion peasants, workers, millionaires and those aspiring to middle-class status.

into the pockets of the chosen few. The spectacular growth that has taken place in China over the past decade has masked the graft problem from the economy but when the inevitable slowdown does occur, this 'tax' on China will weigh down prosperity there.

Since the four largest banks are too big to fail in my opinion, a recapitalization of these institutions takes the form of a taxpayer funded bailout.

the bailouts are sorely needed. The Big Four, which account for almost 70 percent of total PRC bank assets, are technically insolvent. Their bad debts are estimated at 25 percent of total loans by the government, but private sector estimates put them at double that amount. Even under some optimistic private-sector estimates of a bad-asset recovery rate of 25 percent, a reduction of the bad-loan ratio to 12 percent within a few years, and a low capital-asset ratio of 3 percent (well below the Bank of International Settlements guideline of 8 percent, because state banks are underwritten by Beijing), the cost of bailing out the Big Four would exceed ¥2 trillion ($241.5 billion), or almost 25 percent of China's 2003 GDP.

Losses at banks in China through lax lending standards and through direct graft have led to this sorry situation and changes in management of these institutions will be ineffective in my opinion.

Bank directors in China, in theory employed to oversee and rein in managerial excesses are, as one foreign official put it, ``a complete joke. They are there to collect their pensions and have a nice lunch. Maybe once a year they have a trip to Laoshan (a famous mainland health resort) organized for them. They make no decisions, they have no power. A wax dummy would have more effect.''

Until the corruption by Chinese Communist Party officials stop, why should anyone else not grab what they can until the party stops?