There are pros and cons to raising money from family and friends, but for your first round (especially in your first company), I think that the pros outweigh the cons (if your family can afford it), especially if you follow some common sense rules so that you can still go to your family reunions.  It seems to me that many in the startup world look down on companies that are funded by family and friends.  I think that’s a mistake.  I’m writing this post because I wanted to share my experience raising money from family and friends so that others can see it is a viable option.

When it came time to raise money with my first company, I had the choice of whether to try to raise money via angel investors or from family and friends.  After doing some research, I decided that family and friends was the route I wanted to take.  We were able to raise six figures fairly quickly from a good group of investors, which helped us stay focused on running our business instead of raising money.  Whereas many angels and angel groups would have wanted to get to know us for 3-6+ months, we were able to close our round in about 6 weeks.

How were we able to raise money quickly?  How do you actually go about approaching family and friends for money?  What if your family doesn’t have much money?  Why should you do it and why are they better than angels/vcs?

We were able to raise money quickly because we wrote a detailed business plan, did our research and found people who were willing to believe in us.  At first, we wrote a 2 page executive summary of our business that included how much money we were trying to raise, our valuation, how much 1% of the company would cost, why we needed the money and what we planned to do with it.  This exercise helped us really figure out how to tell our family and friends what we were doing.  It is especially important to avoid the curse of knowledge when writing your business plan, but its even more important when the investors are your family and friends.  Next, we developed our full business plan, making sure to be as clear as possible.  We made it clear that we were asking for investment in exchange for ownership in the company, rather than loans.

Next, we talked to our lawyer about how to raise money.  He helped us write up an offering summary, amended our operating agreement to allow us to take on investors and filled out all of the necessary forms for the government.  He also helped us add to our business plan to make it more understandable to non-tech people.  Our professionals that were working with us (lawyers, accountant, professors) were able to point us in the right direction of people with money.  This is even more important if your family does not have the resources to invest in your startup.

All of our investors were accredited investors, which means that they have net worth of at least $1m or a yearly salary of over $300k.  Accredited investors helped us in two ways.  First, since they were high net worth individuals, they could afford to take the risk of losing their money.  While we were confident we were going to be successful, we still knew we could fail and lose our investors’ money.  Second, having all accredited investors meant less paperwork for us and our legal team.  Having accredited investors helped us avoid the mistake that some people make: raising money from people who cannot afford to lose it.  This is a huge mistake, even if you think you are going to be successful.  It is the quickest and surest way to give yourself way more stress than you need and get yourself taken off their holiday card list.

We were up front with our potential investors.  While we were confident we were going to be successful, we told the investors that the worst case scenario involved them losing 100% of their investment.  We told them that they might not be seeing a return on their investment for 3+ years and tried to think up scenarios that would cause these bad outcomes to happen.  It was clear that our investors were more comfortable with us once we showed them that we had done our homework and were not simply selling them snake oil.  Don’t make promises you can’t keep just to get someone to open their checkbook.  They will not be happy with you when you are not fulfilling your promises a few months down the road.

Make sure you don’t set your valuation too high.  While you are trying to get a good deal for your business, you want to make sure that your investors are getting a good deal as well.  After all, they are your family and friends.  Another key is to not take too much money from one single investor.  In my first company, our biggest chunk from one single investor was $70,000.  While we ultimately made him money and he could have afforded to lose his investment, it would have been more comfortable for everyone involved to have gotten a little less from one single source.  It’s also not the end of the world if one of your potential investors turns you down.  Don’t press for money from someone who is uncertain because they will be the first to complain when things are not going as well as you had hoped.

Many angel investors will tell you that their investment comes with connections that you will not get from your family and friends.  While there is some truth to this statement, I think that it is overrated.  Your family and friends will get you money more quickly and be more willing to take you at your word.  A family and friends round will also set you up nicely for a second round from an angel or VC if it is necessary down the road.  If you can show that your family and friends believe in you, it gives you credibility.  If I see a startup without some amount of family and friends money, I wonder “wow, this guy couldn’t even get his Mom to believe in him, so why should I?”   It brings up questions in my mind, but is not a deal breaker.

I have had good experiences raising money from my family and friends and I think more people could benefit from thinking about going this route, rather than just thinking about angels/vcs.  Check out my list of Dos and Don’ts and Pros and Cons of raising money from family and friends below:

Do

• Write a simple executive summary and longer business plan
• Be upfront and honest about potential losses
• Be honest about the time horizon for payoff
• Make sure your investors can afford to lose 100% of their investment without any hard feelings
• Seek out accredited investors from your professionals

Don’t

• Oversell yourself, your company or the opportunity
• Underestimate risk
• Take too much money from a single source
• Set your valuation too high
• Get mad if they turn you down

Pros

• Raise money more quickly
• Better valuation and less stress than angels/vcs
• Potentially make your family/friends money
• Easier to get money than from angel groups for first time founder

Cons

• Can be awkward if you fail
• Doing business with family/friends can be nerve wracking
• No network

What do you think?  Have you had experience raising money from family and friends?  What did I miss?

                          

SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance – Steven Levitt and Steven Dubner.  SuperFreakonomics is a great follow up to the Stevens’ first effort, Freakonomics.  If you enjoyed Freakonomics, you will love SuperFreakonomics.  They tackle all sorts of problems with data, which you hardly ever see in most other walks of life.  Ever since I read Freakonomics, I’ve been fascinated with the way they look at problems and issues and I’ve been reading the Freakonomics blog in the New York Times daily.  In SuperFreakonomics, Levitt and Dubner tackle emergency room safety, the efficacy of child car seats, prostitution and most controversially, global warming.  They also present some amazing history about this history of vaccines, car seats and health care in their trademarked, data driven, but still humorous style.

I won’t ruin any more of the book for you, but there has been a huge outcry from the global warming establishment about SuperFreakonomics’ take on global warming.  Dubner and Levitt say that global warming has become a “new relgion complete with dogma and good and evil.”  They have been proven right because they were immediately criticized by the global warming establishment when the book was released.  I liked the way they tried to bring reason and science back to the global warming debate and move it away from political, religious debates that it has become, but was suprised that they advocated so hard for geo-engineering.

Levitt and Dubner (and I) love to point out that most of our problems come from unintended consequences of well meaning policy decision.  Many times, these unintended consequences could have been predicted ahead of time, but weren’t looked at for a variety of reasons.  They advocate geo-engineering the planet, but don’t take any time to talk about the potential unintended consequences.  There may not be many (but I doubt it), but I was expecting them to address the issue at least a little bit.  That said, SuperFreakonomics is entertaining, informative and well worth reading.

Absurdistan – Gary Shteyngart.  Not many books can make me laugh out loud.  I was on a flight to NYC, reading Absurdistan and trying not to laugh out loud and failed fairly miserably.  Absurdistan is the fictional story about a young, Jewish, fat, son of an oligarch, Russian immigrant to New York City and his trials and tribulations going between Russia, the US and Absurdistan, a fictional country located near Iran.  I read it on the advice of of someone who likes many of the same books I’ve read and wasn’t disappointed.

Shtyngart’s writing is really fun.  He mixes in hip hop references with geopolitical feelings musings that would only occur to a Russian who moved to the US.  One of my favorite parts is about how people in the 3rd world applaud whenever a pilot safely lands a plan “as if it were some kind of miracle”, whereas in the West, people complain about being late and rush to get off.  The section on a Holocaust Museum in Absurdistan is brilliant writing and worth reading on its own.  The books is a scathing critique of just about everything from Russian politics, American foreign policy, fat people and corporations.  While a little slow in places, each chapter has at least a gem worth finding.  I recommend reading this book if you like history, politics, different cultures and good writing.  As a bonus, after reading Absurdistan, Oscar Wao and The White Tiger, I now know how to say a certain part of the male anatomy in Russia, The Dominican Republic and India.

                          

Back in April, I questioned whether the US Dollar is America’s Achilles Heel.  Each day, I am more and more convinced that it is.  Back when leaders like Chavez were the only ones questioning dollar hegemony, most of the rest of the would could safely ignore his statements as the ramblings of a dictator blinded by anti-Americanism.  Most people did.  When developing countries complained about the devaluation of the dollar, people could brush the complaints off as jealousy.  When Russia started rumbling about moving away from the US dollar, some people started to take notice, but were not concerned, as they viewed Russian statements as posturing to reassert itself on the global stage.

Finally, when China’s central bank head made statements that he was not happy with the huge increase of the money supply, people began to take notice, but were still not convinced that there was a problem.  Next, China signed currency swaps with countries like Argentina, Brazil, Thailand and others that allowed businesses to do deals in Yuan, rather than relying on the US dollar.  This was a clear shot across the bow at US dollar hegemony.  China has also stopped buying longer term US securities, prefering short term notes that they can roll over more quickly, while stockpiling raw materials, rare earth metals and precious metals.

Yesterday, the world had to take notice when the Middle East oil states held secret meetings with China, Russia, Brazil, France, Japan and others to discuss selling oil against a basket of currencies and gold, rather than US dollars.  The US was left on the sidelines.  Pretty much everyone is denying that these meetings took place, but where there is smoke, there is fire.  It is the logical progression for the rest of the world.

They cannot attack the US militarily and win, so they have to attack the US’s biggest asset and its biggest weakness: the reserve status of the dollar.   It is America’s soft underbelly.  I don’t believe that these countries are moving away from the dollar because they do not like the US or want to see the US fail.  They are moving away from the dollar because they are scared.  They are scared that the US will continue to print huge amounts of money to inflate away its massive $90T+ unfunded liabilities (yes, T=trillion) and national debt, making their dollar denominated securities go down in value.  I have seen people say that America’s unfunded liabilities between the debt, medicare and social security is over $120T, or about 10 years of GDP.  You can see their fear in skyrocketing gold, which hit a record high of $1,045 per ounce today.  The oil producing nations are tired of pumping their tangible, natural resources in exchange for dollars that are not backed by anything.  They are simply looking out for themselves.

Taken together, these country’s actions are a frontal assault.  They are saying “enough is enough.”  They do not want to accept our paper, which is backed by nothing, in exchange for their manufactured goods or natural resources.   Unless the US takes decisive action to stop the erosion of the dollar, I fear that the US will lose its biggest competitive advantage: the reserve status of the dollar.  If this happens, our standard of living is fated to go down.

                          

To borrow from Bill Clinton’s first presidential campaign, Its the Leverage, Stupid!  Consumers borrowed huge amounts of money to live lavish lifestyles or to just keep up with the monthly bills.  The consumer savings rate peaked in the 1970s around 15%, but declined consistantly during the 80s and 90s.  It even went negative in 2007, right before the financial crisis.  This meant that consumers were, on average, spending more than they made.  Consumers resorted to using their homes as ATMs, borrowing vast amounts of money to keep the party going.  Clearly it was not sustainable.

Banks and non-bank banks stoked the flames and let the party rage on.  Banks offered mortgages to people who shouldn’t have had them, manufactured huge bets on CDOs and made billions moving money around.  After the government removed many of the leverage regulations, banks continued to go wild.  Other companies and hedge funds joined the fray, borrowing billions of dollars  for leveraged buyouts that left balance sheets riddled with debt.

When the economy started to slow down and the stock market fell out of bed, companies and consumers who were strapped with debt and little savings faced the brunt of the downturn.  Companies began to deleverage, cuting costs and jobs to be able to stay in business.  US consumers, scared by huge declines in net worth stemming from the stock market collapse and the real estate downturn, started to save, bringing the savings rate up to around 7%.  

The US government, which had started to run larger deficits during the Bush years, stepped in to fill the void.  The Bush administration pushed the first bailouts through and the Obama administration passed even more bailouts and a huge stimulus package.  The $740bn+ stimulus package pushed much of the spending two to three years down the road, funding tons of pork-laden projects that are probably unnecessary and have nothing to do with stimulus.  These programs saddle the government with even more debt at a time when the rest of the world is concerned about the value of the dollar.  The government should have advocated for $200-300b of immediate spending, or better yet, returned money to the people so that they could pay down their own debts.  Instead, we have record amounts of debt and even more leverage, not even taking into consideration the unfunded liabilities of Medicare and Social Security that will require even more leverage.

Now, as the stock market and the economy as a whole are showing signs of getting worse, there are calls for a second stimulus.  I fear that Congress will pass another massive bill, but most of the money won’t be spent fast enough and there will be even more waste.  I’m worried that many of the projects will be useless and ineffective at turning the economy around.

The only way to fix the problem and get through the bear market is to deleverage.  We need to squeeze the leverage out of the system, stop the insanity and go back to more rational debt levels.  With another round of mortgage resets set to take place late this summer, we are likely to have many more foreclosures in the next year.  Instead of spending money on projects in the future, the government should have made it easy for mortgage holders to renegotiate their mortgages in exchange for the bank having the rights to some of the upside of the house when the market turns.  This type of solution removes debt (leverage) from the consumers and bad debt (leverage) from the financial institution and saves consumers money right away, with a lower mortgage payment.  The government will have to spend a little more money, but it would be rational, compared to the huge stimulus package and bail outs that we have seen so far.

The government should be helping (forcing) companies to convert debt to equity in institutions that have bad balance sheets.  Instead of bailing out investors and companies who made bad decisions, the government should be converting debt to equity to shore up balance sheets and make the companies deleverage.

I think we are on the verge of another downturn in the stock market and rising unemployment.  The press seems to think (or hope) that the worst is behind us.  Most people are turing bullish and many Americans have come back into the market.  I fear that we face a repeat of the stock market’s performance during the Great Depression, where there was a prolonged bear market rally and then a second crash that wiped out more market value than the initial crash.

China and the rest of the world are already starting to pick at the reserve status of the dollar.  If the US keeps leveraging and then decides to inflate away the problem, the US dollar may lose its reserve status.  The government must make sure they do not make the crisis worse than it is.  Its not a Republican or Democrat issue. Its an American issue.  I am not confident that the government will make the right decisions.  With GoldmanSachs alums holding many key government jobs, I fear that they will do what they know best: continue to leverage and try to pick up the pieces later.  If you want to go farther, read Matt Taibi’s blog and latest piece in Rolling Stone.

I hope I am wrong, but I don’t see the US coming out of this without lots more pain.  What do you think?

                          

The documentary has interviews with the journalist who first started to question Enron’s meteoric rise, former employees and executives and plenty of video from the companies many meetings and pep talks.  It is really well done and very interesting, notching an Academy Award Nomination in 2006.  If you are at all interested in the Enron story, or corporate fraud in general, check out this documentary.

The most interesting part of the documentary centered on Enron’s role in the blackouts that plagued California in winter 2001 and summer 2002.  I was always skeptical about claims of meddling and corporate scandal in the blackouts, but the documentary painted a very explicit case that showed overt meddling that caused up to $30b of losses in the California economy, the recall and end to the political career of Gray Davis and ultimately the election of The Governator to California’s highest office.

The documentary showed audio of Enron traders telling power plants to shut down, which caused rolling blackouts.  The traders also were taped diverting power from California power plants to other areas to try to drive up the price.  It worked.  Power was $40 per unit before they started their shenanigans and spiked to $1000 per unit at their peak and Enron made billions.  This part of the business was pretty much the only successful part, but was clearly unethical, if not illegal.

The rolling blackouts caused huge economic damage to California’s economy, ended a political career, caused traffic accidents and many other consequences so that Enron could make money.  Add this business practice to their cooking the books, it was pretty clear that Enron was very corrupt.  It was also interesting to see how complicit investment banks, ratings agencies, the Bush Administration, accountants and journalists were in allowing Enron to get away with fraud for so long.

There are many parallels to the current financial crisis in that so many people were blinded by greed, derelicting their moral and fiduciary duties.  They turned a blind eye to poor business practices and extreme risk taking.  Its interesting to see history repeat itself so quickly.  Check out the documentary.  Its playing for free on Mark Cuban’s HDnet channel for the next few weeks.

                          

“…the US government has a technology, called a printing press (or, today, it’s electronic equivalent) that allows it to produce as many US dollars as it wishes at essentially no cost. By increasing the number of US dollars in circulation, or even by credibly threatening to do so, the US government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”  Ben Bernanke, 2002

Throughout history, the world’s economic powers have had to decide how they should be paid for their goods and services.  At first, gold, silver and precious stones were stores of value that could be exchanged for goods and services.  As currencies were developed and became widely accepted, countries had to decide which currency or currencies they would accept for their hard work.  The most widely accepted currency is usually known as the reserve currency.  Countries hold these reserves as a store of value and as national savings.

Until the early 1900s, there was no official reserve currency, but some currencies acted in a de facto reserve status.  Starting in the 1700s, the de facto reserve currency was a combination of the French Franc, the British Pound and the Dutch Gilder.  Later, in the 1800s, it was a combination of the British Pound, US Dollar and the Russian Ruble.

By the 1900s, many currencies were backed by gold.  This means that a person could exchange paper money for an exact amount of gold.  After World War II, the global powers signed the Bretton Woods Agreement, which made the US dollar the central reserve currency.  It allowed countries to exchange their currencies for dollars or gold at fixed exchange rates.  This system worked well while the US had a much stronger economy compared to other countries, but as Japan, Europe and Asia began to recover after WWII, the Bretton Woods Agreement began to to show signs of strain.  The US felt it was paying more than its fair share.

In the 197s0s, the Bretton Woods Agreement broke down as other countries rose to prominence and began demanding gold from the US in exchange for their US dollars that they had accumulated through trade.  After Nixon closed the gold window and permanently detached the US dollar from gold, the United States was in the unique position of being able to print the reserve currency, but not have it convertible into anything tangible.  The US could print money out of thin air and use it to buy cars from Japan.

Since the US can issue the world reserve currency, it receives huge economic benefits in the short term.  The US can simply print as much currency as it wants, as long as the rest of the world is willing to accept dollars in exchange for goods or services.  This process allows the US to live beyond its means for as long as foreign countries are willing to continue to accept dollars.  Countries, like China, accumulate US dollars and loan them back to us at low interest rates.

This process has been going on since the 1970s, but has accelerated since globalization has taken hold.  The United States lost its manufacturing base to China, India and Asia and has been paying for goods and services through increased leverage and increased running of the “printing press.”  Printing press is a misnomer, as most of the new money that is created is just created out of thin air and deposited by the Federal Reserve into the world economy via banking reserves.

As the US continues to go into more debt, we are forced to either raise taxes or print more money to pay off our debt.  Since raising taxes is politically unfeasible and cutting spending is even harder, the US will most likely pay off the debt by printing even greater quantities of dollars.  China now holds over 1.95 Trillion dollars in its foreign reserves, most of it denominated in US dollars.  They are worried that the US will simply print itself out of debt, rendering its hard earned savings worthless.

We saw how extreme debt and leverage destroyed the big investment banks.  I am worried that the US is in a similar situation.  The national debt is currently $11.2 trillion dollars, or $36,000 per man, woman and child in America.  We pay $3.6 billion dollars per day in interest.  It is compounding at its worst.

If China decides that it no longer wants to continue purchasing US paper, the dollar will decline precipitously and interest rates will rise.  There even could be a run on the dollar.  This would be disastrous for the United States.

China and Russia have already started to push for a new global reserve currency, either backed by gold or backed by a basket of currencies at the United Nations or the World Bank.  China’s equivelant to Ben Bernanke recently posted an essay advocating a new reserve currency.  I fear that the US dollar will lose its reserve status, as the rest of the world has grown tired of watching America print prosperity.  Its not logical that these countries will continue to allow this to happen.  They know that they cannot defeat US hegemony in a military war, so they realize that if they wish to dislodge the US as the hegemonic power, they must use a different strategy.  I believe it will be attacking the US where it is weakest: the reserve status of the US dollar.  It is our Achilles Heel.

There really is only one conclusion to this story: the standard of living in the United States is fated to fall.  Nobody knows how far it may fall, but there is no way that the last twenty years of prosperity, brought to you by leverage and the printing press, is sustainable.  At some point, China and the rest of the world will say enough is enough and will demand real, tangible payment for their hard work.  This will be disastrous for the average US citizen and for US power in general.

                          

He recently wrote an article about Iceland’s meteoric rise to prominence in the global world of finance and later its amazing crash when the bubble burst.  His article should be required reading for anyone interested in finance or the global economy.

Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance—resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown.

I wanted to focus on an aspect of the article that I’ve written about in my post entitled “The Business School Way of Life.”  Lewis mentions that most, if not all, of the people who were involved in Iceland’s boom and bust had degrees from prestigious American and British business schools.  They learned the Business School Way of Life in America and brought it home to Iceland.  Everyone caught the fever and it has wrecked a once stable country.  Now, the currency is worthless and debt is 850% of GDP, higher than even the highly debt burdened USA’s 350%.

As an example of a person who fell into the Business School Way of Life is Stephan Alfsson. Lewis spends some time interviewing  Alfsson, a fishing boat captain turned financier, in his article.  Here’s Alfsson’s story:

Lean and hungry-looking, wearing genuine rather than designer stubble, Alfsson still looks more like a trawler captain than a financier. He went to sea at 16, and, in the off-season, to school to study fishing. He was made captain of an Icelandic fishing trawler at the shockingly young age of 23 and was regarded, I learned from other men, as something of a fishing prodigy—which is to say he had a gift for catching his quota of cod and haddock in the least amount of time. And yet, in January 2005, at 30, he up and quit fishing to join the currency-trading department of Landsbanki. He speculated in the financial markets for nearly two years, until the great bloodbath of October 2008, when he was sacked, along with every other Icelander who called himself a “trader.

So why would an expert fisherman, who began training to go to sea at age 16, promptly give up his job to turn to finance?  Why did he think that he could work in banks and be a “trader” when he had no experience and no training?  Similarly, who do students who leave business schools believe that they can accurately project risk?  Lewis tried to get Alfsson to answer:

“You spent seven years learning every little nuance of the fishing trade before you were granted the gift of learning from this great captain?” I ask.

“Yes.”

“And even then you had to sit at the feet of this great master for many months before you felt as if you knew what you were doing?”

“Yes.”

“Then why did you think you could become a banker and speculate in financial markets, without a day of training?”

Alfsson does not have an answer and Lewis lets him off the hook, but I think that it was pure greed.  Alfsson and people like him were willing to try to get rich quick.  They saw everyone around them getting rich and decided that they wanted in on the action.  In Alfsson’s case, he saw people younger than him returning from American business schools and starting banks, seemingly making fortunes overnight.  The contrast between the hard work of a fisherman and the paper shuffling that was the Icelandic banking system cannot be any more stark, yet nobody wanted to raise a concern.  As Lewis puts it,

 At the very least, in a place where everyone knows everyone else, or his sister, you might have thought that the moment Stefan Alfsson walked into Landsbanki 10 people would have said, “Stefan, you’re a fisherman!” But they didn’t. To a shocking degree, they still don’t.

We are experiencing this same phenomenon in the US.  Why didn’t anyone try to stop the hedge funds, banks and private equity firms by saying “Hey, you just graduated from college, what do you know about CDOs and assessing risk?”  Why do many people who work in these firms still believe that they can correctly model future risk?  Why do business school students still go into finance without someone asking them questions like this?

                          

Like many healthy banks, Citizens late last year figured it was in for a tough couple of years with the national recession and the continued turmoil in financial services, which anchors the regional economy. So it applied and won $20.5 million in bailout funds from the Treasury Department on the usual terms requiring a 5 percent annual dividend payment to the government. A few weeks ago, while reading a newspaper article, Price came up with an ingenious plan for how to use it.

The article was about the reluctance of people to buy a house in the current market, and what kinds of incentives had been used successfully by builders and bankers to get them to close a deal. Two stood out: lower rates and the waiving of closing costs. And that got Price to thinking: What if Citizens were to use its federal bailout money to offer below-market mortgage rates with no closing costs to consumers who would buy a house, or a house lot, from builders and developers who had borrowed money from Citizens?

Price asked some of his loan officers to check with the builders and developers, who not surprisingly were excited enough about the project to be willing to chip in some money to help cover a portion of the forgone closing costs. So last week, Citizens launched its marketing campaign for the $20.5 million program, in collaboration with its builder-developer customers, offering 30-year loans with an initial teaser rate of 3.5 percent for the first two years, rising to a fixed 5.5 percent rate (the current market rate) for the balance of the loan.

Its great to see smaller banks succeeding while the big ones are failing.  Its unfortunate that an executive like Price who makes under $500,000 is not rewarded more for his success.  I would love to see someone with his talents have the ability to rise up in the banking industry during the current upheaval.  Instead, by bailing out the big banks, the same execs who got us into this mess continue to run their companies, huge salaries and all.  It’s crazy to me.  I understand that rationale behind the bailouts, but one would think at a bare minimum, the money could have been used in more interesting and worthwhile ways.

So here’s a question the House Financial Services Committee might put to the Titans of Finance: How is it that Kim Price, a community banker with an undergraduate degree from Appalachian State University, a tiny executive staff and a pay package that you would consider insulting, somehow managed to come up with a more creative use for his government bailout money than any of you?

Besides for the subtle dig at Appalachian State, which I would assume he would use for any banker who has a degree from any non-ivy, I would love to hear how these CEOs would respond.