...Led by Morons, Etc. Etc. (Chapter 48,478)

In its surge to make the world safe for assorted rogues, pirates and racketeers, the Federal Reserve Board advertently played the Henry Ford — “History is bunk” — card Monday night and invited the ultimate foxes into the tumbledown henhouse with the carp-loaded balance sheet.

The Federal Reserve, unleashing its latest attempt to inject more cash into the nation's ailing banks, loosened longstanding rules that had limited the ability of buyout firms and private investors to take big stakes in banks.

Rules, of course, put in place after rogues anciens used aforementioned banks as personal treasure troves at the expense of their customers and other stakeholders (starting to sound familiar?), a fact that Depression-era scholar Ben Bernanke appears to have conveniently forgotten.

So not only are More-or-less-gone Stanley (MS) and Goldman Sachs (GS) now nuzzling up to the FDIC-insured trough, they will be joined by such public-spirited citizens as Leon Black, Henry Kravis, J.C. Flowers, Steven Schwarzman and ol’ Three Heads himself, Cerberus’s Stephen Feingold, master of the no-need-for-a-bailout-here Chrysler and GMAC universes.

But K Street is on the job. According to Ed Yingling, chief executive of the American Bankers Association,

the banking industry will watch closely to make sure the new policies are strictly enforced to prevent “activist investors” from doing an end run around the Fed's scrutiny.

So that's all right then.

Not that any this came as an absolute stunner to any Goldman Sachs’ alums.

Funds Get Freer Hand in Buying Bank Stakes

by Peter Lattman and Damian Paletta

The Wall Street Journal Sep. 23 2008

Policy statement on equity investments in banks

Federal Reserve Board Sep. 22 2008

Earlier on NakedShorts:

A nation of idiots, led by morons (© Barry Ritholtz)

Sep. 23 2008