William Cowie

"For the past decade, Wal-Mart (WMT) and other nonfinancial firms have been rebuffed in their efforts to enter the banking business," NYU professor Larry White writes (.pdf). "And – no surprise – the regulators have been congratulated by incumbent banks, which don’t relish the prospect of competition from brandname retailers. I believe that preventing entry into banking by an otherwise successful company prepared to meet prudential standards is always a mistake. The error is particularly egregious in the case of Wal-Mart, because the giant retailer caters to moderate-income households – precisely the households poorly served by the banking establishment."

Banks should be banks. In particular, commercial banks should be that, and not investment banks.

What sets them apart is they are working with other people's deposits. That is not a trivial issue. Nothing in Wal-Mart's make-up suggests they're capable of doing that very well. Rather than adding to the field, regulators need to get hybrid banks out of the field. JP Morgan has no business being in commercial and investment banking. Neither does BAC. It's no coincidence that the risk friendly investment bankers screwed up their commercial banking operations, sticking us with the bill.

Citigroup reportedly asks the Treasury for permission to pay bonuses to many key employees.

Hey, Tim, thanks for all that money you. Now, can we give it to its rightful owners: us, the executives? You know, our payments for those nice country clubs, yachts and last year's vacation in Aruba are overdue. And those pesky Hamptons second mortgages just won't go away. And these days one has to pay one's taxes, as you now know.

Thank you very much. Your seat on this board, once you've completed your internship in D.C., is safe.

Rotterdam, Europe's largest port, is running out of space to store crude oil.

I wonder how much of this is those people who bought spot oil at $38 and sold futures for $45, just waiting to deliver and for that contango to undo itself...

Petroleum Inventories at 10:30. Consensus: Crude +1.8M barrels. Gasoline +0.2M. Distillate +1M.

Question: does this include the port of Rotterdam that's reportedly running out of oil storage capacity?
www.bloomberg.com/apps...

Next question: how much of this inventory is on hold for those contango driven purchases, waiting for delivery next January, for example?

Bank executives are being extraordinarily reticent in their willingness to talk about stress test results, but CNBC's David Faber says there is one underlying theme: tests appear to have been more stringent than they expected, and not fairly so, in banks' eyes.

Of course they're not going to say anything. Why bite the hand that will feed them? They depend for their very jobs (and million dollar bonuses) on the government, so you won't hear peep from them.

How Will Markets React to Monday's Stress Test Results?

"So what have we learned throughout this entire banks stress process? Not much. We still do not have a reasonable idea of the health of the banks, and we know that the government will provide with them all that they need in order to keep the cash circulating."

No more needs to be said, that sums it all up.

Peculiarities of the Current Rally: Where Do We Go from Here?

Banks need to be capitalized? Is the pope Catholic? When the wave of commercial real estate defaults start hitting, it will be very, hard for the big banks to hide. Anyone who drives around anywhere in the USA sees all these "For Lease" signs. That can only mean one thing. The worst on that front is yet to come...

Record Deficits Expected in Q3

What is sad, bordering on criminal, is how much of that money is simply a direct wealth transfer to Wall Street firms. Prime example: $10 billion "make good" to Goldman via AIG: 100 cents on the dollar, even though GS says they were covered. Why did we pay then, and not rely on GS to claim against their so-called coverage?

That was just the first example. It went downhill from there...

Fast Money Recap - Is This Apple Rumor True? (4/28/09)

It looks like smartphones are becoming the new "must have" gadget, recession or no. Interesting question is if they'll eventually supplant netbooks as the portable internet access device of preference...

Citigroup (C) has no right to question the Treasury's reported stress-test results, but Time's Justin Fox feels sympathy for Bank of America (BAC) CEO Ken Lewis. "BofA is in trouble because it was doing Treasury a favor," he says. "How do you fairly deal with a situation like that?"

Who did who a favor? Ken Lewis was eying M-L for a long time. That's why he turned a blind eye to the details, and why he agreed to pay these guys their stinking bonuses...

TARP watchdog Elizabeth Warren worries the adverse scenario being used to test banks' health is so 'disturbingly close' to current economic conditions that there may need to be a second set of stress tests if the economy worsens.

We don't need no stinkin' stress tests. We know the answer: the big zombie banks won't make it if the economy worsens (commercial real estate, anyone?) Why bother with stress tests? We know what will happen: we'll be told the entire world will come to an end if don't immediately pump more billions into these fossilized monuments to bad judgment.

And the moment we say there's a limitation on executive pay, we'll immediately learn they really don't need the money, thank you very much, they'll get it from Warren Buffett or stock offerings.

The Scarier Graphic from the Economist

In particular, we have no "engine for growth" - a product or industry with strong growth, pulling the economy behind it. Tech has been it for a while, but now it's looking like too many of those locomotives are stalling (MSFT, GOOG). Are we down to the iPhone?

Many are hoping alternative energy will be that engine, but that's an industry that will get nowhere without a strong government boost. And the government's preoccupation with Wall Street (in time and tax dollars) is causing time to be wasted before that emerges as a strong enough engine to pull the economy...

Former Merrill Lynch CEO John Thain slams BoA (BAC) for lying about its role in Merrill's bonus fiasco. Thain claims he and Ken Lewis agreed in writing that bonuses could be paid early, and BoA's assertions otherwise are "simply not true."

You know things are getting bad for Lewis when the king of the multi-thousand dollar commode calls him out, and says it is in writing.

Toxic Assets and the Anglo-American Financial Axis

The puzzling thing is we already have a proven plan for failing banks which worked amazingly well before. It's called the RTC (Resolution Trust Company). How it worked is if a bank is insolvent, it is shut down and the toxic loans handed to the RTC. The RTC manages the loans the old fashioned way. If they become too delinquent, they foreclose and (important) take the property off the market till the market recovers. At that time, they sell it and recover most of the money. We funded it with close to a trillion dollars and eventually got almost all our money back.

We have people in place who know what to do (and earn less than $60 million per year, to boot). They figured out a reasonably effective way to do it. Why did nobody call on them??

Surely that is a much better starting point than the current bottomless pipeline to the derelict banks that caused the problem? As facts emerge, it sounds like Paulson (ex-Goldman) figured out the plan that benefits Goldman the most and screw the taxpayer. There is no other logic behind the plan, and plenty of people have tried to figure it out.

Of course, an RTC type plan would have involved the liquidation of Paulson's Wall Street buddies and, gasp, their fat bonuses. That's the disaster they were talking about when they told us the world will end if we don't do it. There has not been a shred of evidence for any other kind of looming disaster...

How Are Those Banks Doing? Depends Who You Ask

The picture that has emerged is Paulson (a banker's banker) offered TARP to the banks as free money, with no strings attached. The American people, through Congress, attached strings in outrage. Then a funny thing happened. The moment the execs' pay got limited, all need for TARP disappeared, and they began falling over themselves to repay TARP money.

Does that mean the end of government aid to banks? Don't believe that for a second. All it means is the banks simply are telling our government to come up with a different program, not run through Congress and, most importantly, with no restrictions on their $60 million paychecks. Bye-bye TARP, hello PPIP. Now they can keep our tax dollars and don't have to answer to anyone for their compensation.

Welcome to the new America...