Vobogeck

Congress: Shortsighted About Financials

Spot on!

Bank Nationalization: It's Just Plain Wrong

IMHO, the problem with the US banking system is that the REGULATORS allowed:
- leverage up to 30:1,
- securitization of all kinds of risky assets,
- hedge funds operating behind a veil of secrecy,
- and shamefully turned a blind eye to widespread fraud like that of Madoff.

The regulators are empowered by the government, and IMHO it is the government that got us into this mess. The bankers simply responded to the encouragement they were given by the regulatory system, including "encouraging home ownership" among less credit worthy borrowers (as I understand it, this was a goal first set up by the Clinton administration and reinforced by subsequent administrations and the federal home loan organizations)

Why are the Canadian banks in such good shape? Because the regulatory system does not allow such high leverage as we see in the US system, the mortgage lending industry does not allow no money down, teaser initial rate mortgages. Canadians get no tax relief for mortgage interest, so there is incentive to pay off the loan. In the US, the incentive is to have as big a loan as you can. The US government reaped the crop of bad mortgages that it sowed. Don't blame the bankers. The government needs to first fix bank regulations and take responsibility for what has happened.

Temporarily suspending the mark to market rules would be a good start. Nationalizing the banks will just play into the hands of the short sellers, many of whom post on Seeking Alpha. Kudos to Baker for being a voice of reason among the self-serving short sellers.

Comparing This Past Week to the '87 Crash

Instead of focussing on the single week losses, investors should focus on the third column. Only GM is a long-term loser.

Did the FDIC Sabotage WaMu's Management and Erode Investor Confidence?

I agree with the previous post. It is nauseating to see the gloating from JPM that the WM acquisition will be accretive to the tune of 50 cents a share.

What Have You Done, Jamie Dimon?

Because depositors withdrew $16 billion from their accounts in less than a week. WM had no liquid assets left. A classic run on the bank. The biggest mystery is why the Feds have not increased deposit insurance to $250k and then extensively communicated through TV ads, etc that this insurance is available to depositors in ALL financial institutions.