Rick S.

Wall Street Breakfast: Must-Know News

I have accounts in one of the banks closed over the weekend, Affinity Bank in Ventura California. Nothing fancy about their leverage or loans. Simply a lot of mom and pop commercial development loans that went sour because of the overall economy. It happens when development comes to a screeching halt as it did last year, developers go bankrupt, and the banks that loaned them money find themselves with an asset that has essentially zeroed out. It's a stepped process that takes time, but it eventually hits a bank's bottom line of reserves.

Ron Paul, Barney Frank, Wall Street crooks, Glass and Steagal have a lot to do with a lot of things, I'm sure. But they had little to do with the banks that closed last weekend.

Wall Street Breakfast: Must-Know News

I am surprised that all the investment banks aren't maintaining superstratispheric leverage and not just Goldman, in light of the fact that the Federal Reserve has shown it will bail anybody out that's big enough. Talk about moral hazard.

The new leverage limiting factor, if there is any, might just be the size you can puff up to and stay within the limits of the Fed's ability to bail out rather than its willingness to do so.