Author: Matthew G. Saroff

The Seeds of the Next Crash Have Just Been Sown

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The Federal Reserve just eased regulations on minority ownership of banks, raising the percentage of stock ownership allowed to be raised without requiring registration as a bank holding company”

Key changes in the guidelines include allowing an investor to buy up to a 15 percent voting stake instead of the previous 9.9 percent limit. Investors can also buy up to 33 percent total equity interest, including voting and non-voting shares, instead of the 25 percent prior limit.

Allowing greater ownership before regulation, reminiscent of the S&L crisis, when many of these institutions were purchased by developers, who then lent to themselves at unrealistically attractive rates.

Of course, these days, it won’t be real estate developers, but private equity firms who can use this to exert influence over banks for capital.

Case in point, the founder of private-equity firm J.C. Flowers & Co., surprisingly enough a guy named J. Christopher Flowers, is buying the First National Bank of Cainesville in Missouri.

Not enough bullets.

H/T Calculated Risk.

Rick Davis Was Getting Freddie Mac Money Until Last Month

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John Sidney McCain III’s campaign manager’s firm was getting $15,000 a month until the government took them over.

Note that Davis is still on the board of Davis & Manafort, and two sources in the story that the money was specifically in order to maintain access to John McCain.

McCain claims to have learned from his Keating 5 experience, but now it appears that he could swim in a sea of knowledge, and emerge completely dry.

What Do You Call This?

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The punch line is the same as for the joke that starts, “What do you call 100 lawyers at the bottom of the ocean?” (Answer at bottom of post)

The head of the Indian operations of Graziano Transmissioni, Lalit Kishore Choudhary, was beaten to death by employees he had sacked.

I have said on a number of occasions that if you want to go postal, go after upper management first, and it seems that these employees were of a like mind.

The quotes regarding this, show just how callous people are:

A spokesman for the Federation of Indian Chambers of Commerce and Industry said: “Such a heinous act is bound to sully India’s image among overseas investors.”

That is an unbelievably cold statement. Some dude got beaten to death, and the only comment is, “It’s bad for business.”

Of course, being the Times of London, they are wringing their hands over this, and note the violence at the location selected by Tata for a factory to manufacture its ultra cheap Nano, but refuse to mention the fact that the land in question was stolen from the peasant farmers who had worked it for hundreds of years.

Meanwhile India’s Labor Minister has apologized for saying that the murder of Choudhary should, “serve as a warning” to managers to treat workers compassionately.”

He was right the first time.

If you want to read a more full throated, and more eloquent endorsement of actions that might make senior executives think twice, you need to go no further than Exiled Online

Live by heartless officialese, die by heartless officialese plus a hammer upside the skull. Nothing could be fairer than that. Proceed with the mob beatifications as soon as we get their names. And somebody find that f@#$-you-Mr.-Cheney guy’s name too while you’re at it. Something about the politeness of the “Mr.” right after the “f@#$ you” really enchants us. This is a guy who understands the importance of human dignity. No doubt, with a little encouragement, he could put together a nice mob.

Damn good writing, and you should read the rest right now.

In conclusion, the philosophical foundation driving our current system is that the “entrepreneurial class” should be able to operate without any external limits on their behavior, and that they should operate without conscience or empathy, and this is a psychotic world view.

As to the riddle at the beginning of the page? The answer, of course, is “A Good Start.”

Krugman Calls Paulson a Liar

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Flat out, and he uses the “L” word, he quotes David Davies, and notes that “Good ideas do not need lots of lies told about them in order to gain public acceptance.”:

So, this morning Hank Paulson told a whopper:

We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight.

What the proposal actually did, of course, was explicitly rule out any oversight, plus grant immunity from future review:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

He’s right too. Paulson wants no oversight as he bails out his buddies.

He Came, He Saw, He Queered the Deal

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Silly me. I figured that McCain’s “suspension” of his campaign was a completely empty gesture which would contribute nothing to any bailout deal.

I was wrong. John Sidney McCain III’s high profile involvement, and the White House meeting that his his campaign engineered, just had a deal blow up, because John McCain allied with conservative Republicans in the house to propose yet another tax cut.

About the only good things to come out of his involvement are a couple of bon mots from Democrats, the first from Christopher Dodd, who said that the entire affair sounded more like, “a rescue plan for John McCain than one for the financial system,” and the other from Barney Frank, “Senator McCain has said he had to interrupt his campaign and couldn’t do a debate because he had to come here to help us. God save us from such help. But in any case, there is no sign whatsoever that Senator McCain’s got any real role here, so he certainly ought to feel free to go back and debate.”

In the mean time, Boehner aHis Evil Minions&trade make it clear that this is just another exercise in dick swinging for purely partisan gains.

Lovely fellows, I’m glad that I have a daughter, so that I can forbid her to marry them.

Senator Bernie Sanders Calls Larry Kudlow a Socialist

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Considering the fact that Bernie Sanders is actually a card carrying socialist, just called Larry Kudlow a socialist:

Larry, if I ask you that the government should intervene like every other industrialized country does and provide health care for all people, you’d say ‘oh no!’ And if I ask you to support government intervention so that we don’t have the highest rate of childhood poverty in the world, you’d say ‘oh no!’ But when Wall Street screws up because of their greed, you say, ‘oh yes, it’s a great idea!’

PWN3D!

Does Kudlow need someone to cut his meat for him or something?

I wouldn’t want him around a plastic butter knife.

Credit Where Credit is Due

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I think that Google® Adsense® got it right this time with my post calling bankers wankers:*

Back in December and January, when John McCain was spending money like…well…John McCain, every time I called him a sick, old man, adsense would serve one of his “Death Star” ads, but this time, when I posted something about whining bankers, and they served an ad for “My Name is Earl” and “The Office“, which seems most apropos.

Please note that this is not an inducement for my reader(s) to click on the ads, which is a violation of the Google® Adsense® terms of service.

*Hmmm….there is a rhyme there gotta try and make a rap of it.

Maliki Says that Bush Wanted Changes in Withdrawal for Electoral Advantage

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So Nouri al Maliki said in an interview with al-Iraqiya:

MALIKI: Actually, the final date was really the end of 2010 and the period between the end of 2010 and the end of 2011 was for withdrawing the remaining troops from all of Iraq, but they [the Bush administration] asked for a change [in date] due to political circumstances related to the domestic situation [in the US] so it will not be said to the end of 2010 followed by one year for withdrawal but the end of 2011 as a final date. Agreement has been reached on this issue. They are willing to respond positively because they, too, are facing a critical situation.

Impeach Cheney today.

Impeach Bush tomorrow.

Received Via Email

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Heh

Dear [your name goes here]:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion USD. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gramm, lobbyist for UBS, who (God willing) will be my replacement as Ministry of the Treasury in January. As a former U.S. congressional leader and the architect of the PALIN / McCain Financial Doctrine, you may know him as the leader of the American banking deregulation movement in the 1990s. As such, you can be assured that this transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully,

Minister of Treasury Paulson

McCain “Suspends” Campaign

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It appears that he believes that his campaign the country needs him to go down to Washington so that he can inject politics into the matter.

He is also calling for a delay in the first debate, doubtless because with the financial crisis, there will have to be some questions asked on the economy, though Obama is having none of this, noting that multi-tasking and delegation are crucial skills for a president.

My theory is that he knows that no one is concerned about foreign policy right now, so he wants the foreign policy debate delayed until people will pay attention.

It’s also certain that the economy would come up in the debate, even with the ostensible focus on foreign policy, so he’s looking to cut and run.

Of course, it may just all be a ploy to distract people from Sarah Palin’s disasterous interview with Katie Couric……How the hell do you get owned in an interview by the mistress of softball questions anyway?

H/T This Modern World for the pic