John Talbot is suggesting that Geithner’s scheme to save the banks is dependent on their ability to screw retail consumers and small business consumers:

And this is where defeat of the nomination of Elizabeth Warren becomes critical for Geithner. For Geithner’s strategy to work, the banks have to find increasing sources of profitability in their business segments to balance out their annual loan loss recognition from their existing bad loans in an environment in which they continue to recognize new losses in prime residential mortgages, commercial real estate lending, sovereign debt investments, bridge loans to private equity groups, leverage buyout lending and credit card defaults.

The banks have made no secret as to where they will find this increase in cash flow. They intend to soak their small retail customers, their consumer and small business borrowers, their credit card holders and their small depositors with increased costs and fees and are continuing many of the bad mortgage practices that led to the crisis (ARM’s, option pay deals, zero down payments, second mortgages, teaser rates, etc). American and Banking Market News reports this week that the rule changes in the financial reform bill may lead banks to start implementing fees that had essentially disappeared from the industry early in the new millennium, such as fees for not meeting minimum balance requirements on a checking account, or reinstituting fees for certain online banking transactions that are currently free or charging to receive a paper statement or to talk to a live teller as Bank of America’s CEO has recently proposed.

Let me be clear here. Mr. Talbot does not endorse this strategy, and he supports Ms. Warren as head of the CFPB, he is explaining what he believes the calculus of the Geithner/Summers axis.

So, he is saying that in addition to actual taxpayer funded bailout, he is saying that Geithner and Summers see a back door taxpayer bailout as the only way to save the banks.

The thing is that the costs here, if Mr. Talbot is right, are enormous.

Excessive bank charges, won’t just generate excess profits, they will also reduce economic growth and tax receipts, since consumer spending and small business is where growth comes from, and this is where they will be extracting their money.

I do hope that he is wrong, because for this to be their strategy means that we do have a bunch of Republicans in all ways that matter, running the White House economic policy.

My guess is rather less tinfoil hat.

I think that Geithner has never in his life thought outside of the “what is good for Wall Street” box, and that this, juxtaposed with what appears to be an antipathy towards women in the field,^* has led to yet another one of his petty and self destructive vendettas.

At least that is what I hope.

If John Talbot is correct, then these Cossacks Republicans work for the Czar, who knows what they are.

^*I do not think that Geithner, who has spent his entire professional career getting ahead by kissing up, has only come out strongly against two people that I know of, Elizabeth Warren and Sheila Bair, both of whom lack a Y chromosome.

And here they are, ordered, and numbered for the year so far.

91. Woodlands Bank , Bluffton, SC
92. First National Bank of the South, Spartanburg, SC
93. Metro Bank of Dade County,Miami, FL
94. Turnberry Bank, Aventura, FL
95. Olde Cypress Community Bank, Clewiston, FL
96. Mainstreet Savings Bank, FSB, Hastings, MI

Full FDIC list

Great Googly Mooogly, back up to 6 banks.

So, here is the graph pr0n with trendline (FDIC only):

I would note that are now at the point where the utility of the least squares trendline is diminishing, but I’m keeping it here for historical purposes.

Paul Krugman finally comes out strongly about Bernanke’s inaction regarding the threat of deflation, which could threaten decades of recession.

It isn’t just the the fact that Bernanke who has sterling academic and economic credentials, unlike Greenspan who got his PhD from the back of a cereal box, but he continues to ignore the threat of deflation.

The problem is that Bernanke literally wrote the book on the dangers of deflation, and he is consciously eschewing the policy prescriptions that he called for nearly 20 years ago for Japan.

Greenspan was what Lenin called a “Useful Idiot.”

Bernanke knows better, which is why Krugman is calling him “feckless”.

And no, I’m not talking about the non-existent inflation threat, I mean that they are great depression type deflationary spiral:

Federal Reserve officials, increasingly concerned over signs the economic recovery is faltering, are considering new steps to bolster growth.

With Congress tied in political knots over whether to take further action to boost the economy, Fed leaders are weighing modest steps that could offer more support for economic activity at a time when their target for short-term interest rates is already near zero. They are still resistant to calls to pull out their big guns — massive infusions of cash, such as those undertaken during the depths of the financial crisis — but would reconsider if conditions worsen.

Top Fed officials still say that the economic recovery is likely to continue into next year and that the policy moves being discussed are not imminent. But weak economic reports, the debt crisis in Europe and faltering financial markets have led them to conclude that the risks of the recovery losing steam have increased. After months of focusing on how to exit from extreme efforts to support the economy, they are looking at tools that might strengthen growth.

Let’s be clear about this: The Federal Reserve fetishizes two things, inflation fighting, and opacity.

The fact that they are leaking to the press about possibly engaging in additional quantitative easing (printing money) because the ‘Phants are playing “Dr. No,” is an indication that:

• They really don’t want to do quantitative easing.
• They are trying to kick Congress in the pants so that they engage in fiscal stimulus.
• That they feel that more needs to be done.

They are seeing things, and I don’t mean the “audit the Fed” bill, that are scaring the hell out of them.

Well, there were no bank failures this week (see Full FDIC list) but the FCUA closed a credit union:

10. Southwest Community Federal Credit Union, St. George, UT

Full NCUA list

I would note that this is only the 2^nd, or 3^rd if you count the Friday that was new years day, so far this year where a bank was not closed.

So, here is the graph pr0n with trendline (FDIC only):

And here they are, ordered, and numbered for the year so far.

84. Peninsula Bank, Englewood, FL
85. First National Bank, Savannah, GA
86. High Desert State Bank, Albuquerque, NM,

Full FDIC list

Back up to multiple bank closures, 3 this week.

So, here is the graph pr0n with trendline (FDIC only):

And here they are, ordered, and numbered for the year so far.

83. Nevada Security Bank, Reno, NV

Full FDIC list

We have now had 2 straight weeks of only 1 bank failure.

I am not sure if this is improvement, if the things are just piling up behind the dam, or if we are simply running out of Banks.

In any case, here is the graph pr0n with trendline (FDIC only):

A day late, because my Daughter had her bat mitzvah, (my reflections on that later) but here they are, ordered, and numbered for the year so far.

82. Washington First International Bank, Seattle, WA

Full FDIC list

And here are the credit union closings:

9. Orange County Employees Credit Union, Orange, TX

Full NCUA list

So FDIC bank failures seem to be moderating a bit, but credit union failures appear to be picking up a smidgeon.

In any case, here is the graph pr0n with trendline (FDIC only):

And here they are, ordered, and numbered for the year so far.

79. First National Bank, Rosedale, MS
80. Arcola Homestead Savings Bank, Arcola, IL
81. TierOne Bank, Lincoln, NE

Full FDIC list

So, here is the graph pr0n with trendline (FDIC only):

Last year at this time, the question was whether or not there would be more than 100 bank failures. (It hit 140)

The question this year is whether it breaks 200.