Cthulhu,
Bair in the interview said she wasn't competent enough to oversee large banks and so they might outlaw them in the future. This is supported by her need to raise FDIC premiums in the midst of increasing loan defaults; if she had been competent, she would have done this in advance or intervened with the reckless ones so as not to punish the prudent banks. It is quite sad, no one has the heart to tell her the chance has come and gone.

Granted I realize the extraordinary nature of defaults right now, it's just that she took zero action leading up to it. Someone who did their job might have raised the issue that defaults had dropped to abnormally low levels during the bubble and should not be used in VaR or otherwise expected to continue

Indeed, I get the feeling after watching this video that Bair & Co. aren't organized enough to take over a large bank such as Citigroup. That could be the sole reason why that hasn't happened yet. If none of the large banks can be taken over by the FDIC, I foresee two possible outcomes: 1) the government will continue to bail out large banks until we as a country go broke; or 2) the large banks fail. I think Bair was correct in her assessment that banks shouldn't be so large that they pose a systemic risk. I'll take the second outcome, for as messy as it would be, it seems to be the cleanest option.

That honda commerical is pretty good.

.........................

I actually just informed my buddies that I'm going to work for the FDIC and close down banks. Wish me luck with the interview...

I wonder if the hiring process will be similar to the one Bush had when applying for a job in the green zone.

"Who did you vote for for president in the last 3 elections?"

I'm glad I watched SNL re runs instead of this.

"For the next five years we project that we will lose $65 billion dollars on bank closings."

I liked how he asked 'how many banks will fail this year?' and she dodged the question 100%

["For the next five years we project that we will lose $65 billion dollars on bank closings." ]

That was filmed before the $500Billion request. They have a lot of work to do. Nades will be working a lot of OT, rubbing elbows with Pandit and Lewis.

Right.

How many people would attempt to accumulate wealth if there were no police/army/government to protect it? History gives the answer.

The libertarians/republicans cannot see the forest which is protecting their own trees.

Property rights, personal freedoms, etc. All are fair game.

Property rights, personal freedoms, etc. All are NEVER fair game. Unfortunately it usually takes a world war to remind governments of that inviolable fact.

Property rights don't mean much where the federal government can tap your phone, check up on what you get from the library and even render you because the president says so. Or at least John Yoo says so.

$65b over the next 5 YEARS? There are no words to describe the cluelessness of Ms. Bair. Try WEEKS Shelia unless you are adopting level 3 accounting.

It was the country's last white president who enslaved the nation, anon.

“I'm glad I watched SNL re runs instead of this.

Did you see the Michael Steele thing this weekend. They had some good stuff for a change. Maybe depressions make people funny:

Hulu - Saturday Night Live: Update: Michael Steele
Hulu - Saturday Night Live: Hawaiian Hotel

I'm more interested in figuring out how the FDIC weighs if a bank should be taken over. It's not like that bank was "We are failing, save us". More like the FDIC just came in and said, no more bank for you. you are now FDIC employees.

Note: Sheila said that the FDIC "plans to lose" $65 billion. That means that they plan to take over far more total account value than that, since they typically "lose" a smallish percentage of the bank's deposits if they can find a buyer to dump the accounts on.

So I take this to mean that the FDIC plans to take over about $650 billion worth of deposits in the next five years. That number is still too low, but...

That makes me feel all warm inside.

If these things are a surprise to the bank,
how does the FDIC authenticate itself to the bank?

Ah Hah! At last it makes sense. FFDIC stands for "Fake FDIC." Our very own FFDIC is planning the heist of the century. He and his band of merry riskers will take over an unsuspecting medium sized bank on a Friday and by Monday will be sipping Mai Tais on their own island nation. [Sign me up FFDIC]

The only thing FDR forgot to mandate was the creation of Kolkhozes.(collective farms)

And they'll go to what country? Oh, that's right, it's deleveraged. :-E

This isn't a partisan issue, get it?! This is a constitutional issue. You want to talk about administrations who screwed up, we'd have to go very far back in time. I hated Bush, Clinton, Bush and Obama. Good enough for you this time??!!

Well at least we have bipartisanship when it comes to the attack on the constitution and every principle this country was founded on.

I saw a sheriff and a police car or two in the occasional shot.

Looks like I picked the wrong week to stop sniffing glue.

It's always the wrong week to start sniffing glue. In other news, I saw a sign that said "Free beer tomorrow."

Hoopajoops LTD says:
favorite quote "insurance in the oxygen of the free enterprise system"
It is? Give me a f'n break/
Bankruptcy is the oxygen of the free market system. No joke.

Bankruptcy and repudiation are the springboards from which much of our civilization vaults and turns its somersets, but the savage stands on the unelastic plank of famine.
Walden & on the Duty of Civil Disobedience by Thoreau, Henry David

too many people (needed) to do it all at once.

Anon @ 4:35 asked a question: Dollar strong, stock market failing, treasuries not doing as well, gold weak and oil rising? What to make of it?

I've thought about this for about two hours...

Yep, OPEC is sufficiently cutting supply to outstrip the demand destruction (plus oil is still a hard asset). Gold is dropping due to selling to meet margin calls on stock market portfolios (plus meet redemptions) and the dollar still is doing well versus other currencies. But I think that the treasury slowness is indicative of souring on US vis a vis others and is precursor to future problems with dollar. This will lead to a recurring rise in gold as offset to market and dollar drop. Only question is if OPEC will be able to hold together on the supply tightening (I don't bet on it...).

mp: Still don't know that I see Mad Max coming out of the AIG mess.

"EvilHenryPaulson says:
Today, 7:55:23 PM
“The first time I held $2 million in cash which I was responsible for, I joked out loud about flying to Mexico and opening a surf shack.

I said it out loud because I never intended to follow through. Imagine the temptation when you process billions a week with no strict checks on all of it"

And which planet would you hide on? But then I thought: oh wait. And then I thought: shut up.

"The government has declared war on American business"

They declared war on citizens long ago.
Why do business guys believe they have special exemption?

scary unemployment chart

Very nice chart, thanks.

I starting to wonder more and more about the high-tech "low touch" economy. This WSJ article talks about why current manufacturing jobs are, because of extensive technology use, taking less of a hit than in earlier years. Dryfly has talked about this also many times.

However, the "high touch" economy has seen the job market expand significantly in the "customer-facing" areas. I believe that it is these highly discretionary jobs that will be hit by far the hardest. The "service economy" is littered with overhead.

Your savings are safe.

Visiting hours will be from 12:30-12:45 every third Thursday starting in 2029. Conjugal contact will be prohibited.

If that rag tag flea-ridden group of ignorant, overweight nincumpoops are guys with white hats I think we'd better all stick our heads up into our large intestines and ask for advice.

"Visiting hours will be from 12:30-12:45 every third Thursday starting in 2029. "

That's when your phone in Moscow was supposed to be connected, after you confirmed it in 1985.

Well, are they coming to connect it in the morning or the afternoon?

What do you care, it's in 2029.

I care because the plumber is supposed to be there in the morning.

Re 60 Minutes interviews - I was interviewed four times for one of their international medicine stories. The key is to be quite aware of your phrasing to know which things they will pick up and broadcast. I could have had greater air time had I agreed with their phrasing, but I refused.

In case you missed it:
If these things are a surprise to the bank,
how does the FDIC authenticate itself to the bank?

Ah Hah! At last it makes sense. FFDIC stands for "Fake FDIC." Our very own FFDIC is planning the heist of the century. He and his band of merry riskers will take over an unsuspecting medium sized bank on a Friday and by Monday will be sipping Mai Tais on their own island nation. [Sign me up FFDIC]

no need for open season to be declared. Poaching money from the treasury is being done at will

Two pipelines are better than one.
Twice the cash flow, twice the fun.

Mish does not understand.
Debt is the lifeblood of the economy,
because debt is our number one product and export.

My S and L got taken over by FSLIC in 1990.

It was a small operation and very familiar with it's customers. Didn't even have an ATM...

Wife and I were leaving town on Friday afternoon for weekend away and got held up. I called them to ask if they could stay open for a few minutes while we got there and the manager sounded utterly shell-shocked. She said that we would have to get their NOW.

I got there within 15 minutes - left without my wife - and the doors were locked with an FSLIC notice in the window. I could see the manager sitting at her desk with her head cradled within her arms...

If the execs knew it, the bastards never told the troops.

I went on a writing jag today. More of the CR inspired story of life in America after we get closed down, stickered, and sold for parts.

American Apocalypse, an excerpt:

I heard the knock at the door. It startled me. For a second I thought I was back in my room. Max’s voice cut through the door “Fifteen minutes until dinner. Be out front.” I heard his door shut and the sound of the plumbing running. I got up, ran a comb through my hair, a toothbrush over my teeth, and I was ready for showtime. I went outside and stood around. Men and women were straggling in to eat. Some of them had children in tow. The children were well dressed and better behaved. Very few were in any kind of uniform, yet it was easy to picture them in one. These were soldiers, and looking at them, my guess was they were good ones.

for the rest: 401 Authorization Required 
plus some other posts by brand name CR peoples...

"""I can't believe I am saying this, but I actually felt for the owner of the bank."""

They were under a cease and desist order from the regulators, so the problems were of their own making to a certain extent.

Seems a loan made at the top of the cycle would require more "equity" so as to protect the shareholders. But of course many bankers are into growth not profits.

Just watched the Buffet interview on CNBC. Has that guy just become a mouthpiece for the administration? The only really cogent point I picked out of his conversation was the fact that Treasuries have rough days ahead, although I think I may have interpreted what he said in a way he didn't intend.

Also, does ANYONE here believe that 6500 is the bottom for the Dow?

C,

Any guesses at where the pound will be by this summer?

118 to 122 against the dollar?

my comment was eaten. Well, it was all calories and no substance.

C,

Where doth thou think the pound is headed?

It could be because the people they were hired to service no longer are able to pay for their time.
No, not sexual reference. My WAG is that half the service industry could go away tommorow and no one would notice.

Half may be a little high but I actually wouldn't be surprised to see it get close to that. Deployment and not necessarily unavailability of Internet services to handle most customer interface issues are still in their infancy because of the "high touch" emphasis. There is major change in the wings.

"...most customer interface issues are still in their infancy because of the "high touch" emphasis."

What's that?

Just watched the Buffet interview on CNBC. Has that guy just become a mouthpiece for the administration?

Worse. Like David Lereah and so many before him he's just befuddled when the world has changed around him leaving him polishing collar stays and bemoaning the heyday when buggy whips were the new iPod.

Any guesses at where the pound will be by this summer?

118 to 122 against the dollar?

Which way? [ducks] Seriously the Pound is tettering on becoming the new Icelandic Krona x10.

"Pound will remain 16 ounces!"

I heard this once:

What's the difference between the pound, the ruble and the dollar?

A pound of rubles is equal to one dollar.

BLUE POET IN A RED STATE
Anthology bound in the flag
and pages from the Holy Bible
About to be remaindered to heaven’s Halliburton retail outlet
Two sunny days in a row defy a foggy tendency
Is it mind or Pacific sea undergoing change?
Does fear encourage or inhibit change?
Both, both. It’’s all the same
I’m a Blue Poet in a Red State preparing for escalation
Who knows?

Nothing certain, it seems
House full or empty or never built
It’’s not a thing this material passion
Domestic possession

& Self-styled Saviors of Humanity?]
Shadows and light
Elegiac tuning of transitions etched
on historic memory, I quote:
I’’m a Blue Poet in a Red State preparing for damnation
Who won the war? Tell me!
The good, the bad, or the ugly?
We’’re all god’’s children believe it or not

You see, we’’re just making our own way
counting on Grace. Nobody’’s got
a monopoly on Hubris
There’’s room for us all in America!

moving and paying the price doesn’’t seem so extreme
It’’s a way of life, you’’re buying into
California! Open space and museums
In Miami art is a customized workshop of fashion:

\tstrife is always temporary and
\t\tAmerica will be America again
Buying time on CNN and space on the Brooklyn Bridge!>
Florida has gone the way of the panther
N
A political dancer. One step at a time and overtime
This is a divided nation
A Blue Poet in a Red State preparing for the duration
<Enemies at the gate, while our emperor seeks deification
A Blue Poet in a Red State fears annihilation>
A blue poet in a red state is the third sex, enough eunuch

There’’s room for us all in Amem a Blue Poet in a Red State preparing for evacuation
A resolution revelation, buy an overpriced house!
It’s all starting to look different
now. The enormous numbers,
moving and paying the price doesn’’t seem so extreme
It’’s a way of life, you’’re buying into
California! Open space and museums
In Miami art is a customized workshop of fashion:
[Satan glitz or Jesus-jihad drab.]
<So we start our peace and justice centers and learn to study Zen
Hose down our copies of Steppenwolf and tell ourselves that
\tstrife is always temporary and
\t\tAmerica will be America again
Buying time on CNN and space on the Brooklyn Bridge!>
Florida has gone the way of the panther
Nearly extinct or extinct, that’’s the answer.

You have to be quick on your feet
A political dancer. One step at a time and overtime
This is a divided nation
A Blue Poet in a Red State preparing for the duration
<Enemies at the gate, while our emperor seeks deification
A Blue Poet in a Red State fears annihilation>
A blue poet in a red state is the third sex, enough
Your limits, not staying in your place, not staying put,
Not knowing when to stop, when to go back, to turn
Left, right or center. I’m not blind or insensitive but
A survivor, on tele vision, where I tell of the vision of the Virgin Mary
And the sandwich. And people applaud, and oh how I love

Pavel - BINGO! Shirley, pay the man.

[The CR Board waits teethgrinding in apprehension in case C does yet another Karl Popper post].

Well, moving right along the pound is basically a slice of carbonized wheat product staple at the moment. The policy swerves in the last week haven't suggested to me that Merv and co know what they're doing, and as I've joked around a bit before, I think there's some loss-leading going on with UK monetary policy laying the relatively quarantined ground for Timmmay and BB to do with the Big Game. Very high stakes.

But really, we have to see if buying gilts really does have any meaningful QE impact, and what the transmission channels are, to what end use, with what unintended effects, and how that might play to (jointly and severally) fin mkt effects and real economy lags, wherever we consider appropriate to find indicators.

I still think this is Thar Be Dragons territory and we're not even sure what the dragons look like any more.

Skol!

C