Monday, September 21, 2009

A House of Cards Needs a Good Foundation

Yet another risk analyst has come out with a list of bad banks. Their list has almost 2300 banks in the "F" category. These banks that are considered likely to fail hold four and a half trillion in assets. So far the FDIC has had pay an average of 25% to cover deposits so you are looking at a bit over a trillion dollars for this estimate assuming things don’t get any worse. Congress has given the FDIC a half trillion line of credit and of course Congress can print as much as they want. How this gets paid back is another matter.

On the too big to fail list are four US companies — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo & Co. now have 46 % of the assets of all FDIC-insured banks, up from 38 % a year ago. Nine more banks control another 40 % of bank assets and would also likely to be on the too big to fail list.
The Financial Crisis Inquiry Commission held its first meeting last week, four months after being created by Congress. They did little at the first meeting but give speeches about their own importance but gave little of substance. Don’t hold your breath for anything to come of this committee unlike the Pecora hearing of the 1930’s that produced the reforms that would have prevented the current crisis had they remained in place.

Besides the slow and inauspicious start, under rules supplied by Congress, the minority Republicans on the committee appointed by the Republican leadership must approve all subpoenas. That will guarantee that no stone will remain unturned. The stones will be turned in a mixer with Portland cement and carefully guarded until all the facts are encased in hardened concrete, forever covering up who was to blame and what their real motives were. This will provide a solid base upon which a tissue of lies will be used to construct a new house of cards obscuring the continuing decline of our civilization until it’s too late.

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