14. Bernanke openly solicits private equity firms to invest in banks. Is this even close to a remotely normal action for Fed chairman to take?
15. Bear Stearns was taken over by JPMorgan (JPM) days after insuring investors it had plenty of capital. Fears are high that Lehman will suffer the same fate. Worse yet, the Fed had to guarantee the shotgun marriage between Bear Stearns and JP Morgan by providing as much as $30 billion in capital. JPMorgan is responsible for only the first 1/2 billion. Taxpayers are on the hook for all the rest. Was this a legal action for the Fed to take? Does the Fed care?
16. Citigroup needed a cash injection from Abu Dhabi and a second one elsewhere. Then after announcing it would not need more capital is raising still more. The latest news is Citigroup will sell $500 billion in assets. To who? At what price?
17. Merrill Lynch raised $6.6 billion in capital from Kuwait Mizuho, announced it did not need to raise more capital, then raised more capital a few week later.
18. Morgan Stanley sold a 9.9% equity stake to China International Corp. CEO John Mack compensated by not taking his bonus. How generous. Morgan Stanley fell from $72 to $37. Did CEO John Mack deserve a paycheck at all?
19. Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking "How the hell can Countrywide add to Bank of America earnings?" Here's how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over "Fraudulent Conveyance" are now surfacing.
20. Washington Mutual agreed to a death spiral cash infusion of $7 billion accepting an offer at $8.75 when the stock was over $13 at the time. Washington Mutual has since fallen in waterfall fashion from $40 and is now trading near $5.00 after a huge rally.
21. Shares of Ambac (ABK) fell from $90 to $2.50. Shares of MBIA (MBI) fell from $70 to $5. Sadly, the top three rating agencies kept their rating on the pair at AAA nearly all the way down. No one can believe anything the government sponsored rating agencies say.
22. In a panic set of moves, the Fed slashed interest rates from 5.25% to 2%. This was the fastest, steepest drop on record. Ironically, the Fed chairman spoke of inflation concerns the entire drop down. Bernanke clearly cannot tell the truth. He does not have to. Actions speak louder than words.
23. FDIC Chairman Sheila Bair said the FDIC is looking for ways to shore up its depleted deposit fund, including charging higher premiums on riskier brokered deposits.
24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. IndyMac will eat up roughly $8 billion of that.
25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Wow! Do you still think that I've been crying "Wolf!" all this time? This is fact. This is clear evidence from a variety of angles that the banking system is severe trouble. As usual, this is just the tip of the iceberg.
The following scripture talks about the demise of the city of Tyre. Substitute the United States and the current times, and you have a good picture of what will happen.
"This is what the Sovereign LORD says to Tyre: Will not the coastlands tremble at the sound of your fall, when the wounded groan and the slaughter takes place in you? Then all the princes of the coast will step down from their thrones and lay aside their robes and take off their embroidered garments. Clothed with terror, they will sit on the ground, trembling every moment, appalled at you.
Then they will take up a lament concerning you and say to you:
" 'How you are destroyed, O city of renown,
peopled by men of the sea!
You were a power on the seas,
you and your citizens;
you put your terror
on all who lived there.
Now the coastlands tremble
on the day of your fall;
the islands in the sea
are terrified at your collapse.'
"This is what the Sovereign LORD says: When I make you a desolate city, like cities no longer inhabited, and when I bring the ocean depths over you and its vast waters cover you, then I will bring you down with those who go down to the pit, to the people of long ago. I will make you dwell in the earth below, as in ancient ruins, with those who go down to the pit, and you will not return or take your place in the land of the living. I will bring you to a horrible end and you will be no more. You will be sought, but you will never again be found, declares the Sovereign LORD." Ezekiel 26:15-21 (NIV)
Email: DeltaInspire@panama-vo.com
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