Banks on Jello

Does anyone else get the sense that the financial system is so royally screwed up that it’s one butterfly’s wing flap away from collapsing?

Wall Street shut down this morning because of a number of unusual high volume trades, the LIBOR scandal keeps building, the former CEO of Citigroup says merging with Travellers was probably not such a good idea, while Steve Rattner says don’t break up the banks, write a better Dodd-Frank.  Here’s the money quote from Rattner’s piece today:

Because of pressure from Sheila C. Bair, then the chairwoman of the Federal Deposit Insurance Corporation, the primary responsibility for winding down failing institutions was given to the F.D.I.C., an agency woefully ill equipped to deal with complex global entities. The Federal Reserve Board would have been a far superior choice.

In April 2011, the F.D.I.C. published a hypothetical plan suggesting that it could wind down a global octopus like Lehman in a manner similar to the way in which it routinely takes over small community banks. The report was widely derided.

We need a Dodd-Frank do-over to create the right oversight apparatus for huge banks. Regulators will always be outnumbered by bankers, and they will never find every problem. But, like prison guards, regulators are essential, even if they are outnumbered. In a world of behemoth banks, it is wrong to think we can shrink ours to a size that eliminates the “too big to fail” problem without emasculating one of our most successful industries.

You know who else didn’t like the idea of Sheila Bair taking over the banks?  Tim Geithner.  But he pressured Bair to back them anyway, guaranteeing shareholders a lot of money Bair didn’t think they deserved.  She would have made shareholders take substantial haircuts.  I’m betting that Rattner and his friends wouldn’t have liked that very much which is why it was off the table almost from the beginning.

I’m not sure I like Rattner’s tone.  Is he saying that the FDIC, which has something like 80 years of experience taking over failing banks is incapable of dismantling these behemoths or is he just dissing Sheila Bair?  Maybe it was just bad timing to have a woman as head of the FDIC when a man would have been able to do his job without meddling and disrespect.  Or maybe the world of the political elite should be held accountable for the fact that its ingrained sexism appears to be behind some phenomenally bad decisions in the past 13 years.  There’s more than one account of Bair being called “hard to work with” and “not a team player”.  Those are code words, baby, for we don’t want to listen to her and we’re going to pull out the old sexist staples to knock her status down.  Well, it worked so well against Bair and Brooksley Born, Elizabeth Warren, Christina Roemer and Hillary Clinton.  The pattern is obvious.  They don’t even pretend to hide it anymore.

I don’t know but I’m getting really pissed that so many sensible women are ignored and trampled so that the big boys can keep playing their games uninterrupted.  That shit’s gotta stop or why bother appointing women at all??  Again, this is Obama’s responsibility.  He hired these guys. And it’s not like his female White House staff didn’t warn him about the disrespect shown them.  What has Obama done about it?

Then there’s Rattner’s statement that even if we regulate the banks, they’ll just find a way around the regulations.  I’m not sure what point he is trying to make here.  If he’s trying to put us at ease, it’s not working.  It’s probably time to stop treating banks as a blessed industry while everyone else is getting damned.

And then there are the uber wealthy who are starting to worry that the Sans Culottes are going to turn the country into some dystopian state.  Maybe we shouldn’t have taken so much, they muse while they take in the scenery from their mansions.

Yeah, maybe.  Only time will tell.

And then there is Tim Geithner.  It looks like we were right about him.  He knew all about the LIBOR interest rate fix.  According to Taibbi, it was a well known secret on Wall Street.  Everybody knew it but the American people, who put their faith in Obama and his treasury secretary.

All I can think about is the stress tests and the way that Geithner assured everyone that the banks were solvent.  Who knows what the truth is but all of the Obama administration’s policies were built around the fiction of the condition of the banking industry.  Maybe the regular American citizen didn’t know about the LIBOR interest rate fixes but it’s hard for me to believe that Obama didn’t know.  You have to ask yourself what Obama was thinking when the stimulus turned out to be too small, bankers’ asses were saved and not homeowners, and he treated every bank crisis with an ad hoc solution instead of regulation.  Without regulation, it could happen again.

It’s all very, very shaky.

Enough about me, what do you think about my new book?

Gore Vidal died.  I read Lincoln a long time ago.  It was pretty good, as historical fiction goes.  Might have even happened like that.

Other than Lincoln, and the fact that he and Jacqueline Bouvier Kennedy were steprelatives of some sort, I don’t really know much about him.  There are a couple other novels that he wrote that sound interesting to me.  Julian is about the Roman emperor who tried to deconvert the empire from Christianity to paganism, which must have been a rewarding endeavor. Or not.

Anyway, I’m interested in defining moments.  Vidal went seriously off his crackers in the last couple of decades, trying to get into the head of Tim McVeigh.  Good luck with that.  I don’t think Vidal could pull off a Lincolnesque mind meld with McVeigh in any way that I would find compelling enough to read.

However, here’s a juicy encounter Vidal had with Norman Mailer on the Dick Cavett show.  I don’t know who the lady is in this video but I adore her gloves, as if anyone needs to wear gloves on a TV set.  Come to think of it, maybe she was on to something.  Vidal and Mailer exchange insults in a way one doesn’t see on TV anymore as Mailer’s train starts to derail.  And Cavett keeps his cool and composure and then delivers a devastating coup de grace.  He makes Bill Maher look like an amateur.

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Diving into a Necker Island pool

And if you have an extra $34,000 sitting around not doing anything useful, you could spend it on a single night on Necker Island, Richard Branson’s private island in the British Virgin Islands.  The Great House burned to a cinder last year after it was struck by lightening during Hurricane Irene.  Not to worry, there are 6 Bali style pavilions and Richard’s private house that he lets out when he’s doing some other fantastic thing billionaires do.  And if your house party spills over, there’s a luxury catamaran called the Necker Belle that can handle the extras.  He also has a 3 seat open sea sub.  Passengers wear SCUBA gear while they glide over the reefs.  It’s an additional $2500 and you must book in advance.

Of course, if you are a personal friend of Richard’s, you can stay for free.  Kate Winslet was there when the house burned down and carried Branson’s 90 year old mother to safety so I’m assuming she’s got her own key now.  The rule is: the more famous you are, the more likely Richard will lend you the island free of charge.  It is now my goal to be the most famous blogger in the world.  I’m sure that I would appreciate the island more than any fee paying rich persons.  *They* only have money.  I have that certain je ne sais quoi and can hold my own at any torch lit dinner party at the beach pavilion.