EXHAUSTION

The big one is in a school north of here, the little one is south. We have to chase both of them down each day at different times...forget about morning delivery which changes daily. This is not the fun trip we thought it was going to be. Couldn't be age,could it? Anyway, when last heard from I think I was speaking to the stress test about which I had some less than nice things to say. If you remember, Citigroup was the big name that failed...or maybe they didn't, we're not quite sure yet. What we are sure of, however, is that the geniuses at the Fed managed to bugger the math in the computation of the mortgage portfolio, missing it appears that Citi, being our only international bank, actually has mortgage exposure outside of the U.S. that scored better than domestic exposure. Quel surprise! Unknown at this point is whether Citi is now a "pass" rather than a "fail.". Betcha that's how it comes out. Now you may be asking, "where the hell did all this come from," and you would be correct to ask. In a prEss release from the Fed in the dead of night a week ago Friday which is usually the case when embarassment is afoot. So in this theme it was not that much of a surprise that in the annual report of the Dallas Fed which was released today one finds the most interesting suggestion that those Too Big To Fail (TBTF) banks be broken up. My buddy, Paul, who comes from the Hank Gonzalez school of banking along with his buddies in the "oil badness" down in the donut shop in Galveston jumped for joy believing that "them TBTF banks were no damn good anyhow" Of course Paul's knowledge of banking goes back to about 1958 and stops in 1962 but it was a banner day for him. When the Dallas Fed comes up with an idea it's good to pay attention and this idea is no exception. But unlike Paul who didn't read much more that the first line, a more careful analysis would reveal that in addition to concerns over the ability to manage institutions of the size and diversity of the five largest banks (unless of course you are Jamie Dimond) what the system was being asked to do by the monstrosity known as Dodd/Frank was simply impossible and might well add to precisely what was intended to be prevented; the failure of a big TBTF bank. So here we are, full circle.The Washinton pointed hEads engaging in all sorts of basically useless exercises and getting them wrong while so doing whilst being told by their colleagues in Dallas that the whole thing is one great big joke. As an aside, I spent all of Monday in D.C. Fairy Coo Coo land. K Street is more crowded than ever, the politics are the worst that I have ever seen and it is clear that nothing will be accomplished for the remainder of this, an election year. Heading back to the Fly Over Zone on Monday. Can't wait.