This is becoming very difficult. There is very little going on and it appears that the entire world is awaiting the results of the "stress test" scheduled for Thursday. Well, that is inaccurate. Not the entire world. It appears that the International Monetary Fund has found a mission that of predicting with unerring accuracy the condition of the U.S. Banking system an the requirements facing the same for new capital. Excuse me if I am underwhelmed, then again, one must keep in mind that the Fund has friends in high places as it was no other than Our Hero was once an employee. It was there that he became confused as for the need to pay payroll taxes for you see, you salary from the Fund is essentially tax free (they pay it) and it's easy to become confused...oh, why bother. Suffice to say, it has been a dull day in a fairly dull week.
But, we labor on to report that rumor has it the Wells Fargo, Citibank, B of A and apparently a few others are a bit short of the ready according to the Regulator mob. Oh that ominous note, the bank index has traded up big time. Go figure. Or maybe it's not so hard. Part of the report is supposed to set guidelines for "tangible common equity" for each individual bank and it may well be that the stock boys have no more idea than yours truly what the hell "tangible common equity" is supposed to do to make anyone of us sleep better at night. Oh I know the definition;this is the stuff that is supposed to be there at the end of the day after a bankruptcy. The percentage being floated about is 4--4 1/2% of total footings. Last time I looked the Incredible Shrinking Citicorp had about $2 TRILLION in total footings. If any among you feel that 4% of that number is just about right, would you contact me with your reasoning and the best reasonoer will win a prize. I case of ties, duplicate prizes will be awarded. Employees or any member of the family of a Citicorp employee are not eligible. This offer is available to only members of this planet. Advanced life forms from other galaxies are not eligible. All entries must be postmarked by tomorrow at midnight, eastern daylight time. We are going to get to the bottom of this thing.
Once there is agreement, the short-fall institutions will scurry out into the market to raise the necessary capital from private sources or failing that, Our Hero will make up the difference after about six months...assuming that anyone is left after six months. Actually, I was in favor of this approach a few months back but the major difference in my thinking was that there are some things that are best done in private. Announcing to the world that the First National Bank of Boothill (apologies, Chris Fides) is in extremis is not exactly the best way to prepare the market for a fund raising operation on behalf of FNBB or at least in my experience it never has been. But, I have been wrong before (two or three time to be exact) and there is a price for everything so this could become really interesting. Then again, if people believe that the fund raisers are in the nature of a Government Sponsored Organization ala Fanny and Freddie...well, we shall see. Only thing is those two didn't come out well in the end did they? Neither did Mr. & Mrs. Tax Payer. Then again, the Treasury could provide the funds directly as suggested, but that might result in more howls and shouts for ownership on the part of the government rising to a fever pitch. You pay peanuts, you get monkeys. $2 TRILLION in assets run by monkeys? Hummmmm.
You can see my problem. I'm just sitting out here in fly-over country waiting for a bit of inspiration. Worse yet, of the 10,000 Peonies in the world the wife just bought at least 500 of the 1500 she doesn't already own. She buys, she doesn't plant. They are pretty, however. I've left a pass and not at the gate house for John Lennon in case he comes by to visit. HELP!
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