WHEN I GROW TOO OLD TO DREAM...

It hasn't happened yet but I'm getting close. The Supremes got cold feet and ruined my dream of intervention in re the Great Chrysler Grab. I can see why as the amount involved was quite small and the fall-out would have been quite large. Perhaps they are saving their powder for GM where the same issue might well resurface with a far greater number attached to it. By the by, did you see GM's new CEO's answer to the question, "What do you know about cars?" Answer: "Nothing." OoooooooK.

Anyway, the papers got signed today and Chrysler is now Fiat by fiat. As stated in the past, Fiat does know a thing or two about cars and as the price of oil just passed $71 a barrel they may get lucky trying to sell the little things they have on the shelf. It's really going to be interesting to watch the surviving dealers switch sales pitches from Hemmis, 442s and four-on-the-floor to, "Ah che bella picalina macchina!" But back to finance.

Lots and lots of stuff. The Treasury agreed to allow a bunch of banks to pay back the Tarp money and released the numbers on the latest actions by Citi to become, "One of the world's best capitalized banks," in the words of their CEO, the besieged Mr. Pandit. This is coming about through the conversion of approximately $68 billion in preferred shares into common equity which will give Our Hero's shop about a 38% ownership in the joint that never sleeps. Now do you remember way back a few months ago when I stated that the concept of equity and capital adequacy involving banks was a myth? From a dog's breakfast, Citi, through the magic of accounting has been transformed into "one of the world's best capitalized banks" WHILE NOT ANOTHER DIME OF CAPITAL HAS BEEN ADDED! Thank you Mr. Geithner for making me look good again. God, sometimes I even scare myself! The amazing part is people and especially the media, the watchdogs of society, continue to fall for this crap.

Of course, this has given our girl friend, Ms. Bair, yet another reason to continue to yap. Now her pitch is the management of Citi must be changed to protect the investment of the American taxpayer in the common shares and to put in some, "Good, old credit managers," who she believes to be lacking in Citi's strength. For a change she may be right as Sandy Weil destroyed the great credit culture that had been a hallmark of the Bank for years while putting together a totally unmanageable mismash of businesses and strategies. Ol' Sandy went so far as to fire his fair haired boy, Jamie Diamond, now CEO of J.P. Morgan Chase after Jamie fired Sandy's daughter (who by all accounts was a first class pain in the ass). How delicious is that? But while Shelia may be on to something, the situation was hardly unknown among regulators with a brain which is why the merger with Wachcovia made considerable sense as it would have brought to Citi a solid group of domestic bankers and a large, solid core of domestic deposits which Citi sorely needed...not to mention some handy tax consequences. Of course it was Ms. Bair, in an outrageous act of conflict of roles, queered the deal while ADVISING Wells Fargo as to their strategy for capturing Wachcovia.
That's our girl.

Our Hero had a tough one today as well. Seems as though The Leader and his gang got hammered by the Wall Street guys on the issue to pay guidelines so they sent poor Tim out to tell the press that the administration was no longer thinking of proposing anything and that they would simply punt it over to Congress. Bad hair day all around. Of course this gives Barney Frank the ball but now the whole thing gets caught in the middle of both houses so it looks like a win for the execs.

The Leader is now telling folks that Congress is going to be under a strict "Pay as you Go" spending restraint--right after he spends all the money in the world over the next few months. This is a charade and a half, but I guess we have come to expect it. The bond market certainly has. Last time I looked the 10 year had ticked up to 3.96%. If summer comes can winter be far behind? Tune in tomorrow. Ciao!