CUI BONO?

Quite a day today. If you pick up your local blat, you are bound to see some leaked story concerning what our regulators are doing (or not doing) in regard to one of our more prominent institution and you may ask yourself, "Now I wonder who (or why) leaked that?" One of the things you learn in Law School is the old Latin adage, "Cui Bono...who benefits? I bet even Judge Sotomayor learned that at an early age even though according to the Chairman of the Judiciary Committee she never had the benefit of being exposed to the classics. Having attended Cardinal Spellman H.S. in New York City in the seventies as did the good Judge, one wonders where that moron got that idea, but I digress. The latest leak was the secrete agreement under which B of A, Citibank and a couple of other of our stalwarts are operating concerning management, oversight, good practices and God knows what else. As these dictats generally come from the institution's primary regulator, i.e. either the Fed or the Comptroller of the Currency (Treasury) one can assume that its someone on the outside looking in who thinks they can benefit from throwing a spanner in the works and I suspect that it is none other than our old friend Shelia Bair of the FDIC who, through creating disruption and doubt believes she can enhance her own position as she has been attempting to do since this mess started. Cui Bono? This dope. Bet on it.

The other big who benefits question today came from the House hearings featuring former Treasury Sec Henry Paulson. To the surprise of practically no one, Ol' Hank said yeah, I told Ken Lewis that he was toast if he tried at the 11th hour to queer the Merrill Lynch deal. I was watching the proceeding on CNBC when Michelle Caruso-Cabrera asked one of the congressmen, "So?" I like the gal; gets right to the heart of the matter. There was no answer. Of course what Hank did or didn't do is hardly the issue. What this is all about is the ongoing battle about who will do what to whom in the future. Congressman Issa, probably speaking for the Repubs on the committee has from the git-go tried to use this incident to kneecap Ben Bernanke, he being totally opposed to his reappointment as fed Chairman. As we mentioned in a previous post, Rep Issa had best be careful for what it is he wishes. The Dems, on the other hand, are determined to portray all parties as being out of control, a situation that cries out for an entirely new system of regulation and oversight, going as far as to muse that these dark dealings might well take on aspects of criminality. Setting aside for the moment the brilliance demonstrated by both Houses in the oversight of Fanny and Freddie under the guiding genius of the tag-team of Frank & Dodd, one wonders what use 535 Members and 100 Senators would have in solving the kind of mess faced by Paulson if such a situation should again arise. The Mall would become one giant foxhole. But Cui Bono? Seems to me it was Ben Bernanke. Ol' Hank proved to be a stand-up guy and essentially said it was me not him who dropped the hammer on Ken. So maybe we have Ben to kick around for another term. Could be worse. But as Lawrence Peter Berra said, "It aint over 'til it's over." This one isn't. In the mean time, CIT is about to go in the tank and while not an AIG, CIT provides a hell of a lot of credit for a hell of a lot of companies, who provide a hell of a lot of jobs, who...well, just let's say nobody benefits.