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TMFEditorsDesk (< 20)

The market's up 3%, a bank rant, and self-loathing...



July 15, 2009 – Comments (6) | RELATED TICKERS: GS , JPM , BAC

Holy moley...if you haven't been paying attention the market's up 3% today!

It's supposedly on strong Intel and Goldman earnings reports and bogus government forecasts that the economy's going to contract at a slower pace (in other news, I'm dying at a slightly slower pace than I was yesterday because I ate a turkey sandwich for lunch instead of pizza).  The real reason: who knows?

A bank rant

Wall Street infuriates me these days. Now that their share prices have stabilized, they're trying to get theirs:

Exhibit A: Goldman is expecting to pay record bonuses based on trading that seems as risky as it ever was. Don't think the others are far behind. 

Exhibit B: Bank of America is trying to weasel out of paying the government $4 billion for its asset guarantees because of a technicality.

Exhibit C: JPMorgan has been whining about the price the government wanted for its warrant buyout and is fighting for lax regulation of derivatives.

If I lose my house and crash on a friend's couch for six months, I'm not arguing with him about a couple bucks on a dinner check when I'm back on my feet. 


Alright, enough with the banks. I'm looking at the man in the mirror now. Two things I did today that I wish I didn't:

- I checked my out my portfolio about 10 times today on Yahoo!'d think it was b/c of the 3% uptick...sadly, no, typical day.

- I got excited b/c a stock I bought in the last few days is up 10% since I bought it last week.  Never mind that the market's been up since I bought it or that it's a very minor short-term movement that has nothing to do with my long-term investing thesis. And never mind the wreckage in the rest of the portfolio...I caught evil Anand calling himself a genius more than once.

As a struggling doctor once said, "What I wouldn't give for more patience!"   

Rant out, 


6 Comments – Post Your Own

#1) On July 15, 2009 at 4:47 PM, TMFEditorsDesk (< 20) wrote:

Further reading:

Goldman Sachs shenanigans (fellow Fool Morgan Housel)

Bank of America shenanigans (Morgan again)

JPMorgan shenanigans (WSJ)



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#2) On July 15, 2009 at 4:51 PM, Imperial1964 (95.18) wrote:

You missed the news about CIT being halted.  Rumors of some sort of government bailout deal.

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#3) On July 15, 2009 at 5:00 PM, TMFEditorsDesk (< 20) wrote:

Per Imperial1964's request, here is the story on CIT:



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#4) On July 15, 2009 at 6:10 PM, rd80 (96.69) wrote:

I'm not real fond of defending bankers, but....

GS - Now that they're out of TARP (they should have never been included in the first place), their compensation plan is none of the government's business.  Besides, NY state and NYC need the tax revenue that comes from all those bonuses.

BAC - If Treasury was stupid enough to let this happen
"Complicating matters, it claims it doesn't have to pay simply because it never signed the papers back in January." (quote from Morgan's article)
Then shame on Treasury. 

JPM - Total non-issue.  There is no requirement for the bank to buy the warrants back.  Treasury is now free to auction them off to the highest bidder.  If Treasury's price valuation is correct, the government will make more on the warrants with a full and open auction than a closed negotiation with JPM. More on the JPM warrants in my Semi-monthly TARPedBanks Report from last week.

Fool On!

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#5) On July 15, 2009 at 6:52 PM, SuperCharge (71.64) wrote:

"Even if they were merely dragged into a black hole caused by other banks, they owe taxpayers a big, fat, thank you. And so does B of A".

If it's true that BAC was pushed (& their shareholders fooled) into the black hole, then it's the other way around. Taxpayers & the fed owe B of A a big fat thank you. Hopefully it'll payoff for everyone in the long run.

"Complicating matters, it claims it doesn't have to pay simply because it never signed the papers back in January."

Great, so in the event of another huge pullback the Treasury won't be paying on that insurance policy. Newflash - BAC jumps the gun... Again.

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#6) On July 15, 2009 at 10:28 PM, TMFEditorsDesk (< 20) wrote:

Great comments.

On's not the bonuses that bother me as much as the risks being borne to generate those bonuses...knowing that ultimately we have to backstop any risks being taken. To be fair, you operate under the system that's in place...hopefully, we'll create a system where too big to fail isn't an option.

On BAC...I know their argument is that technically nothing was signed, but it's disingenuous to say BAC didn't receive massive benefits from the government backstop. The market operated under the assumption there was an agreement in place.  And regarding the whole BAC was forced into all this argument...the whole system was in trouble and as one of the largest cogs of that system, BAC benefitted from the government intervention.  If they didn't want these bailouts, they should have lobbied for more self-regulation to keep systemic risk at bay.

On JPM...yeah, JPM had the right to let the government auction the warrants, but it's just one example of the attitude of these guys trying to get theirs even after the massive bailout they helped cause.  The nickel and diming bothers me after the government saved the industry, graded the stress tests on a curve, and gave JPM sweetheart deals on Bear Stearns and WaMu. JPM and the others are going to fight tooth and nail to put us right back into a too big to fail system by lobbying against things like better derivatives regulation.


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