Just For The Record ....

Although I agree that the banks needed to get bailed out, or whatever you want to call it, I don't like a lot of things that were done.

1. What's with the concentration? Per the FDIC, there are $13 Trillion of bank assets and the big 4 have $7 trillion! The idea of allowing/encouraging mergers of weaker banks with "stronger" banks is not totally dissimilar to the idea that we were going to pay for the Iraq war with their own oil money. An unrealistic way to do something on the cheap, with awful results. Sometimes it works, but in the S&L crisis, the problem institutions were shorn of their problem assets and then sold off to healthy banks. Now we have to go back and do it after the fact -- the bad bank thing -- partially because no one wanted to pay up initially.

2. What was the idea of combining BAC and MER? As long as a bank does vanilla banking, then scale doesn't change the fundamental nature of the business. Once you start combining traditional banking with a trading and investment banking becomes much more complex. BAC was over the 10% market share rule last year, when it was waived to let them buy (overpay) for LaSalle. Then they were allowed/encouraged to take of Countrywide. Then Merrill. If someone had just told Ken Lewis that he was already big enough -- we would have a pretty healthy mega bank. Instead we have a huge mess.

3. As far as terms and conditions, Buffett insisted that Goldman's senior guys have at least 75% of their net worth in their bank's common stock and not sell as long as he held his preferred stock investment. As long as the senior management is "all in" -- there is some alignment of management and shareholders. Much better then trying to micro manage executive excesses. The treasury should have put an anchor on senior management so if the ship goes down, they are on the bottom along with their share holders.