Bank Day

Well the stress test is over and there is a huge sigh of relief, just like when I used to take them. If I live it was a success, the banks are alive and seem to be doing just fine. For the heads of the banks it may be a different story. Ken Lewis CEO of the Bank of America, I told them to stay in Frisco, is humbled (in his words ) by the stockholders removing him from the chairmanship of the board.
He was on CNBC for 20 minutes and Bloomberg for 1 hour! He made what I thought was a good point this morning on CNBC. He was asked why didn't the banks regulate themselves on the dispensing of loans to uncredit worthy borrowers? No one twisted their arm to make bad loans. His response was that banks compete for deposits, so on a level playing field they have to go as far as legally possible to draw in money. Then they have to loan all that money out as fast as possible. If they don't do the above they will lose market share, and that's a no-no.
Now if the Federal Reserve and the SEC had been doing their job, they would have put the breaks on the heated up economy, by raising interest rates, reducing the money supply, increasing bank reserves and stopping the proliferation of derivatives. Now why didn't they do their jobs???
It's my opinion that the President of the United States of America told the Federal Reserve, the SEC, FDIC, FHA, Fanny Mae, and anyone that he might control that he needed lots of money (Taxes,Debt) to prosecute the wars that he was fighting. His thinking was that if the economy was rolling along at high speed, the war wouldn't be so much of a burden on the minds of the people. In other words the people were not asked to sacrifice for the war, so everything was great. In other words the President, Bush II, was afraid of even a mild slowdown. Because of this short sightedness, the people of this country are sacrificing anyway, but much more than if a bit of cold water had been thrown on the economy when everything got overheated.
We are talking TRILLIONS! For what?
All comments are welcome, now that you know where to find me.
Hang in there. I think our new President has a brain and best of all he knows how to use it for the benefit of the people.
Thanx for your time.