I do not see our govt. officals being able to do anything…. smart, reasonable, or timely.

Does this include the military?

Does this include FDIC?

Should both be disbanded?

If your bank went under, someone might claim that you were too stupid for entrusting a Savings and Loan with your money. They might say that you are not entitled to receive an FDIC bailout.

I think everyone needs to see a difference between government actions aimed at rewarding bad home buying/lending and government actions aimed at avoiding potential liquidity problems which could be extremely messy and much more expensive for the economy.

I’m strongly opposed to the first type of actions, but I support the second type of actions if they are smart, reasonable, and timely.

Do any of you have “risky” money market investments? Well guess what? I can argue that the federal government just bailed you out!

“Bank runs” are a bit more complex since the day Jimmy Stewart saved the Bailey Building & Loan by thwarting the irrational behavior which could have led to an unnecessary liquidity/financial crisis in Bedford Falls.

I think that’s the way the fed saw this. If Bear had defaulted on its bonds, other debt, and account holders, then it’s possible that we would have seen irrational runs at Lehman Brothers, Merrill Lynch, Morgan Stanley, etc as people realized that their money market, 401(k), and brokerage accounts aren’t well protected. It might be a bit of a stretch to assume that all these banks would have frozen retail customer accounts while navigating through bankruptcy – but it’s certainly very possible.

I’m sure many of you don’t grasp the possible precariousness of the current liquidity situation. Many believe that some of the disaster associated with the Great Depression could have been avoided if the federal government had intervened more quickly, and I agree. George Bailey relied on his personality and reputation to save his business and much of the town in the process. Well, lgm is partially right. The George Baileys of Bear Stearns were not bailed out (beyond $10 per share). They’ve lost their business. But at least much of the town has been saved.

Yes, yes, yes I’m a capitalist. But certain regulation and oversight is very necessary. Anyone that doesn’t keep their money in a mattress sees the benefits of FDIC. Yes, the federal government is hastily pushing beyond the role established 75 years ago. Sure, it would be better if it was regulated a bit more methodically, and hopefully it will be soon. (Maybe investment bank liquidity will be regulated in the same manner as insurance companies going forward.)

Overall, I think it’s possible that many of you would be doing the same thing if you were helping to manage the fed right now.

It was not a bailout. The principals and stock holders lost almost everything.

Come on, lgm, think! Of course it was a bailout of sorts.

Thanks to the federal government;

1. The bond holders haven’t “lost almost everything.”

2. The debt holders haven’t “lost almost everything.”

3. The account holders (think deposit holders of a Savings and Loan) haven’t “lost almost everything.”

4. The employee severances are carved out so the employees haven’t “lost almost everything.”

There are plenty of interested parties of BSC that were bailed out.

However, that’s not necessarily a bad thing. See my next post.

What’s really interesting is that it was written June 27, 2007!

What happened with the Community Reinvestment concept was really converted to a race to the bottom where the worst abusers of mortgages (flippers, frauds and near criminal players at all levels and all sides of the transactions) sucked the system dry.

Maybe there’s a reason Countrywide’s CEO looks like a mafia don…

Ron Paul said it is not the president’s job to run the economy

So we finally have admission that Ron Paul should have been the Republican nominee. I wonder why the Democrats chose John McCain to be the Republican nominee, not Ron Paul…. maybe it’s because the Democrats are afraid to run against a pro-Constitution Conservative.

What is becoming clear is how dreadful many of those securitized loan packages were and are. BSC wasn’t the only investment bank to get burned [alive] there.

As for regulation, it’s hard to see this mess as over-regulation. It looks more like under-regulation right at the point where the rubber hits the road. NINJA loans, 100% mortgages, ARM’s with staging baloons, flippers up the wazzoo, WaMu’s turn-your-house- into-a-HELOC credit card…

Sorry, I’ve just discovered the HousingBoom blogosphere and shhiiiittt man, these guys have been crazy for a while now.

The only good thing (and that’s relative) is that JP Morgan will be taking over BSC. And although the Fed will backstop their takeover, JPM is expected to spend 1/4 of their 2009 profit doing so.

Just my two cents though.

To put in another way — say you’ve just been caught in a flash flood. You and your car are floating off to the great beyond and someone offers you a ‘bailout’ or a ‘rescue’. Would you want one like Bear Stearns got?

*ps, the faintly recalled refrain of “you bums, you know, you bums” is probably from some comedy routine from the 70′s. Google, alas, can’t remember either. Anyway, I like it.