Sometimes I think that all these banks with brokerages attached are issuing 8%-9% preferred while simultaneously driving down their own common to be able to buy back their own stock later on the cheap and ride it back up gaining momentum until the 2013 call dates on all these preferred where they'll do secondary offerings pay off the preferred and the beat goes on! I know it ain't that simple but it sure looks like that is what is going on to me. I mean the real probability of a bank run has what been elevated from what, 2%, to 2.5% probability?
Holley has a point here, but I think it is a much more sophisticated and complex game. There is stuff going on at the individual bank level as Holley suspects, but it is a multi-level game, that at the top level includes the Treasury Secretary and the connected, such as the Carlyle Group. They are settling old scores and positioning themselves for huge profits.
Given that the mismatched short liabilities/long assets balance sheets of the entire financial industry could result in a liquidity crisis for nearly any financial institution in the United States, isn't it quite curious that the financial institutions that seem to have had, or are having, the most liquidity troubles are those that Treasury Secretary Paulson always wanted to see taken out, i.e. Bear Stearns, Freddie and Fannie?
The mortgage/housing crisis is real, but the inside players are certainly using it to set up their next big score.
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