Friday, November 13, 2009

The Pigs Have Found a New Trough

WSJ's Robin Sidel is reporting that Wall Street firms such as Goldman Sachs and Deutsche Bank are racing to form investment pools that plan to fund acquisitions of failed banks. Goldman and Deutsche Bank already have picked the jockeys that will run their funds.

Who have Goldman and Deutsche Bank picked?

The usual suspects, former J.P. Morgan Chase & Co. Chief Executive William Harrison, former Wachovia Corp. CEO Robert Steele, and Herb Boydstun, former CEO of Hibernia Corp., a regional bank in New Orleans that was sold to Capital One Financial Corp.

Got that a former JPMorganChase CEO and Robert Steele, a former vice chair of Goldman?

It's a very small pig pen. They won't even let private equity in. Sidel writes:
And while private-equity firms are circling badly damaged banks, the Federal Deposit Insurance Corp. issued guidelines in August requiring them to hold higher levels of capital than traditional banks. Private-equity firms also are prohibited from flipping failed banks in a quick sale.

Those curbs create an opening for the new investment pools, which are winning support from regulators.
Crash the system and then fund the takeovers of the crashed banks, nice work if you can get it.

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