We're not quite as healthy as we thought we were. Oops. (WSJ)
J.P. Morgan Chase Chief Executive James Dimon said...that March was a little
tougher than the first two months of the year....Bank of America...CEO Kenneth
Lewis also said that March had been a tougher month for his bank. [Convenient
that they decided to dump this information on Friday afternoon, and at the
close of a very good week].
Readers may recall that a few weeks ago, those two CEOs---along with Citi's
Vikram Pandit---said the first two months of the year had been very good:
Pandit, March 10th: "We are profitable through the first two months of 2009
and are having our best quarter-to-date performance since the third quarter of
Dimon, March 11th: "Jamie Dimon, the chief executive of JPMorgan Chase, said
Wednesday that the bank was profitable in January and February..."
Lewis, March 12th: "We have been profitable for the first two months of the
year," Lewis told reporters after a speech in Boston today.
This was possibly the most nakedly self-serving bullshit the big bank CEOs
have offered to date. ("bullshit" being a technical term of course, see Harry
By February, it was understood that the big banks are all insolvent, certainly
Citi and BofA. To deal with them, consensus among the cognoscenti was finally
tending to a proper recapitalization: wiping out shareholders and forcing
losses onto creditors via debt-for-equity swaps. Call it nationalization, call
it preprivatization, call it FDIC receivership, it was clear that losses had
to be recognized and by those to whom they properly belong: investors across
the capital structure.
But no one really wanted to do this, not in Congress and certainly not in the
Obama administration, where Timmy Geithner has made clear that his priority
isn't a cleansed banking sector, it's a privately-owned one. For obvious
reasons the banks don't like this solution either. So they offered up their
self-serving b.s. regarding January and February, buying just enough time for
Congress/Bernanke to badger FASB into changing mark-to-market rules and for
Geithner to roll out his private-public partnership plan.
Voltron says: Wait until hedge funds figure out that they can hedge their
meager 6% downside for pure "heads we win, tails taxpayer loses." The
government doesn't care, it's a shell game to intentionally obfuscate the