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Memo From “Banker Guy”

Monday, February 16, 2009  |  posted by Hugh Hewitt

One of my regular correspondents is a senior and very successful advertising exec who stays hidden because of his politics. You know him as “Bear In The Woods.”

Now I’m pleased to introduce you to “Banker Guy,” who runs an honest-to-God successful bank, who has opinions on what’s going on in the financial crisis, but who also wishes to remain behind the veil. Here’s Banker Guy’s first offering:

When We Talk About “Banks” Just What Are We Talking About?

According to the FDIC there are nearly 8,300 banks in the United States. However, if you look at the Federal Reserve’s report on consumer credit, you will note that banks provided at little more than a third of the total loans. A quarter of all consumer credit was provided by securitized pools, so-called “asset-backed” securities. If you look at mortgages on 1-4 family residences, once again you will see that banks provide less than 30% of such mortgages and that securitized pools represent over two thirds of all mortgages outstanding.

We have only reviewed two categories of debt, but you get the picture. If you consider commercial loans, then the nearly $2 trillion commercial paper market and public debt markets come into play and are outside of most all commercial and savings banks.

So who are the lenders besides the 8,300 “banks?” They are insurance companies, money market funds, brokerage houses, hedge funds, off-shore banks, and governmental funds. In addition these lenders are GE, GMAC (remember those Ditech commercials), pension plans, and federal, state, and local governments.

The political aspect of all of this is that it is a lot easier to harangue ten or twelve bank CEOs and pressure regulators to harangue the rest of us bankers than it is to deal with the reality of the marketplace of lenders.

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The Presidents

Monday, February 16, 2009  |  posted by Hugh Hewitt

While California waits to see if GOP State Senatro Abel Maldonado becomes the guy who killed the Golden State’s economy and his own political career with a vote for a staggering tax hike, we’ll celebrate Presidents Day on the program with a rebroadcast of historian Richard Norton Smith’s march through the presidents beginning with Washington and ending with W. (IT was taped three years ago, so we can’t go back and add President Obama, though I will gladly have Richard back to discuss the new president often.)

Over the years this broadcast has been among the most popular as Smith is a gifted historian and speaker, and his good humor and love of the subject shines through in every segment. If you can’t listen, you can order the CD from the show store:

History of the Presidency

The California Meltdown: Will Abel Enable Massive Tax Hikes?

Sunday, February 15, 2009  |  posted by Hugh Hewitt

The unfolding comedy in Sacramento should make this legislature a laughing stock of the country. The Democratic leadership have “locked down” the building, keeping Republicans as hostages in the effort to jam down billions in new taxes.

If a Republican senator folds now, he guarantees not only the end of his political career, but also a reputation for political cowardice that will live on in California history. Arnold and the Dems are leaning on Abel Maldonado, who has a promising futre in California politics –if he doesn’t vote for this package. If he caves, I hope Arnold has promised him a job in Hollywood, because Abel’s career will be over in politics.

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