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An e-mail from my favorite anonymous bank CEO, “Banker Guy”:

Bernanke to the Rescue

It’s late in the game and our team is down badly, quarterback Geithner is standing on the field without a team to support him. He doesn’t even have a game plan. He looks to the sidelines for the coach. Coach Obama is working on a new stadium, new uniforms, new curriculum, and a new medical program for the team. As his quarterback is asking for the next play, coach Obama is giving an interview to Jay Leno. Then all of the sudden, a walk-on player runs onto the field, grabs the ball, and starts running through the opposition toward the goal line … its Ben Bernanke![# More #]

It all started on March 10th. Bernanke gave a speech that was clear and to the point. Key items were:

“… (W)e have reiterated the U.S. government’s determination to ensure that systemically important financial institutions continue to meet their commitments.” (We won’t nationalize the banks or let them fail.)

“… regulatory and supervisory policies should not themselves put unjustified pressure on financial institutions or inappropriately inhibit lending during economic downturns … capital standards, (and) accounting rules … have made the financial sector excessively procyclical …” (FASB and the regulators need to relook at capital standards, loan loss reserves, mark-to-market rules, and FDIC insurance assessments so that then don’t make the recession worse.)

Then on Sunday Bernanke took center stage on 60 Minutes and provided sound leadership, saying the decline would moderate and then level off this year. Wednesday, he took the ball and moved big time on monetary policy by announcing that the Fed will inject over $1 trillion into the market to provide additional liquidity. Those actions, coupled with the TALF program slowing starting today, have spurred some real optimism into the markets.

In addition, the FASB outlined some interpretations of mark-to-market accounting rules that could have a positive impact on bank earnings, tangible and regulatory capital. Also, the FDIC seems to be backing off its large assessment. Not surprisingly, some investors started buying badly beaten bank stocks and short-sellers covered. There appears to be a heartbeat of life in financials. Optimism does work!

On the negative side, the diversionary circus by Congress and the Administration over AIG will hurt confidence. It is going to be very difficult for financial institutions to be part of a “public/private partnership” when one partner can unilaterally break contracts and change the rules of the game at any time. No banker I know is willing to have any contact with the U.S. government that would cause their bank to be whipsawed by the populist horde and their media criers. If anyone wants to know why “nationalization” of the banks will not work, all they need do is look at the AIG wrestlemania smackdown.

I can be contacted at


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