Pay To Play

Said a treas'rer: "It's no dereliction,
In financing my home jurisdiction,
If the bank we pick out
For its marketing clout
May've had the odd brib'ry conviction."

Matt Taibbi, raking the financial muck in Rolling Stone, is incredulous that the too-big-to-fail "banksters", who have established a pattern of bid rigging and paying to play in municipal finance, continue to win the lion's share of new issuing business. The attitude of state treasurers toward Bank of America and JP Morgan is conveyed by California's Bill Lockyer, who said:

"I haven't found an investment bank that hasn't had some problem in the last three years. We do business with them all. I think they provide good service. I think they've been highly ethical with us."

The conclusion is that, in the interest of getting the deals done, government treasurers are willing to tolerate a rigged, expensive system. Hat tip to Arthur Cutten of Jesse's Café Américain.

The $1.2 Trillion Rainy Day Fund

At a time which the bankers were stunned in,
The Fed gave emergency fundin'
To hundreds of banks
Of high and low ranks
In New York, Waukegan and London.

The US Federal Reserve has published the data on the 21,000 emergency loans to over 400 recipients, totaling $1.2 trillion, that it made from August 2007 to April 2010. Thanks to Bloomberg, the public can now comb through some very illuminating interactive graphics to compare and contrast the credits to companies large and small, American and international, banks and non-banks. Most know that the heaviest bailing-out went to Morgan Stanley, Citi and Bank of America; many are also aware that European banks such as Deutsche, Dexia and Dresdner availed themselves. But how many know of the lifelines thrown to Legacy Texas Group, Sharon Savings Bank and Stupp Bros.?

A Derivative Argument

Goldman and Morgan disputed
That derivatives must be concluded
Via centralized clearing:
"Our return's disappearing 
If this bank reform bill's not diluted."