My dearest brother sent me a link to yesterday’s New York Times story detailing how hedge fund investors are circling the country’s small banks like raptors after particularly tasty chipmunks.
Published: May 5, 2009
CAINSVILLE, Mo. — No one seems to want to own a business in this dusty, windswept corner of rural America, population 370, with its crumbling sidewalks and boarded-up storefronts.
First National, with its boarded-up second story and $17 million in assets, is worth about a third of what its owner, a New York investor, paid for an Upper East Side town house in 2006. It is an unlikely launching pad for a new American banking empire. Except, that is, for J. Christopher Flowers, a media-shy New York billionaire who last year bought the First National Bank of Cainesville, one of the United States’ smallest national banks.
With that charter in hand, Mr. Flowers plans to take over a handful of large struggling banks, casualties of the economic crisis. In some cases, he hopes, the federal government will help.
Mr. Flowers, a private equity manager, has no particular love for rural Missouri; in fact, he has never set foot in Cainsville. Rather, he wants to use the national bank charter he picked up in this farm town to go on a nationwide buying spree.
My brother’s comment was telling:
Hello sucker— how the vulture capitalists will pick your pocket with the help of their lobby and the same connivers in the congress!!
And it’s hard to argue that he’s not right. Parties that hold “toxic assets” are going to unload them to other parties who also hold “toxic assets,” who in turn will unload their “toxic assets” to other parties who also hold “toxic assets” in a scheme to make would-be M.C. Escher’s the world over jealous. And all with underwriting from the government and the Fed.
And since this is a game that requires an enormous amount of money to play, why waste our time being aggrieved that the same Masters of the Universe who drove the bus off the cliff own the tow truck that’s come to drag us out? It’s American as Willie Sutton. Or in the words of the immortal poet, Roger Daltry: “Meet the new boss [baby]; same as the old boss.“
citi and other big Investment banks spent bo-coo bucks to eliminate the law that separates regular banking from investment banking and insurance (smoot-hawley?)
It took 10 years, but the bill has finally come due. Banks too huge risks and put the global economy in jeopardy.
USA Today shows the European economy fell even more than the US economy. They were doing the same risky investments as well. Canada banks are doing well, expect them to buy American banks when the smoke clears. TD and the Royal Bank have already made big bank purchases.