Barney the Dinosaur has a child's intellect, so he would not understand the damage he is causing. While Barney Frank's intellect is certainly debatable, he's an adult, so he should understand the damage, which makes him that much more dangerous.
The answer to the question: Barney Frank!
Barney is my favorite fool on Capitol Hill; the hippopotamus of hypocrisy, the deacon of delusion (I could go on, but the target is so easy it is not really fair) has done it again. He is truly a hippopotamus in a china shop as he makes comments and pushes agendas that create unintended collateral damage. And, like the consummate politician, he never has the courage to take responsibility for his actions. Let's not forget his constant use of threats and coercion to force banks to "meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods". He wielded the Community Reinvestment Act (CRA) of 1977 like a cudgel. The CRA was well-intended and effective but like many sound pieces of legislation it was bastardized by fools.
Barney Frank and his ilk are at the very root of this credit crisis. However, instead of taking responsibility for his actions Barney uses the tools of a true grifter and with a little misdirection tries to avoid the blame. For the last couple of days he has gotten up on the bully pulpit and blathered on about AIG trader compensation. Today, he made the comment, "Now is the time to begin acting like owners". While this may sound good to the untrained ear, don't be misled. The consequences of the government "acting like owners" would be severe. This action would be seen as a type of (if not all out) nationalization, which would be absolutely disruptive to our banking system and cause further instability in our equity markets.
A respected colleague of ours, Michael Johnson of M.S. Howell explains: "...government attempts to increase the consistency of their approach have increased speculation that all new bank holding companies - especially Goldman Sachs (GS) and Morgan Stanley (MS) - could be forced to announce large reductions in their dividends or raise dilutive capital to repay their original TARP loan and reduce government interference." Naturally, either of these actions would be destructive to share prices. Don't forget to thank your friendly congressman, Barney, if this should occur.
RCM Comment: Meredith has been on point throughout this crisis, so her thoughts bear close examination.
Meredith Whitney on CNBC says same thing will happen in the financial sector this year as last year, but with different assets being purged. Whitney says banks will purge assets, driving valuations lower, sending the equivalent marks on each others portfolios down. Says so much credit is going out of the system, so even if you're ok, your credit situation is weakened, leading to a higher probability of default...Thinks April will be a very busy month as the stress test results are released and banks decide what to sell.
Tuesday, March 17, 2009
RCM Editorial: Barney Frank vs. Barney the Dinosaur. Who Would Cause More Damage As a Congressman?
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