Apple Inc (AAPL)

[langostino]

OT: Further Fraudie and Phoney fallout


Dunno if I'm reading this wrong, but I think the scope and breadth of Morgan Stanley and Paulson's due dilligence on understanding the Fraudie/Phoney fallout was limited to the major banks, SWFs, and Wall Street institutions. At least that's how I interpreted the part of Paulson's speech in which he served notification on all local, community and smaller regional banks that if they hold enough Fraudie/Phoney paper that today's impairment puts them in the danger zone on regulatory cap requirements, they should call the Treasury to notify them.

If I'm right, then there is a huge flood of smaller banks for which this will be the proverbial straw that broke the camel's back. Most people were looking for 800-1,000 bank failures before this is all done. Between IndyMac and the first handful, nearly 1/4 of FDIC's entire piggy bank has been exhausted.

Add it all up, and we could very well see a run on the FDIC in coming weeks and as the dreaded month of October comes knocking, we could be looking at news headlines that FDIC is bankrupt. Naturally, that would require yet another Federal Government bailout, in order to avoid massive panics and runs on the banks.

Would like to be wrong about this, but that's the way I interpreted what I saw from Paulson.

p.s. speaking of a stunning lack of political "dissent," I'm VERY surprised that someone didn't take the opportunity to call for the Fraudy and Phoney execs not to get away with just firing and giant golden parachutes. For the outright fraud they committed in their accounting and SEC filings, these guys should be going to JAIL. Even if not, you'd figure a Dennis Kucinich type would be going ballistic, even if it was only to score cheap political points on some good old fashioned demagoguery. Probably b/c just about every single one of 'em was feeding at the corrupt trough. And both parties were up to their necks in it. Best not to throw stones when you live in a glass house. Mutually agreed upon silence.