http://www.iht.com/…

The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry Paulson Jr. said they must sign it before they left.

The chairman of JPMorgan Chase, Jamie Dimon, was receptive, saying he thought the deal looked pretty good once he ran the numbers through his head. The chairman of Wells Fargo, Richard Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout, according to people briefed on the meeting.

But by 6:30, all nine chief executives had signed — setting in motion the largest government intervention in the American banking system since the Depression and retreating from the rescue plan Paulson had fought so hard to get through Congress only two weeks earlier.

Sounds a lot like what Herbert Hoover did at the beginning of the Great Depression. We all know, or should after reading the above link, how well that went.

http://www.nytimes.com/…

Goldman Sachs and Morgan Stanley, the last big independent investment banks on Wall Street, will transform themselves into bank holding companies subject to far greater regulation, the Federal Reserve said Sunday night, a move that fundamentally reshapes an era of high finance that defined the modern Gilded Age.

The firms requested the change themselves, even as Congress and the Bush administration rushed to pass a $700 billion rescue of financial firms. It was a blunt acknowledgment that their model of finance and investing had become too risky and that they needed the cushion of bank deposits that had kept big commercial banks like Bank of America and JPMorgan Chase relatively safe amid the recent turmoil.

It also is a turning point for the high-rolling culture of Wall Street, with its seven-figure bonuses and lavish perks for even midlevel executives. It effectively returns Wall Street to the way it was structured before Congress passed a law during the Great Depression separating investment banking from commercial banking, known as the Glass-Steagall Act.

By becoming bank holding companies, the firms are agreeing to significantly tighter regulations and much closer supervision by bank examiners from several government agencies rather than only the Securities and Exchange Commission. Now, the firms will look more like commercial banks, with more disclosure, higher capital reserves and less risk-taking.

I’m fine with this outcome in that the Glass-Steagall Act has been effectively nullified as far as I can tell. However, it makes me wonder if this was all part of some plan. Yes these firms will become more regulated in some ways but in what way does it harm them vs harming smaller firms. Morgan Stanley has had its Utah based industrial bank and word is they have been looking at the benefits of becoming a bank holding company for a while now.

So now they are a net less risky. They claim revenue will be down as a result as will bonuses and perhaps pay. We shall see. How long till the government forgets what led us here and creates the environment for a bubble again? If we make it out of this one… likely not long.

Merrill Lynch to Be Bought By BofA for $29 a Share

Merrill Lynch, the world’s largest broker, agreed to be acquired by Bank of America for $29 a share, or $43.5 billion, after being pressured into a deal by federal regulators.

Merrill agreed to the BofA sale, which represents a huge premium to its closing price on Friday of $17 a share, after talking to several other potential acquirers, including Morgan Stanley.

Morgan turned down a possible acquisition because it couldn’t examine Merrill’s books in 48 hours, a person close to the matter said.

Merrill plans to make an internal announcement to employees sometime between 8 and 9 am Monday morning.

Merrill came under pressure to find a merger partner came after its liquidity began “evaporating” Friday and the firm became worried about a sharp decline in share price on Monday, according to people inside the firm.

Merrill is expecting huge job losses with the merger. The brokerage division will stay intact, but there will be large-scale reductions in workforce. CEO John Thain is also expected to leave.

Lehman Brothers Plans to File for Bankruptcy Shortly

CNBC has confirmed press reports that Lehman Brothers is likely to file for bankruptcy protection as soon as Sunday evening.

Among details to be worked out: the accounting treatment for certain derivatives and repurchase positions, an area not currently covered by bankruptcy laws; and the orderly netting out of a variety of securities positions to which Lehman Brothers is contractually obligated.

Federal authorities are expected to be involved in the orderly disposition of Lehman assets if such a filing occurs. Sources knowledgeable about the weekend deliberations tell CNBC that without some government participation in the process, a bankruptcy filing by Lehman Brothers would cause major disruptions in the financial system.

Officials at the Federal Reserve and U.S. Treasury are taking steps to mitigate risk to the system and assure the orderly functioning of the markets tomorrow.

AIG, Facing Liquidity Crunch, Reaches Out to Regulator

Insurer American International Group, working to stave off rating downgrades and shore up the capital of its holding company, has made an unprecedented approach to the Federal Reserve seeking short-term financing, media reports said.

Chief Executive Robert Willumstad has reached out to the Fed late on Sunday, according to the Wall Street Journal.

The Fed normally oversees monetary policy and supervision of banks, AIG was seeking the funds as a temporary measure and planned to repay the Fed with the proceeds from asset sales.

AIG officials did not immediately respond to requests for comment.

The company, until recently the world’s biggest insurer by market capitalization, has been attempting to hammer out an emergency strategic plan after its shares fell nearly 50 percent last week on fears it faced a liquidity crisis.

And now we are hearing of another interest rate cut. As if this situation wasn’t scary enough.

Who’s taking bets on the Amero showing up sooner rather than later?

http://www.reuters.com/…

A meeting between top government officials and the heads of some of Wall Street’s biggest financial firms over the fate of Lehman Brothers broke up on Saturday but was set to resume on Sunday, a spokesman for the New York Federal Reserve Bank said.

“Senior representatives of major financial institutions reconvened on Saturday with U.S. officials at the New York Fed. Discussions are expected to continue tomorrow,” the spokesman said. Small groups were continuing to work into the night on unspecified issues that were raised at the meeting.

Efforts are under way among Lehman executives, potential buyers and government officials to craft a buyout plan for beleaguered Lehman, possibly before the weekend is over.

Lehman has become the latest victim of the global credit crunch but Treasury and the Fed have made clear they do not want to see taxpayer funds committed to any deal involving Lehman.

Among government officials at the meetings were New York Fed President Timothy Geithner, U.S. Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox.

I wasn’t able to pay attention to the market the 11th and 12th as a result of attending the Service Nation Summit so I missed the Lehman Brothers and Merrill Lynch stock plunge. (Morgan Stanley didn’t do well, Fannie and Freddie dropped quite a bit too.) The Fed claims that they won’t step in with credit because Lehman has been doing poorly for some time and have access to the discount window. Seems last reported was that Lehman was perhaps to be broken up in three ways with “Bank of America would acquire the bulk of Lehman Brothers, including its mortgage assets. Barclays, Britain’s third-biggest bank, would take a smaller parcel including Lehman’s asset management and fixed income businesses, while Goldman would take the rest.” However other sources are claiming Barclays has backed out citing it “couldn’t get guarantees from the government or agree on a private-sector deal to mitigate what it called Lehman’s “open-ended” trading obligations.”

It’s going to be interesting to see what comes out. They really want to figure out something before Asia markets open. Tomorrow could be a really nasty day.

In other news JP Morgan is in talks to buy Washington Mutual. With all these buyups and mergers the results remind me more and more of the 1907 panic where its believed that JP Morgan spread rumors of bank insolvency in order to buy their assets up cheap after the bank run which would inevitably occur. The neo-merchentialist/corporatist system we have continues to increase the power and wealth of the bankers and power elite at the expense of all the rest and the public continues to dig their own grave by playing into the hands of the banks and politicians by requesting more regulation and nationalization which only further expands their power.

For those interested in knowing more about the history of banking in the United States, The Great Depression and why the Federal Reserve System is bad:

America’s Great Depression

• Free: http://mises.org/rothbard/agd.pdf
• Print: http://www.mises.org/store/Americas-Great-Depression-P63.aspx

History of Money & Banking in the United States

• Free: http://mises.org/books/historyofmoney.pdf
• Print: http://www.mises.org/store/History-of-Money-and-Banking-in-the-United-States–P191.aspx

The Case Against The FED

• Free: http://mises.org/books/fed.pdf
• Print: http://www.mises.org/store/Case-Against-the-Fed-The-P69.aspx

I just checked the news and it looks like Bank of America has pulled out too. The Fed is claiming it won’t provide any funds to prevent the collapse. Tomorrow is not going to be pretty. I also noticed that Mr. Greenspan is saying the obvious: “the U.S. credit squeeze has brought on a “once-in-a-century” financial crisis that is likely to claim more big firms before it eases.”

NEW YORK, August 27, 2008-The historic ServiceNation Summit will begin
the evening of Thursday, September 11, 2008 with a Presidential Forum
featuring Senators John McCain and Barack Obama. On September 12, New
York City Mayor Michael Bloomberg will open the day-long summit with
welcoming remarks and California Governor Arnold Schwarzenegger will be
the keynote speaker and conclude the day.

The co-hosts of the summit are Caroline Kennedy, attorney, editor and
writer; Alma Powell, Chair, America’s Promise Alliance; Vartan
Gregorian, President, Carnegie Corporation; Bill Novelli, CEO, AARP, and
Richard Stengel, Managing Editor, TIME. Confirmed participants and
speakers include:

* Senator Hillary Clinton, New York
* Senator Chris Dodd, Connecticut
* Usher Raymond IV, Summit Youth Chair; Founder, New Look
Foundation
* Governor Charlie Crist, Florida
* Governor David Paterson, New York
* Her Majesty Queen Noor of Jordan, The King Hussein Foundation
* Dr. Mehmet Oz, Founder and Chairman, HealthCorps
* Jeffrey Sachs, Director, Earth Institute at Columbia University
* Laurie Tisch, Philanthropist, Laurie M. Tisch Illumination Fund
* Robert Kennedy, Jr., President, Waterkeeper Alliance
* Kenneth Cole, Fashion Designer
* Martin Luther King III, CEO, Realizing The Dream
* Kelly Caffarelli, President, Home Depot Foundation
* Geoffrey Canada, President and CEO, Harlem Children’s Zone
* Laysha Ward, President, Target Foundation
* Dr. Amy Gutmann, President, University of Pennsylvania
* David Gergen, Professor, Harvard’s John F. Kennedy School of
Government
* Scott Cowen, President, Tulane University
* Jean Case, CEO, The Case Foundation
* Ray Chambers, Amelior Foundation
* Chancellor Joel Klein, New York City Schools
* Wendy Kopp, Founder and CEO, Teach For America

The ultimate vision of ServiceNation is an America in which, by 2020,
100 million citizens will volunteer time in schools, workplaces, and
faith-based and community institutions each and every year (up from 61
million today), and that increasing numbers of Americans annually will
commit a year of their lives to national service.

ServiceNation’s bipartisan Summit Leadership Council includes mayors,
governors, former senators and leaders from every sector of American
society (attached is complete list). Major supporters-in addition to
AARP, Carnegie Corporation of New York, Target and TIME-include the
Peter G. Peterson Foundation, The Home Depot Foundation, Bank Of
America, Case Foundation, Charina Endowment Fund, The Jenesis Group, the
Laurie M. Tisch Illumination Fund and Goldman Sachs.

At the bottom of the email are instructions on getting press credentials just like all other releases I’ve received. The difference in this latest one is the inclusion of “PLEASE NOTE: NYPD/U.S. STATE DEPT. CREDENTIALS REQUIRED!” I do not have a NYC press ID and according to the NYPD website it takes 3 to 4 weeks to acquire one… and that’s assuming they’d actually issue one to me. I’ve sent an email to the Service Nation media person concerning this as well as my fellow Manhattan Libertarian Party members. Worse case, I make up my own press ID and show up. Worst that could happen is I get arrested.

From:
Be the Change, Inc.
Tim Zimmermann
(703) 850-0735
tzimmermann@bethechangeinc.org

Additional Contacts:
Rubenstein Communications, Inc.
Germaine Febles
(212) 843-8031
gfebles@rubenstein.com

TIME
Ali Zelenko 212.522.1502
ali_zelenko@timeinc.com

FOR IMMEDIATE RELEASE

PRESIDENTIAL CANDIDATES BARACK OBAMA AND JOHN MCCAIN TO PARTICIPATE IN
FORUM ON SERVICE AND CIVIC ENGAGEMENT ON SEPT. 11 IN NEW YORK CITY

* * *

FIRST JOINT APPEARANCE OF PRESIDENTIAL NOMINEES FOLLOWING THE PARTY
CONVENTIONS

* * *

FORUM KICKS OFF HISTORIC SEPT. 11-12 SERVICENATION SUMMIT

August 21, 2008 [New York, NY] - Presidential candidates Barack Obama
and John McCain will discuss in depth their views on service and civic
engagement in the post-9/11 world during a primetime forum on the
evening of September 11 in New York City.

The Forum is being staged by ServiceNation, a dynamic new coalition of
110 organizations that has a collective reach of some 100 million
Americans and is dedicated to strengthening our democracy and solving
problems through civic engagement and service. It will be the opening
event of the bipartisan, Sept. 11-12, ServiceNation summit, which will
launch a one year grassroots campaign to expand voluntary community and
national service opportunities for all Americans; use proven service
strategies to tackle some of America’s most chronic social challenges;
and call on all Americans to make service a bedrock ideal in our
democracy

At the Forum, called “A Nation Of Service,” Senators McCain and Obama
will appear on stage separately to discuss their respective visions for
the role of service in America’s future. Richard Stengel, Managing
Editor of TIME, will moderate, and the event will be open to all
broadcast networks.

“I look forward to participating in the 9/11 service forum,” said
Senator Obama. “After September 11, Americans of every age, race, region
and walk of life were ready to step up and answer a new call of service
for their country. Making that call to service will be a central cause
of my presidency, because we need the active citizenship of the American
people to meet the challenges of the 21st century.”

“I am pleased to be participating in the ServiceNation Summit in New
York City. The Summit will be an important remembrance of those that
made the ultimate sacrifice serving their country and others as we focus
on how to inspire others to serve causes greater than their own
self-interest through national and community service,” said Senator
McCain.

The Forum audience will include 9/11 family members, young Americans,
military veterans, and thought leaders, and questions can be submitted
by the general public at http://tinyurl.com/6jmhd5. “The Presidential
Candidates’ Forum will serve as a call to action for the next
administration,” said Forum moderator and TIME managing editor Richard
Stengel. “I hope to have candid conversations with Senators McCain and
Obama about their plans for engaging more Americans in national
service.”

I’ve got media credentials now for the summit but I don’t know that I will be able to attend the forum as my confimation email said: “More detailed information, including a schedule of events open to the media and details on media availabilities will be provided shortly.” I’ve sent an email to the Director of Strategic Partnerships to be placed on the invitation waiting list to attend the actual summit. While it seems very unlikely I’ll get the invite I did include that I was a director of the Manhattan Libertarian Party to spice up the request. You can find the rest of the press report minus some quotes from affiliates after the jump.

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