How to distort the truth 101
Posted on July 14th, 2008 by bile Tags: bank, bank run, Charles Schumer, economics, government intervention, IndyMac Bancorp Inc., inflation, interventionism, Ladenburg Thalmann Inc, New York, Richard Bove 1 Comment »Redirect blame.
The government seizure of IndyMac Bancorp Inc. late Friday may set off more concern about other banks failing under the weight of the mortgage implosion and credit crisis, but few seem to be in danger, according to Richard Bove, a banking analyst with Ladenburg Thalmann Inc.
Bove said there was likely some truth to accusations that comments from “a prominent senator” that IndyMac was in danger hurt the thrift, one of the largest mortgage lenders in the country.
Sen. Charles Schumer, D-N.Y., raised concerns about the bank in a letter June 26 that has been widely criticized as undercutting investor confidence in IndyMac. The senator defended his actions in a news conference on Sunday, saying his letter merely pointed out problems that regulators allowed to build up for years.
“There are no benefits by having prominent officials claiming that large financial institutions are failing, are insolvent; are incapable of raising funds; or that they should be allowed to fail,” Bove wrote in a note to clients. “This grandstanding does nothing to create confidence in the American financial system.”
“Additionally, there can be no doubt that this recent era of regulation-lite allowed excesses to develop in the financial system. The unwillingness of the supposed protectors of the system to actually protect it is also inexcusable,” Bove said.
Let us look at these two statements separately and together.
There are no benefits by having prominent officials claiming that large financial institutions are failing, are insolvent; are incapable of raising funds; or that they should be allowed to fail.
BS. Prominent officials are just human beings, likely investors, and their opinions matter just as anyone else’s in the market. They may be ignorant of economic theory, they may be completely talking out of their ass but the MSM has thousands of economic gurus doing that every day and few complain.
Additionally, there can be no doubt that this recent era of regulation-lite allowed excesses to develop in the financial system. The unwillingness of the supposed protectors of the system to actually protect it is also inexcusable.
I would hardly call this an era of regulation-lite. There are lots of regulations. The problem is government intervention. As for unwillingness to regulation. I simply don’t believe that. Politicians will do whatever will get them the most power. If regulation is it they will. Economic law be damned.
Together now. Bove should be complaining about politicians interfering and regulating and not them talking. Is it really that difficult to see that cheap money and other market manipulations are the primary causes for this all? The cheap money dumped into the housing market? The unfair advantages given to the GSEs. The evidence seems to scream off the paper/monitor. These guys like Bove want to keep this fascist system going. They are going to blame those who are competitors. And it’s likely to work… like the many times before… and we will all suffer because of it.
