We’ve Been Bamboozled by the Banking Industry, but the Chickens Are Coming Home to Roost

Wednesday, October 20, 2010
By Paul Martin

by Reggie Middleton
ZeroHedge.com
10/20/2010

While chatting with Herb Greenberg before my interview at CNBC on the banks, he asked me why I was short the banks, JPM in particular (JP Morgan’s 3rd Q & Just How XYZ Bank Can Never Go Out of Business!!!). I told him that I believe they are overly optimistic about the reserve thingy (Big Banks Will Pay for Optimism), the mortgage put back cosequences (JP Morgan’s Analysts Agree with BoomBustBlog Research, Contradict CEO Jamie Dimon’s Conference Call and The Putback Parade Cometh: Pimco, New York Fed Said to Seek Bank of America Repurchase of Mortgages) and real estate in general. I also said that in the scheme of things, Jamie Dimon appears to be, by far, the most effective manager of the big banks, and JPM seems to be the best run of the big banks. He negotiated a literal coup with Bear Stearns purchase, getting the billion dollar head quarters for free, the company for $10 per share and government backing for the legacy assets. He made a mistake with WaMu by not demanding a deeper discount. I know it seems like 28% or so off seems like a good deal, but it was not – and I clearly stated it several times (Is JP Morgan Taking Realistic Marks On Its WaMu Portfolio Purchase? Doubtful!). I just want to make this clear. There is nothing personal here, at least in terms of investments and financial analysis. The stream of events are of such grave consequence that this goes beyond mere finance, though. Why? This country has been “Bamboozled by the Banking Industry”, but the “Chickens Are Coming Home to Roost”. Let me explain…

The Rest…HERE

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