The fed has a cetain level of tolerance of wealth being taken out of the banking system before they reign in the supply. The fed had given many warnings the past several years to those institutions mentioned above as competition to the banks to back off mortgage banking. The fed basically telegraphed what was going to happen and if you notice the players who are in the best position now are the big 4 (chase, BofA, citi and wells fargo).

The feds agenda is to have big banks in charge or the flow of capital for the simple fact banks are the way the Fed is able to control the flow and distribution of wealth.

The federal reserve was never set up to help or protect the average person. Anytime there is competition to the big banks (jp morgan, wells fargo, BofA, citi) the fed basically adjusts the spigot to re-distribute the wealth back to the big banks(oddly enough there are 2 ways to do this…-raise the fed funds rate so high to make it almost impossible for anyone other than big banks to function or to lower the fed funds rate so low that the big banks have cheap money to take over the competition, and pay very little to do so). You can see one side of this with the dilution of stock value with the capital infusions that most of the mid-smaller sized institutions have had to aquire to attempt to stay in the money game.
What is really going on is that almost all investment banks that stepped out of line and involved themselves in the big banks territory are being cut down at the knees. (The black knight being dismembered in monty python and the holy grail is a great example).

You would have seen all the Investment bankers go down if it had not been for the fact the IB’s were smart enough to entangle themselves with derivatives which created counter-party risk.

The fed could afford bears stearns to go down in flames and hand over the carcass to JP Morgan (It was not a bailout as the media is promoting), This was a warning shot to the other investments bankers to shap up and shift their activities back to bond trading and other such business and get out of the banking sector.

The discount window is only for banks who are under control of the federal reserve and was set up as a saftey net for capital emergencies…the IB’s did not have the ability to go to this window until after the fed made sure bears stears was insolvent.

Even then the fed allowed this window to be open to the IB’s only due to counter party risk.

It is amazing to see the dominoes fall in line—-Bear Stears was an 80 year old company….for this company to go down the way it did is crazy.

The IB’s that are left that do not have connections will go down as well or be gobbled up by a big bank.

Watch Lehman and Merrill…it will be a battle for these IB’s to survive.

Keep your eye on the big banks as they are the source and beneficiaries of all this chaos. Chase, BofA, Citi and Wells Fargo will be left standing with a greater share of the pie and in control of the market.

I would put my money on that once this shift of wealth occurs, the fed will announce some special program(s) and congress will sign a special incentive bill to assist the banks who step in to help those troubled homeowners to catch up or to refinance their homes and then housing will mysteriously stop the free fall and enter a stable period of appreciation- (appreciation by virtue of the special programs that will allow the surplus inventory of REO’s to be purchased similar to the FHA programs back in the mid-late 90’s to get rid of the REO inventory from the late 80’s S&L “crash”). I see the end game- The fed funds rate be pushed up at least 1-2% to help the cause-oil will drop, mortgage rates will come down and the dollar will get stronger so that the imported inflation will be knocked back somewhat.

In the meantime those of us who are being beaten down need to keep our chins up and keep fighting back. Keep fighting and requesting to get a modification or reduction because there is hope. We are getting closer to the turning point. By June of next year this enviroment will be much different mostly for the better.

Good Luck…

Keating Five folks….Keating Five….

I love how Ms. Sweet is ignoring the fact that she has received $367,000 out of her original $480,000 deposit. If my math is correct, that is a sight more than the $100,000 that she was legally entitled to. I wonder where the other $267,000 came from… Hmmm, could it be from the Pritzker family?

Also, I am entirely amused when Ms. Sweet is constantly crying poor mouth. I don’t know about anyone here, but I don’t have $367,000 sitting around in my bank account. Not to mention the million dollar publicity campaign she’s running.

Regardless, the amount of money Ms. Pritzker has raised for the Obama campaign and her cutting edge ideas on fundraising are impressive and there is no getting around that.

You need to look more than 5 minutes. This article is based on several hours of research and not your 30 second google search.

Sorry, but your comment is funny and you may want to take your blinders off.

I’m the Fran Sweet mentioned in the article. Elizabeth apparently you are a very gullible Obamaite. You believe Penny Pritzker? Wow what world do you live in!? Please see the Chicago Sun Times article dated Aperil 28, 2008, titled: Obama’s Subprime Pal which provides proof (a letter signed by Penny) that Penny Pritzker was actively involved in the management of the privately owned Superior Bank as late as May 31, 2001. Penny has never been accused of any wrong doing? Why do you suppose that is? Check out the unpaid loan the bank made to one of the bank’s owners. Note: Bear Stern bought some of the Superior Bank subprime loans after the bank’s failure. In addition, less than one year after Penny Pritzker stole $42 million dollars from the depositors of Superior Bank (not to mention the loan shark interest rates charged the subprime mortgage and auto borrowers)she had the audacity to give a philanthropical gift of $30 million to the University of Chicago. The same elitist university Barack Obama happens to have worked for as a professor of law and at which Michelle Obama worked at in a high level position. I suggest, Elizabeth that you continue your research on the Pritzker sweetheart deals with the government. How is they were able to obtain the Naval base land which closed near Orlando Florida for so little money? How is it the Ernst & Young accounting firm settlement resulting from the Superior Bank failure gave the Pritzkers 25% of the settlement and none to the stiffed depositors? Check into the relationship between Ernst & Young and other Pritzker businesses. (Smell like Enron does it?)
To John Jason and Elizabeth: Unfortunately for Barack Obama we are judged by the company we keep, i.e Jerimiah Wright, Penny Pritzker, Tony Rezko. Like Jerimiah Wright, Penny Pritzker is more than a casual acquaintance of the Obamas, see the Wall Street Journal article Money Maven. When candidates have political positions that are the same or very similar, wise people judge them by their character. One of the factors in judging character is the company a person keeps.