State of the Union

I rarely get on a soapbox here, but I was watching a bit of the Geithner show today and it just stunned me how Congress doesn't get it. It is almost scary. And with Obama giving his State of the Union address, I felt it was as good a time as any to toss in my two cents. So much so, that I actually just sent an email to all my elected officials.

The whole meltdown of last year has become a giant finger-pointing exercise and now people like Obama are trying to make political hay of Financial Institutions. Not two days after Brown won MA, and Obama is up there with Volcker with his bold bank tax, which screws the banks that were doing the right thing. In fact, in many cases it wasn't non investment banks screwing up, it was AIG, Lehman, Morgan Stanley, Goldman Sachs, Bear Stearns, Freddie and Fannie Mae.

What really needs to happen is that we let free markets work. Insolvencies can happen and not bring markets to their knees so long as they are done in an organized fashion (think Washington Mutual or Merrill Lynch). The bailouts actually helped other Financial Institutions. I am sure that the day before Bear Stearns had to shut their doors, you could have bought their bonds for 20 cents on the dollar... guess what? They got 100 cents! Now if you buy bonds in a risky company, why should you get 100 cents on the dollar backed by taxpayers? Stunning. Same can be said for Citi, Wells Fargo etc... the bondholders were unscathed. They should have been forced to make concessions BEFORE the Fed and the Treasury stepped in. That only makes sense, but you never hear anything about that. Don't you think if Warren Buffett bailed out a company he'd force concessions from everyone? Bondholders, Stockholders may be even creditors and Unions? Think about what he got when he put 5 or 10b in GE and GS. Not only did he get a high interest rate (about 10%) but he got options to buy their stock in the next 10 years at a low price. Why shouldn't our govt demand onerous terms like that as well? And as voters, if our govt hands over our tax dollars that easily, do we have the right people in office?

Ok, I have vented and feel better. Here is a great link to read: A Blueprint for Financial Reform

Then, I was also a bit angry at JTX today, which is now down about 40% for me. They seem to keep getting hit for the same thing (Jackson Hewitt plunge on lack of funds for loans). I have to think that under $3, if you believe they will survive, they are a steal. And finally CBPO shot up 15% today, recovering a chunk of the previous days 25% drop. I did add shares (not in my MFI portfolio) at the start of the day as they seemed way oversold.