Reflating the Idiot Bubble

I remember sitting at a symposium in the fall of 2008. Ken Lewis was the keynote speaker. BofA had just acquired Merrill and Countrywide but nobody seemed nervous. Not one bit. I mean Lehman just went down, but so what? I tried asking Mr. Lewis about the logic behind BofA's recent acquisitions (specifically Countrywide), but he really didn't think there was much risk there. Nope, not much. Now, I was talking about stuff like this , for example. But oddly, nobody at the conference wanted to talk about the risk BofA was taking and had recently taken. Hugh McColl stories were abundant, however.

Almost two years later, I wake up and read the following . Now I have been known to have a blackout from time to time, but this can't really be happening...again?!

Sadly, BofA is not alone as JPM, Citi, Goldman, Stanley and Wells Fargo may resort to similar tactics to boost predictably lackluster second quarter numbers.

I remember my dad nearly snapping off my wrist when I stopped on the street to admire the gentleman mesmerizing bystanders with three bent playing cards atop a cardboard box. "Always the RED, never the BLACK....where's that Queen Laaaady!".

"Do not ever let me see you near that fool". My old man snapped. I didn't get it then. But I sure as hell, get it now.

Back at the peak of the crisis, a 2007 FASB addition known as Statement 159 allowed banks to book profits when the value of their bonds fell from par. The rule expanded the daily marking of banks’ trading assets to their liabilities, under the theory that a profit would be realized if the debt were bought back at a discount.

This in fact, was the favorite toilet bowl tactic of Lehman before they went down the pipes.

Nearly two bloody, sweaty, teary years later, just as we are starting to see some small glimpses of a possible recovery on Wall Street, these morons are starting back up with the same old parlor tricks. I swear, these fools won't stop until every finance professional is as welcome in American society as Roman Polanski is at a pre-teen slumber party.

The following quote has been attributed to many great minds over the centuries, including Ben Franklin and Albert Einstein. Regardless of origin it bears repeating once more...

Insanity: doing the same thing over and over again and expecting different results.

Always the RED gentlemen. NEVER the BLACK, apparently.