Next are JP Morgan and Wells Fargo?

Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control

Posted on 15 January 2009 by David Merkel

Part of the too big to fail/succeed legacy was the four banks that were inviolate: Citi, Bank of America, JP Morgan and Wells Fargo.? The Fed can’t let any of these fail, so Bank of America (what a nice name) gets extra aid, even after the almost failures of Citi and? Wachovia.

From an idealistic strandpoint, I don’t get the aid.? If aid were not available, Bank of America would have been less aggressive, and we would be moaning about the smaller Merrill and Countrywide troubles today.

But, that’s not the case.? The aid provided has perverse incentives to banks.? The more you moan, and the bigger you are, the more you get.

This will not end well.? My experience tells me that those who are dependent tend to be so, until something big jolts them back to independence.? After all, dependence is comfortable.

2 thoughts on “Next are JP Morgan and Wells Fargo?”

SueReads says:

17 January 2009 at 12:25 pm

Amen, Brother!!!
Zryi says:

15 February 2009 at 10:27 pm

They are just setting themselves (us really) up for a bigger and harder fall. These bailouts are not going to fix anything. When are we going to stand up and say “NO” ?… After next one? Or maybe the one after that?

Comments are closed.

David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures. Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions. Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.