PayThink

Of the two speeches Sheila Bair made Monday the one at the Economic Club of New York made headlines. The Federal Deposit Insurance Corp. chairman argued her agency should get the job of prison warden for systematically important goliaths after they run into trouble.

Meredith Whitney made a name for herself by issuing dire predictions that proved correct, and at this week´s Milken Institute conference in Beverly Hills, she upped the ante.

Something is wrong here. As journalists it´s impossible to claim that we at BankThink and American Banker aren´t trying as hard as everyone else is to find out how the 19 big banks did on their stress tests, but we also can't say we´re in a comfortable position while doing it. It´s worth wondering whether anyone at the Treasury Department or the White House or the Federal Reserve spent time contemplating this response before rolling out the stress test portion of the bank rescue plan. If so, that person should take a long vacation. If no one contemplated it, then maybe everyone should take a vacation and bring in some fresh-faced temps.

Just a quick query to readers of the timing of an Office of Comptroller of the Currency enforcement action: Was the release of a discrimination enforcement action the day before the OCC defends its enforcement authority over state discrimination laws a case of just good timing or clever calculating?

In a 5,000-word, front-page profile in today´s New York Times, Treasury Secretary Timothy Geithner faces a chorus of critics on his behavior as the president of the Federal Reserve Bank of New York as well as his ideas for a rescue of the financial system.

Former Rep. Jim Leach has always been a man of the world. But no one can accuse him of forgetting home.

Lots to watch for in Washington this week, with the House of Representatives taking up credit card reform and some members of the Senate urging a look at the Federal Deposit Insurance Corp.´s borrowing authority, as well as possible movement on mortgage cramdown legislation.

Another point about yesterday´s revelation from New York Attorney General Andrew Cuomo about the pressure on Ken Lewis to go through with the Bank of America/Merrill Lynch merger: Why did Lewis, known as the "red-blooded" southern, tough-guy banker, not call former Treasury Secretary Henry Paulson out on his bluff? Paulson didn´t technically have the authority to fire anyone.

After a letter from New York Attorney General Andrew Cuomo yesterday revealed that Bank of America CEO Ken Lewis may have been cowed into completing a merger with Merrill Lynch on threats from former Treasury Secretary Hank Paulson, we knew it was time to check in with one of Lewis´ most fiery shareholders, Evelyn Y. Davis. The D.C. scion misses no meetings and takes no prisoners. And as other shareholders´ fury mounted over Lewis apparent failure to disclose the true wretched state of Merrill´s books, we wondered what Davis had to say about the debacle.

Some might argue that Karl Marx was vindicated last year. It seems that capitalists can't miss an opportunity to spoil a good thing, given enough time. Prosperity leads profit seekers to over-invest, Marx would say, and when capacity eventually outstrips demand the whole things collapses. The next generation of winners picks up the pieces at liquidation prices, and the whole cycle starts once more.