Today in the Financial Crisis, Monday September 22, 2008

From the Los Angeles Times:
Fed jumps in for Wall St. again

The Federal Reserve took another big step late Sunday to reshape Wall Street and end the era of goliath investment banks, even as Congressional Democrats worked to put their imprint on the Treasury Department's unprecedented $700-billion plan to shore up the economy.

The Fed gave the green light for the two remaining major investment banks -- Goldman Sachs Group Inc. and Morgan Stanley -- to become bank holding companies that can create commercial banks to take federally insured deposits, make an array of loans and otherwise act like any other bank....MUCH MORE

U.S. awaits markets' verdict

Caution looms over Wall Street

The Dow Jones industrial average may be almost exactly where it was a week ago, but Wall Street is a completely different place.

In a matter of days, Lehman Bros. Holdings Inc. went into bankruptcy, Merrill Lynch & Co. was snapped up by Bank of America Corp. and giant insurer American International Group Inc. was bailed out by the government. One big mutual fund broke the buck, and another was shut down.

Overall, investors are relieved about the intervention. But they remain quite cautious about the outlook for the financial markets and the economy. Those who remember the savings and loan crisis of the late 1980s will recall that it was followed by about three years of recession, pointed out John O'Donoghue, co-head of equities at Cowen & Co.

"If we're not in one, we will be in one," O'Donoghue said, adding that a government rescue of the banks would not prevent them from tightening their lending standards further. When people and businesses have a hard time getting loans, that tends to stunt economic growth....MORE

And CNN Money:
Oil posts biggest-ever 1-day gain

The Dow Jones Industrial Average closed down 372.75

What we were posting:
5:37 a.m. 
Dear SEC: Would You Take a Look at Trina Solar? (TSL)

I know you've got a lot on your plate right now but a time-and-tape analysis of TSL from 3:55 p.m. EDT to 4:01 p.m. EDT on Friday September 19, 2007 suggests someone was desperate to buy the stock, which jumped 14% in those six minutes.

I bring this to your attention because this type of action suggests a short-cover and my question is:
Was this the cover of an illegal short-sale?

I suppose I could ask the lady attorneys to take a look via discovery but you have something I've always envied: Subpoena power (power, power, power).
Thanks in advance.

10:32 a.m. 
Fed Waives 5-Day Waiting Period on Goldman, Morgan Stanley

Um, what's going on?
From the Wall Street Journal's Real Time Economics blog:

The Federal Reserve said Monday the transaction involving the requests by Goldman Sachs and Morgan Stanley to become bank holding companies may be done immediately. The Fed on Monday released two orders related to its late Sunday announcement of approval of the requests by Goldman and Morgan Stanley. In that late Sunday release, the Fed said the decision included a five-day antitrust waiting period. But in the orders Monday, the Fed said the transaction may be consummated immediately...MORE

10:58 a.m. 
Won't Get Fooled Again
1:10 p.m.
Freak Out in the Oil Markets

My freak out. The markets were just doing what they do. Going forward, if I should be AWOL from the blog for more than a couple hours during the trading day, just assume I am having a complete and total breakdown. Fortunately, President Carter was a micro-managing kind of guy.
From Bespoke Investment Group:

...Just another crazy datapoint in a crazy market. 

From SNL (he'll talk you down at 2:15 in)
...Peter (on phone): Uh.. I, uh.. I took some acid.. I'm afraid to leave my apartment, and I can't wear any clothes.. and the ceiling is dripping, and uh.. I, uh..

Walter Cronkite: Well, thank you very much for calling, sir..

President Jimmy Carter: Just a minute, Walter, this guy's in trouble. I think I better try to talk him down. Peter?

Peter (on phone): Yeah..?

President Jimmy Carter: Peter, what did the acid look like?

Peter (on phone): They were these little orange pills.

President Jimmy Carter: Were they barrel shaped?

Peter (on phone): Uh.. yes.

President Jimmy Carter: Okay, right, you did some orange sunshine, Peter.

Peter (on phone): Very good of you to know that, sir.

President Jimmy Carter: How long ago did you take it, Peter?

Peter (on phone): Uh.. I don't know. I can't read my watch.

President Jimmy Carter: Alright, Peter, just listen. Everything is going to be fine. You're very high right now. You will probably be that way for about five more hours. Try taking some vitamin B complex, vitamin C complex.. if you have a beer, go ahead and drink it....

2:11 p.m. 
Paulson Plan May Benefit Mostly Goldman, Morgan, Analyst Says (GS; MS)

The post below starts out:

From "No self-interest here" (and/or the department of duh):

I should maybe have held some snark in reserve....

2:29 p.m. 
Another Oil Market Victim: David Gaffen at MarketBeat Has Succumbed to the Madness

UPDATE: Below
I suppose it was just a matter of time. After the show* he put on Friday, which got me digging through long undisturbed brain cells for "bravura", he has been reduced to this headline. I picture him laughing maniacally**:

Four at Four: Oil of Oy Vey

From MarketBeat...

"Here at Masada Securities we consider ourselves a fortress of strength in these uncertain times."
5:06 p.m. 
The Front Line of the Housing Mess. And: The Climateer Line of the Day

 I think our mess is a combination of greed and outright fraud....

 5:59 p.m. 
Moody's lowers rating on Washington Mutual Bank (WM)

From the AP via Forbes:

Moody's Investors Service on Monday downgraded the financial strength rating of Washington Mutual Inc.'s main bank subsidiary to "E," its lowest rating, saying the thrift's capital is insufficient to absorb its mortgage losses....MORE

FromMarketWatch:
Moody's cuts WaMu preferred stock to 'most speculative'...

7:33 p.m. 
ALMOST ARMAGEDDON: MARKETS WERE 500 TRADES FROM A MELTDOWN

From the New York Post (like you couldn't tell from the all caps headline):

The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.

Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor.

According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning...MORE 

Just another day at the market.