Regional bank stocks are major casualties as Capital Corp of the West, Fifth Third Bancorp, Rainier Pacific, Bank of Granite and Citizen’s Republic rank among top percentage decliners on the NASDAQ. The gloomy scenario for smaller banks tone was set for earlier in the day by Camden Fine, president of the Independent Community Bankers of America. He told the Wall Street Journal that 200 of his 5,000 members must raise capital -- which is in very short supply these days -- because of losses from Fannie Mae and Freddie Mac investments. He predicted 40 members will be merged and a dozen will fail.
Gloomy news cut short the celebration surrounding the latest FDIC shotgun marriage, which spurred once-mighty North Carolina-based Wachovia into the welcoming arms of Citigroup. Citi shareholders are less welcoming to the new addition to the family. They are having dividends cut once again (this time halved to 16 cents) to free up capital needed to right both Citi and Wachovia.
Meanwhile, news from D.C. is decidedly grim as mutinous Republicans are putting poxes on the houses on President Bush and GOP standard-bearer John McCain in voting against the $700B bailout of Wall Street. Less than a third of Republicans in the House voted in support of the bailout.
McCain’s temporary suspension of his campaign and midnight trip to Washington looks even more foolish today than it did last week. The Arizona Senator, who appeared to be yesterday’s man in the debate with Barack Obama, has been thrown under the bus. He is now irrelevant. Republicans are willing to risk a global depression -- predicted by worthies such as Warren Buffett -- in return for the beginning of another grand political alignment.
The GOP has written off the '08 Presidential and Congressional contests. Republican moderates (what’s left of them) are now expendable and being butchered on the altar of ideological purity.
The resulting GOP will be a core group of conservative true believers (fanatics to some). They will wave the flag of unfettered capitalism, the philosophy that got us into the current mess.
Those Republicans are more than willing to wander in the political woods for years, holding to the thought that Goldwater’s thumping in '64 ultimately led to the rise of Reagan. For the rest of us, there is much work to be done to undo the damage done to this country during the last eight years.
