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Morning Reading
Good morning. Despite all the bailouts, banks still aren't lending. Plus, remembering when the Fed was boring, and the need for airline pilots to stop being bored:
Congress and TBTF (Big Picture) Good point:
The House draft bill written by Rep. Barney Frank (D - MA) - along with several former Fed attorneys and Treasury staff and consultants -- ignores fundamental reality: You don't employ a bomb squad to sit around and wait for a bomb to explode, you engage them to dismantle it as soon as they find one.
Despite megabailouts, banks still aren't lending (New York Times)
GMAC's return to the public trough -- where it expects to get up to $5.6 billion on top of the $12.5 billion it has received since December -- should serve as a reminder that much of the American banking system is nowhere near where it needs to be despite hundreds of billions of dollars doled out by the Treasury.
If the federal government's strategy to save the banks was meant to get them back into the business of lending to American consumers and businesses, it has not worked yet.
Back when the Fed was boring... (The American):
I am sometimes asked if I miss working for the Fed. Up to now, I truthfully have answered that I have a great job and would not want to go back. But when I was at the Fed, we had mundane worries about the size of daily open-market operations, the level of the Fed funds target, and the wording of the Federal Open Market Committee's statement. I am not sure what my answer would be if I could be responsible for setting wages, option pay-outs, cafeteria menus, dress codes, and commuting routes for some set of financial institutions in the name of preserving financial stability.
Why the Goldman-AIG story won't go away (Bloomberg)
Automation in the cockpit leads to pilot boredom (NPR) Scary:
Goldfarb compares the pilots' case to the dangerous phenomenon of drivers and train conductors using their cell phones to break up the monotony.
"It's 'driven to distraction,'" he says.
The Northwest flight landed safely in Minneapolis. But Goldfarb says that in the 90 minutes the pilots were distracted, they were very likely ignoring messages from traffic control towers and other pilots.
The fact that banks "aren't lending" is a bit misleading. They are lending, just not as much as a year ago.
Isn't that a good thing? Aren't we supposed to realize that we can't all be so leveraged? Aren't the banks supposed to be more careful about who they lend to? It seem to me that banks haven't closed their doors. You can still walk into a GM car dealer and make a deal for financing. Maybe not the same deal you made 2 years ago, but that's a good thing.
Now, all of this doesn't mean that GMAC deserves another bailout, but the 'force banks to lend' argument is much more mindless populist anger than a cold hard look at reality.
