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The rich rules over the poor, And the borrower is the slave of the lender. (Proverbs 22:7 ESV)In the Old Testament book of Proverbs, King Solomon details the differences in thought, word, and deed between a wise man and a fool. In addressing the foolishness associated with borrowing money, he makes clear the relationship between debt and servitude: No man can truly be free when he is bound by financial indebtedness to another. It's clear, however, that the danger of debt is something a majority of the American people — including members of Congress and our President — have yet...

SAN FRANCISCO (MarketWatch) -- Seven U.S. banks were closed by regulators on Friday, bring the total this year to 140 as the effects of the credit crisis continued to be felt across the country. What's more, the Federal Deposit Insurance Corp. established temporary institutions to help close two of the failed banks.

MACON, Ga. — H. Averett Walker used hot money to turn Security Bank from a sleepy Southern lender into a regional powerhouse. Darrell D. Pittard used hot money to jump-start his brand-new MagnetBank, allowing it to lend hundreds of millions of dollars even though it did not have a single drive-up window or even a customer with a checking account. It is a formula being replicated at banks across the United States. Rather than simply wooing local customers, they have turned to out-of-state brokers who deliver billions of dollars in bulk deposits, widely known as “hot money,” from investors nationwide....

While the nation's lenders ran amok during the boom, Andy Beal hoarded his money. Now he's cleaning up--with scant help from Uncle Sam. BY BERNARD CONDON & NATHAN VARDI Standing outside the glass-domed headquarters of his Plano, Texas, bank in March, D. Andrew Beal presses a cellphone to his ear. He's discussing a deal to buy mortgage securities. In just a few minutes, the deal's done: His Beal Bank will buy $15 million of face value for $5 million. A few hours earlier he reviewed details on a $500 million loan his bank is making to a company heading into...

In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial...

New York Attorney Gen. Cuomo subpoenas ex-CEO Thain By Sue Chang Last update: 11:13 a.m. EST Jan. 27, 2009 SAN FRANCISCO (MarketWatch) -- The office of New York Attorney General Andrew Cuomo said Tuesday it issued subpoenas to former Merrill Lynch Chief Executive Officer John Thain and Bank of America Chief Administrative Officer J. Steele Alphin. The subpoenas were issued as part of its ongoing inquiry into billions of dollars in bonuses paid by Merrill Lynch just days before Merrill was taken over by Bank of America (BAC: "The fact that Merrill Lynch appears to have moved up the timetable...

Bernanke: Game Over? The Market Ticker Monday, January 26. 2009 Posted by Karl Denninger at 07:12 Bernanke: Game Over? Bloomberg is allegedly reporting that Bernanke is "contemplating" buying the long end of the Treasury Curve due to "bond market instability."Here's what he's unhappy about:There is nothing "unstable" about any of this. Rates are going higher. Why? Gee, let's see, Obama says he's going to blow $1 trillion on a "stimulus" package, the other $350 billion of the TARP was released, the GAO says we're going to run well north of a Trillion in deficits, and people are wondering why...

Monday, Jan 26 2009 Revealed: Day the banks were just three hours from collapse By Glen Owen Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown's Ministers has revealed. City Minister Paul Myners disclosed that on Friday, October 10, the country was 'very close' to a complete banking collapse after 'major depositors' attempted to withdraw their money en masse. The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block...

The Zombie Apocalypse Will Eat Our Economy http://www.fool.com/investing/general/2009/01/23/the-zombie-apocalypse-will-eat-our-economy.aspx Alyce Lomax January 23, 2009 According to horror movie canon, there are many ways zombies could come about. These terrifying quirks could consist of anything from radioactivity to pollution to a virus to some mysterious substance from outer space. Whatever the cause, though, it usually reflects something our society fears -- or possibly should fear -- at any given time. Unfortunately, it's becoming clear that the threat of zombies here and now is real. That is, the zombie banks and zombie corporations that are artificially kept alive even though in any rational,...

“If you go back in history whenever we have had periods of forced liquidation like we are having now, periods that only have happened nine or ten times every 100 or 150 years, people have had to sell everything without regards to the fundamentals. The way you make money historically in times like this is you find the fundamentals that are unimpaired and that’s what you buy.” “The fundamentals of General Motors are impaired. The fundamentals of City Bank are impaired by what is happening. The fundamentals of most industries of the world are very impaired. The only thing I...

TARP Part Deux? Do It Right Or Don't Do It The Market Ticker Saturday, January 24. 2009 Posted by Karl Denninger at 14:04 TARP Part Deux? Do It Right Or Don't Do It Virtually everyone agrees on two things right now. The second part of the TARP, $350 billion, will not go to Wall Street bankers (in the main)$700 billion isn't anywhere near enough to clear the credit markets. The second statement is axiomatic (remember, for more than a year I've said this is a $2.5-3 trillion problem just in residential real estate) while the first is one that...

Higher education can be a financial disaster. Especially with the return on degrees down and student loan sharks on the prowl. BY KATHY KRISTOF As steadily as ivy creeps up the walls of its well-groomed campuses, the education industrial complex has cultivated the image of college as a sure-fire path to a life of social and economic privilege. Joel Kellum says he's living proof that the claim is a lie. A 40-year-old Los Angeles resident, Kellum did everything he was supposed to do to get ahead in life. He worked hard as a high schooler, got into the University of...

Gold is unique among commodities as it is perceived as a principal store of wealth. It is an element that does not chemically combine with other elements, does not tarnish, is highly malleable, easy to melt, can be subdivided indefinitely, and can’t be counterfeited. I believe gold’s economics to be comparatively straightforward: • gold is the ultimate competitor to the U.S. dollar; • in the current environment of increasing global competition and military conflict anyone with an interest in building or maintaining wealth who ignores the gold market – and by inference both gold bullion and gold stocks - does...

A senior bank regulator was removed from his job after being accused of helping mortgage lender IndyMac Bancorp alter its records so it appeared to be in better shape -- weeks before it was seized by the government. The Office of Thrift Supervision has reassigned its top West Coast official, Darrel Dochow, who was also a controversial figure in the regulatory lapses surrounding the savings-and-loan crisis of the late 1980s. In a letter sent Monday to Sen. Charles Grassley, the senior Republican on the Senate Finance Committee, the Treasury Department's inspector general wrote that the federal OTS allowed the bank...

A long-awaited sale of IndyMac Bank may be announced as early as today. The Federal Deposit Insurance Corp. has been looking for a buyer, or buyers, for the Pasadena lender since the government declared it insolvent and seized it in July. Final bids were due by Dec. 12, and the FDIC said it expected to close a deal by the end of the year. The American Banker newspaper reported Tuesday that the announcement could come today.

The rapid decline in interest rates since the end of October is wreaking havoc on US corporate defined benefit (DB) plans. By our estimation, the funded status of the average S&P 500 DB pension fund has declined by 35.5% since the end of 2007, with 28% of this decline occurring after October 2008. In our previous analysis, which was published on November 20, we estimated the average US DB plan funded status to be 97% as of the end of October 2008. We now find that the funded status of the average US defined benefit pension plan has fallen to...

The House passed a $14-billion, stopgap bailout of the automotive industry on Wednesday night. But in the Senate, Republicans have the votes to prevent it. And despite urging from the exiting Bush administration, they appear poised to do so. This is big. Normally, lame-duck congresses concern themselves with far less consequential matters. The addition of seven or eight more Democrats in the next Congress may come weeks too late to prevent the bankruptcy (or, in the worst case, failure) of General Motors. In the hours leading up to the critical votes, NRO spoke with Sen. Jim DeMint (R., S.C.), a...

NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded. Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital. Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept...

Dec. 10, 2008 (Reuters) — The U.S. Federal Reserve is considering issuing its own debt for the first time, the Wall Street Journal said, citing people familiar with the matter. Fed officials have approached Congress about the move, which could include issuing bills or some other form of debt and would provide the central bank with more flexibility to tackle the financial crisis, the Journal said. The Fed could not be immediately reached for comment. The Fed can already print as much money as it wants, but issuing debt is largely the province of the Treasury Department. The Fed stepped...

The U.S. Federal Reserve is considering issuing its own debt for the first time, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, it said.