Academic

Yesterday every bank stock fell in value 20%.  JPMorgan just crushed government-mandated acquiree Washington Mutual's payroll.  Since stock price falls (and less so layoffs) are what seems to get the government moving, should we conclude that this week will bring yet another TARP innovation?  Perhaps an emergency uptick rule?

Predictions are foolish, but foolish is the coin of the blogosphere.  So here's a prediction.  We're in the implementation phase of the government bailout.  That's different than the crisis phase, and the Fed's ever resourceful monetary machinations will continue regardless of the TARP.  So I suspect that as the administrators of the bailout get ready to leave office, and as the new administrators try to figure out what, exactly, they have been saddled with, what we'll see in the coming weeks are FDIC-directed one bank at a time mortgage relief, some regulator directed mergers, but not very interesting ones, and maybe some regulatory specifications of the bailout statute's provisions, in an effort to forestall the Obama administration's opportunity to zero out bank CEO pay and so on.

These predictions are guaranteed inaccurate.  If you have other views, do leave them in the comments.

And finally, a little housekeeping.  We are a much loved blawg.  And this article on Richard Fuld is well worth your time.