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The Federal Confusion Corner

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DC's actions resemble a playground scavenger hunt.

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As Minyans know, I have described the intersection of Wall Street, Constitution Avenue and Main Street as Confusion Corner, but increasingly I am wondering if the term might be better used to reference the intersection of the various branches of our federal government. As someone who tries hard to interpret the tea leaves in Washington, I can only describe the comments from various Government leaders as well, "confusing."

Yesterday, FDIC Chairwoman Sheila Bair offered at the Economics Club of New York that the FDIC insurance fund should only be used for bank deposits. Someone may want to remind her of the billions of dollars of debt guarantees which her Agency has provided on non-deposit obligations to bank holding companies and brokerage firms over the past several months under the Temporary Liquidity Guarantee Program.

Similarly, Reuters reported earlier today that House Financial Services Committee Chairman Barney Frank offered that banks could be out of the TARP program within a year, while the Office of the Comptroller of the Currency (OCC) the Wall Street Journal is suggesting that at least Citigroup (C) and Bank of America (BAC) need additional capital - which is likely only going to come from the TARP.

And how does Joe Q. Public make sense of the fact that the government is going to exchange $10 billion in debt at General Motors (GM) for a 50% interest in the company, while the existing creditors will trade $23 billion of debt for 10%?

And what about yesterday's sightseeing tour of an empty Airforce One around the Statue of Liberty?

While I am sure that all of these statements and actions have considerable thought and rationale behind them, I would offer that, to the general public, they're not a source of comfort.

Admittedly, the process of democracy has never been smooth - but the actions out of Washington of late are beginning to look like a scavenger hunt on the playground.

Somebody needs to herd the cats.



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