Inside Financial Services

NOT TO WORRY! BRAINLESS ANTI-BANK HYSTERIA STILL ALIVE AND WELL. HERE’S PROOF.

Karl Denninger, the “former CEO of MCSNet, a regional Chicago area networking and Internet company that operated from 1987 to 1998,” on SeekingAlpha on Wednesday:

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Karl Denninger, the “former CEO of MCSNet, a regional Chicago area networking and Internet company that operated from 1987 to 1998,” on SeekingAlpha on Wednesday:

“Every one of [the big banks] should have been a zero in 2008 and the executives should have been brought up on indictments. As such the alleged “value” in these firms is nothing more than government support for the same sort of business model as Full Tilt Poker is accused of–that is, claiming value in assets that does not in fact exist, relying on the belief that everyone will not show up and demand their money at the same time. Proof of this is readily available every day in the market in that these firms are selling at a fraction of their claimed book value; if there was anyone who believed that the accounting was honest they’d instantly buy the firm in question as that would be fastest and most-certain money ever made in M&A.

“That it hasn’t happened is all the proof you need that the accounting is absolute and utter crap.

“Oh Mr. Buffett? How’s your position in BAC working out?” [Emph. added]

Karl! Why didn’t I think of this earlier? You send the Justice Department your incriminating evidence about all the bad things Jamie Dimon did, and I’ll get the buyout group ready for the run at JPMorgan Chase. I know somebody who knows somebody who says he knows a couple of the regulators, so approval for the deal should be no problem.

This fellow Denninger is-what’s the word?-a lunatic. He seems to believe that the banking crackup was entirely the result of fraud and bad faith on the part of the banks. Wrong. The world’s more complicated than that. Bad judgment, bad luck, and misguided housing policy all played a role-the major role–in fomenting the credit crackup. And while bank accounting may be arcane, it’s not “absolute and utter crap.”

As to fraud, the street runs both ways. Borrowers committed their share. At a dinner we had this week with a senior executive at one of the big banks, he told us that fully a third of his institution’s delinquent residential mortgage borrowers are actually investors, who’d represented themselves as owner-occupiers, who’ve stopped paying their loans-but who’ve nonetheless rented out the properties and continue to collect rent on them. Now that’s fraud! The bank can’t point out this situation publicly, our man told us, since in this environment it’s considered bad form. So the Denningerian anti-bank-ites continue to have the floor to themselves. Even though they’re nuts.

And actually, Karl, as long as you raise the issue, I’ll take Buffett’s stock picks over yours, too.

2 Responses to “NOT TO WORRY! BRAINLESS ANTI-BANK HYSTERIA STILL ALIVE AND WELL. HERE’S PROOF.”

  1. checkinguponkarldenninger

    Has anyone vetted Karl Denninger or is it a no-care since the one word “lunatic” fits in all categories.

    I did a little checking on MCSNet (Chicago land) where Karl claims he was the CEO from 1987 to 1998;this is BOGUS.
    Karl Denninger (karl@MCS.Net)| MCSNet – Serving Chicagoland and Wisconsin
    http://www.mcs.net/ | T1′s from $600 monthly / All Lines K56Flex/DOV

    Also I found: [MCSNet GOOGLE SEARCH – OPERATION DID NOT END IN 1998
    What is MCSNet?
    MCSNet is an Internet provider that provides wireless high speed Internet in Alberta.

    A Commitment of Service for Rural Communities
    MCSNet was founded in 1995, and by 1998 the Internet services were expanded to provide DSL in St Paul, Alberta. In 2002, wireless high speed service was launched as the first and only high speed solution for rural communities in the region at that time. Today, we are Alberta’s largest fixed wireless ISP. We are focused on providing reliable high speed Internet for Alberta’s rural residents. Our pursuits include expanding our coverage areas to provide a high speed Internet option to more communities that may have been left behind, as well as continuing to develop and provide modern services to keep our rural communities competetive.
    ——-/
    there are a few more issues with Karl and I would like to add a second wrong that is not co-joined with lunatic; ” phony”

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