Familiar enough, and confirmation that the basic dispute here is about who gets the Juice — the current holders (banks) or the prospective buyers (gov’tal orgs).

– The WS Journal reported that with arm twisting from Barney Frank the SEC is likely to reinstate the “uptick rule” next month.   This requires short-sellers to wait until a stock “ticks” up (indicating net buyers at work) before able to execute a short-sale.

This rule was rescinded … can’t quite recall, three years or so ago.  Under foolish Christopher Cox at the SEC, a move that will be looked back on along with the FAS 157 (mtm) and Glass-Steagall as disastrous deregulation at the fag end of what Reagan wrought that helped turn the pop of the housing bubble into fixed-income armageddon.

– Bernanke talked at some length about revising the mark-to-market accounting to accommodate the fact that not all valuable assets always have markets and most valuable assets sometimes don’t.

See here, sir, for more press and threaded discussion on MTM thru time.

– Boom Boom also tried to soften the nasty FOMC minutes released on Feb 20, wherein the Fed govs were seen estimating that the depression would last another three to six years “absent further shocks.”  Pretty shocking, eh what?

Today Boom Boom suggested that “recovery” might be evident by the end of this year.

Wonder why he said that …

THUS, IN ANY CASE, the Dow 30 was up nearly 400 points — having dropped an ASTOUNDING 22% in the month since Timmy Geithner gave his silly speech.  That’s two “corrections” in 30 calendar days.  That my friends is f&*#&$d.  The Invisible Hand of the market giving you the finger.

But today they were up, on this regulatory rumor, despite the news (see prior comment) that Citigroup seems to be staggering toward receivership despite Timmy’s best band-aid efforts.

The downdraft under Obama-Geithner has been so steep that nine out of ten traders seem now to expect a rally of a week at least.  Some more.  Some are saying this is The bottom. Burp.

Wall Street Journal reports that Citigroup is again knock, knock knocking on the Gov’s door.

The many silly propositions and implications the Journal here delivers are discussed at Naked Capitalism.

My own focus is on the lead:

QUOTE

Barely a week after the third rescue of Citigroup Inc., U.S. officials are examining what fresh steps they might need to take to stabilize the bank if its problems mount …

Federal officials describe the discussions, which are wide-ranging and preliminary, as “contingency planning.”

Regulators are trying to ensure that they are prepared if Citigroup takes a sudden turn for the worse, which they aren’t expecting, these people say.

Citi executives said they haven’t detected signs of corporate clients or trading partners withdrawing their business, even though … shares are hovering near $1 apiece …

Citigroup says it has a strong liquidity position and that its capital levels are among the highest in the banking industry.

END QUOTE

These assurances ring familiar, of course.

Alan Schwartz, of Bear Stearns, a week before it went under.

Then that chick CFO of Lehman, repeatedly stridently brow-beating her naysayers …

Then poor Bob Steele of Wachovia, toe to toe with Jumpin’ Joltin’ Jersey Jim Cramer.

Seems it’s been about five to seven business days after such assurances are broadcast that the bank has gone under.

Beware the Ides of March.

Krugman replies accurately that the prez seems not to realize what’s being called for: a process involving seizure aimed at restoring solvent big banks to the private system ASAP.

The tone of the interview:  We cool!

651,000 jobs were axed in February.  Not cool.

Former Treasury Secretary James Baker comes out in the Financial Times for the Seidman plan (in essence, despite professed shyness for the word nationalization) for “hopeless“banks.

If Obama-Geithner actually set this eminent-domain type seizure into action, it’s likely that the ZOmbie directors would finally sit down at the TARP table and close sales — hitting Treasury bids for eg mortgage bonds at around 20 to 30 cents.

So the most likely result seems no seizure at all — merely pressurizing the Zombies enough to give up the Juice on these wounded assets that are burning down the city.

See this piece by Minyan Peter, a former banker at Minyanville.com, and my comments thereto, outlining this notion of direct seizure. Perhaps will generate some chat there …

Both say Citi and BoA are too big and their obligations too complex for the Gov’t to take on.

Cramer also says it would be too expensive. Up to $5 trillion. I guess he is contemplating a seizure that would wipe out common shareholders but pay off all other stakeholders at par and maintain existing credit obligations. (But why not just allow them to hold their bonds and maybe pref’d shares and let hte operation continue to make their interest payments?)

He also seems to contemplate the gov’t holding the banks for many years, instead of a quick turnaround the only aim of which is to seize the wounded mortgage, credit-card, auto loan (anybody else?) s-f assets that would have been bought by TARP if the banks had been willing to sell.

In any case, it seems that Geithner is himself dead set against seizure and we are likely to see instead a panoply of small bore initiativea out of Tsy to keep the Zombies breathing until the sun comes out.

Perhaps there is a way — I’m talkin’ about the law, eminent domain — to seize the wounded s-f assets without seizing the corporate entity that owns them?   If so, perhaps Geithner might get that show on the road — and before the curtain went up, perhaps the bank directors would say Uncle and hit the TARP’s bids — ie sell at (say, for mortgage bonds) 25 cents — thus giving the juice to the gov’t.

The gov’t would then have to manage — rather passively — one huge trust that owns a ton of structured finance bonds bought at prices well below best guesses as to total return.   No time or regulatory pressures to worry about.  Let them live out their lives.

They favor half a dozen half-measures applied simultaneously in the appropriate spots.

They favor continuing to give the big banks little shots of love when they need it most.

The “stress tests” are said to be coming this Wednesday (two days hence, the 25th). But there are stories around that they are hardly staffed, will hardly be investigative and in essence are a publicity stunt — designed to support the Geithner approach by showing the world that the big banks can endure. With a little (more) help from the Tsy-Fed twins.

Meanwhile Bennet Sedacca at Minyanville.com reports the the rating agencies are downgrading another ton of mortgage-related structured finance instruments:

QUOTE

Last week, there were 9000 [s-f issues] option ARM downgrades.

If that weren’t bad enough, today S&P downgraded hundreds of prime jumbo deals. Some from AAA to C.

This will hurt the supposedly “well capitalized” banks.

The tsunami continues.

END QUOTE