The Three Stooges Meet Wall Street

I couldn't make this stuff up.

One facet of U.S. efforts to inject life into capital markets is a provision in which, for payment of a fee to the Federal Deposit Insurance Corporation (FDIC), financial institutions can have their bonds backed and thus obtain a coveted AAA rating.

On March 9, the FDIC announced that it would be raising this fee for the largest banks effective April 1. And the banks didn't miss a beat in bellying up to the bar before happy hour ended.

Since that time, the banks, led by Bank of America, Goldman Sachs and General Electric, have issued $29.8 billion in bonds, the second highest weekly amount on record (see Bloomberg). Disappointing, but hardly surprising.

What might raise some eyebrows is the rationales offered by the banks. Goldman Sachs said the sale was

consistent with our long-term funding strategy

While Keycorp opined

[the] bond issue was part of our normal funding strategy and not predicated on any change or proposed change in FDIC structure

These folks make Curly, Larry and Moe look like models of sobriety and probity.