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The government announced that it will be investing $250 billion of capital directly into banks, which IMO is preferable to trying to manipulate the MBS market by buying worthless securities. The trillion dollar (literally) question is "How much money is enough money". Well, the trillion dollars may be a good start. Mayhaps the best solution is the to let the insolvent go bust....

Downey Financial Posts $81.1 Million Net Loss: The California thrift company was again hit by heavy costs from bad credit and foreclosed properties. In a news release, CEO Charles Rinehart said, "We continue to work with our financial advisor towards raising additional external capital and we are reviewing the recently announced governmental programs to determine which programs, if any, might be available and appropriate for us."

Wachovia Posts $24 Billion Net Loss: The Charlotte banking company took an $18.8 billion goodwill impairment charge and set aside $6.6 billion for credit losses. In a news release, Wells Fargo CFO Howard Atkins said, "The asset write-downs, reserve build, and other items are consistent with our acquisition assumptions." (Presentation, supplement, prepared remarks.)

  For just two banks, in just this past 24 hours, we have a hole of $25 billion - or 10% of all the monies that is to be invested by our esteemed government on our behalf. Add in Citibank, WaMu (if still reporting as an operating entity, I don't know), and a few regionals on the Doo-Doo 32 list, and you've eaten up at least 50% of the taxpayer's money before even getting out of the quarter, not to mention being right back where you started from last quarter - which was being in enough trouble to allegedly warrant an emergency $750 billion bailout thrown together in a week from a 3 page proposal by Treasury Secretary "The worst is behind us" Paulson, America's bastion of credibility. Keep in mind that we have many thousands of banks in this nation, so two or three or four are simply statistical blips on the radar screen.