Anger management

Wondering what Barry Ritholtz -- who last week told attendees at the Inman News Connect Real Estate conference in New York City that housing rescue proposals to date amount to little more than "the hair of the dog that bit you" -- thinks of the government's $100 billion+ backstop of Bank of America and the breakup of Citigroup (the recipient of $45 billion in TARP funds)?

Ritholz uses some PG-13 language in his post on The Big Bicture, "Time to fire Ken Lewis." In a more sedate passage, he writes:

"What a joke this has become. Are we supposed to be somehow comforted that the Federal Reserve and the Federal Deposit Insurance Corp., alongside the Treasury, are involved in the negotiations? They do not seem to have clue.

Time for an orderly liquidation: Start with Citi, move on to BofA, fire the execs, toss the Board, spin out the assets to competent managers who now how to manage risk and avoid excess leverage."

Bank of America CEO Ken Lewis said he moved forward with the company's acquisition of troubled Merrill Lynch because government regulators were worried about the impact on the entire financial system if the company went down.

"We did think we were doing the right thing for the country," Lewis said in a conference call with investors today (the deal closed Jan. 1, and today Bank of America disclosed Merrill Lynch is expected to post a $15.3 billion fourth quarter loss).

Mortgage broker and columnist Lou Barnes says the government has no choice but prevent more catastrophes like the failure of Lehman Brothers in September. The global financial system, Barnes says, can't "rest on market-discipline dominoes. We are stuck with too-big-to-fail, and must adapt to that reality."

(Bank of America today highlighted the fact that it extended $115 billion in new credit during the fourth quarter, including $45 billion in mortgages and nearly $7 billion in commercial real estate loans.)

But Barnes agrees with Ritholz on one point: "We're not going to get anywhere until these imperial CEOs, their co-conspirators, and especially their boards of directors face public disgrace."

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