Last evening I went to bed with the futures soaring as if an unlimited government bailout of Fannie Mae and Freddie Mac was a good thing.

See Paulson Crosses Rubicon Lands In 5th Dimension and Operation "Rescue Fannie" Underway - Paulson a Blatant Liar for more details.

It was an instant "gap and crap" especially for the financials as investors immediately had second thoughts. Let's take a look at the scorecard as of 11:30 AM Central.

Equity Scorecard

Earlier today National City Bank was halted but has now reopened. MarketWatch is reporting Commercial banks face heavy sell-off as analysts search for next IndyMac.

Bank stocks were under intense selling pressure Monday as investors and analysts worried that worsening housing and credit problems could claim more banks after the failure of IndyMac Bancorp Inc.

National City shares were briefly halted Monday amid a panic-driven plunge before the company in a statement tried to quell what it called market rumors. "National City is experiencing no unusual depositor or creditor activity," the Cleveland-based bank said. Still, investors shrugged off the news and the shares were off more than 25% at last check.

WaMu shares were also down over 25% in midday trading. Lehman Brothers analysts in a note Monday said WaMu could be forced to substantially boost its reserves to cover an estimated $28 billion of losses on the balance sheet, with $21 billion coming from mortgages. They said home prices and mortgage credit are showing no signs of stabilizing.

SEC Investigating Rumors

Big Brother is at it. The SEC launches securities rumors investigation.

The Securities and Exchange Commission said Sunday it is immediately opening a probe to prevent the spread of false information used to manipulate securities prices.

SEC Chairman Christopher Cox said the investigation is aimed at "ensuring investors continue to get reliable, accurate information about public companies in the marketplace."

SEC Looking For Scapegoats

Is the Fed going to investigate Lehman? Seriously, this is ridiculous. The financial institutions are getting hammered because they are undercapitalized by any rational measure. Earnings suck and are going to continue to suck. If the SEC wants to investigate something why doesn't it start by looking at how and why it and the Fed let this situation get as out of control as it did? The SEC is looking for a scapegoat, when the problem is the Fed and fractional reserve lending.

How Many Bullets Are Left?

Meanwhile take a good look at the institutions in the table above. The question of the day is "How many of those institutions can the Fed possibly bail out?" Three? One? Two?

Minyanville's Todd Harrison looks at it like this. "The Fed has only so many bullets in its gun. The last one will be pointed inward."

If you have money at any bank above the FDIC limit you are living in a complete fog or your are completely nuts. This statement not only applies to individuals but corporations as well. Corporations better be thinking about where they park their payroll.

Mish

GlobalEconomicAnalysis.blogspot.com