April 1 and the Absurdity of the Financial System

Effective March 31, 2010, the Federal Reserve ceased its $1.25 trillion program of buying mortgage-backed securities, something it had begun doing soon after the financial crisis hit in late 2008.

While that much is fact, everything else about our announcement yesterday was fiction. Happy April Fool's Day!

HAFD
Sorry to disappoint the (incredibly high volume of) Fools who believed that we were indeed opening Long-Term Mortgage Management (our homage to failed hedge fund Long-Term Capital Management) to pick up where the Fed left off. We are not, in fact, buying mortgage-backed securities, and so you cannot join in the fun with us. And that napkin-signed commitment from Uncle Sam? It's … a forgery.

We hope you enjoyed this year's joke, and we hope some of its wackiness highlights important lessons for investors. Let's focus on three in particular:

1. Don't buy what you can't afford.
In its program, the Federal Reserve bought $1.25 trillion in mortgage-backed securities. Long-Term Mortgage Management wanted to operate on the same scale, so we planned on getting clever:

Here's how we got to $1 trillion. First, we're raising $1 billion from investors in LTMM. … Next, we borrowed $10 billion by leveraging this collateral 10-to-1. Learning a thing or two from Lehman Brothers, we then "un-factualized" this debt with repo 105 loans, which made us appear debt-free with that $10 billion still in the bank. From there it was just rinse and repeat, leveraging our $10 billion into $100 billion, and then $100 billion into $500 billion. The other $500 billion was borrowed from the Federal Reserve. Basic financial engineering.

It's no wonder late in the day we faux-announced that a single glitch on an options bet in Asia bankrupted the entire operation. Leverage is a dangerous game. It's just as dangerous for Joe Investor dabbling on margin as it is for investment operations dealing with billions of dollars. Margin could lead to financial ruin, which is why almost all retail investors should stay away from it.

2. Don't buy what you can't understand.
We flat-out acknowledged that this venture was uncharted territory for the Fool. The LTMM site said, simply: "The way Long-Term Mortgage Management works is not fully understood."

Nonetheless: "Together, we can raise a fortune, buy buckets of cheap mortgages, and split the inevitable profits. … Admittedly, this is pretty new to us. But we're already hiring quants like Thornton Anders (center, blue, with goggles)."

Michael Lewis recently argued that the financial crisis was less about corruption than about stupidity -- and, as he pointed out, Wall Street is supposed to be the Smart Money. The pros just didn't sufficiently understand the risk.

This is a strikingly clear message: Don't buy what you can't understand, the corollary of which is: beware that which sounds too good to be true. If it is and you don't understand it well enough to know why, you'll be holding the bag. Our hijinks were in full effect in the Q&A:

Q: Is this too good to be true?
A: This is a once-in-a-lifetime opportunity.

What bankrupted Long-Term Mortgage Management was an eight-sigma event (odds: 1 in 819 trillion) that started with what a trader thought to be a routine butterfly spread options strategy on sugar futures. But this was no routine butterfly spread options contract. Good thing the feds promised to back us fully …

3. Don't buy the status quo.
As we were constructing this year's joke, we cooked up a ton of ways to parody "too big to fail" -- and realized that it's almost too absurd to parody. But we did it anyway: "At the extreme, if we blow the whole damn thing, they'll bail us all out." That's basically the same get-out-of-jail free card given to AIG and Citigroup in the fall of 2008.

You'd think that bailing out billion-dollar firms would be politically risky, but little has been done to prevent such a systemic risk. The financial reform proposal moving through Congress doesn't go far enough toward fixing the problem. The proposed legislation relies on so-called resolution authority, which allows regulators to seize and wind down a failing firm. This sounds great in theory, but it's basically what we did with AIG, Fannie Mae, and Freddie Mac -- disasters that cost taxpayers hundreds of billions of dollars.

As former IMF chief economist Simon Johnson wrote in his blog:

Unfortunately, on the major issue -- too big to fail financial institutions that caused the 2008-09 crisis and that will likely trigger the next meltdown -- [Senator Dodd's financial reform bill has] nothing meaningful in the proposed legislation. The lobbyists did their job a long time ago. 

This is unacceptable. Today's megabanks aren't just too big to fail -- they're also too big to regulate and way too big to clean up in the middle of a crisis. While resolution authority is necessary, we also need to limit the size of our banks to levels far below where they stand today and (as the Senate legislation thankfully specifies) forbid FDIC-insured commercial banks from engaging in risky activities like proprietary trading.

Last November, my colleagues Morgan Housel and Ilan Moscovitz wrote a fantastic plea for ending "too big to fail." They closed by promising to email their article to all 535 members of Congress, as well as to the major banks and their trade associations.

They sent approximately 300 separate emails (some congressional leaders don't make public their address) -- and did not receive a single reply.

This, too, is unacceptable. So at the risk of exemplifying the popular definition of insanity, we're going to try it again -- we'll be sending this article to as many of the 535 members of Congress as email allows.

But this time, we need your support. If you agree with our stance that "too big to fail" needs to end and that any meaningful financial reform needs to make our banks smaller and safer, then click the "Recommend" button at the top of this article and then post a simple "Too big to fail needs to end" comment below. (And if you disagree, please challenge our views by posting a comment.)

Whether you bought the joke or saw it coming, we hope you enjoyed it and had a safe, happy, and Foolish April 1.

Brian Richards would like to give a big thanks to all the Fools who made this year's joke happen. Brian does not own shares of any companies mentioned. The Motley Fool has a disclosure policy.


Read/Post Comments (187) | Recommend This Article (600)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 02, 2010, at 12:09 AM, enxinas wrote:

    i was one of em' lol

    nice one Fools. =)

  • Report this Comment On April 02, 2010, at 12:25 AM, FuzzyD wrote:

    Too big to fail needs to end.

    If you would like more numbers behind your letters, perhaps you could set up a website where Fools could email the letters to their Senators and Representatives. If the website is not feasible, does the Fool give permission for us to send the letter with proper credit to our Senators and Representatives?

  • Report this Comment On April 02, 2010, at 12:30 AM, TMFHousel wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 12:30 AM, monticarlo wrote:

    i walked into that one bigtime,good job guys!

  • Report this Comment On April 02, 2010, at 12:37 AM, TMFDiogenes wrote:

    It's time to end too big to fail.

  • Report this Comment On April 02, 2010, at 12:48 AM, Laustcozz wrote:

    I'm really sad how much I read before i realized that it was a joke. Not that I didn't see it was totally ludicrous; it just wasn't that much more of a farce than the reality of the last couple years. God help us.

  • Report this Comment On April 02, 2010, at 12:57 AM, CajunRon50 wrote:

    I fell for it at first, even sent in a "question" (the 50% profits payout to managers was REALLY bothering me). I figured, by law, this was going to require a prospectus and decided to call the telephone number to ask for one. When I was told by the automated system that the "wait time" for response to my call was over 2 days I became suspicious. I thought, surely these guys aren't pulling such an involved and elaborate April fools joke....surely not! Even to the point of setting up a dummy website?

    I certainly do feel lower case foolish.

  • Report this Comment On April 02, 2010, at 1:15 AM, RRGGBB wrote:

    Too big to fail needs to end as well as the disproportionate pay differences and bonus packages, which in my opinion are created holes in the economy. The disregard for people's well being that invest their time in working for corporate needs to also change.

  • Report this Comment On April 02, 2010, at 1:50 AM, edyboom223 wrote:

    At least there would have been good management!

  • Report this Comment On April 02, 2010, at 1:55 AM, BarbieDal wrote:

    Too big to fail needs to end.

    April Fools Day must live forever.

  • Report this Comment On April 02, 2010, at 1:58 AM, lootster wrote:

    It's good that we review what we have learnt. Else, we might get scammed imagine it was a source from a third party!

  • Report this Comment On April 02, 2010, at 3:16 AM, cdcummings12 wrote:

    Too big to fail needs to end.

    Excellent joke yesterday. Does this mean I will not be called back in 2 days and 36 minutes?

    Well played.

  • Report this Comment On April 02, 2010, at 3:19 AM, aggiewes wrote:

    to big to fail needs to end..

    It took me one reading but after I saw the date I knew it was a joke. You almost had me though. Great Joke.

  • Report this Comment On April 02, 2010, at 3:48 AM, earnEarnest wrote:

    Too big to fail must end!!!

    Otherwise, great Fool's Day! I read quite a bit before figuring it out, then I went and clicked on the "in writing" link and laughed my head off!!! Keep our banks safe and keed on Foolin'

  • Report this Comment On April 02, 2010, at 4:00 AM, gilsh wrote:

    Too big to fail needs to end

    It must end.

    Corporations that are as large or larger than states, are not new. But size becoming a factor that guarantees government bailouts is new.

    Once a corporation knows that the national or international economy depends on its existence, then the "worst case uncle sam will come along and help us" mentality comes to life, and as we all know from socialist countries miserable experience of the 60s and 70s and early 80s, this is a killer mentality.

    There is only one solution: just like the antitrust law,

    a set of laws preventing corporations reaching the size and strength that means they cannot be allowed to fail.

    being so large that you risk the financial stability of the nation or the world, is just as unfair as being a monopoly.

    over a hundred years ago, american legislators were courageous enough to realize monopoly is a danger to free society. now it is time to realize that too big to fail is just as dangerous, and that it is high time for another example of courage.

  • Report this Comment On April 02, 2010, at 5:12 AM, Aristocrisis wrote:

    Har-har. Nice joke. Just like the ones that got billions thrown at it, just a few years ago.

    But this one is too simple:

    'Leverage is a dangerous game. It's just as dangerous for Joe Investor dabbling on margin as it is for investment operations dealing with billions of dollars.'

    Well, you've actually said it already, but the big investment operations can leverage all they want, with a very costly taxpayer safety-net underneath them.

    Too big to fail has to end, also because of the obvious lack of justice to the ordinary Joe worker or investor. Thanks for highlighting this issue for the public!

  • Report this Comment On April 02, 2010, at 6:45 AM, wuff3t wrote:

    Too big to fail needs to end.

    People took it seriously? I guess as others have commented, so much madness has passed for normality over the past few years that nothing seems too bizarre or corrupt to be true any more. However I did think your readers would give you more credit, given the content of your site.

  • Report this Comment On April 02, 2010, at 7:53 AM, lemoneater wrote:

    Too big to fail. Should be amended to say "too big not to fail." King Solomon said: "Pride goes before destruction, and a haughty spirit before a fall." Humans are still the same and hubris is still a fatal flaw.

  • Report this Comment On April 02, 2010, at 8:08 AM, libliever wrote:

    I feel like an idiot but at least I'm in good company:)

  • Report this Comment On April 02, 2010, at 8:39 AM, MPov wrote:

    What ever happened to capitalism? Saying that no bank should be too big to fail means that we should punish banks (and their shareholders) for being successful. Breaking up large institutions just for the sake of it seems like socialism to me.

    I'm in favor of regulation that limits certain kinds of speculation, that strengthens capital requirements, and that makes it easier to wind up failed institutions. However, I don't think government should have the power to break up an insitution just because some bureaucrat determines that it is "too big to fail." That is too much power for the government to have.

  • Report this Comment On April 02, 2010, at 8:43 AM, catoismymotor wrote:

    "To big to fail" is a failure of a government that is too big. Putting our tax dollars at risk to prop up a dead or dying company is irresponsible. If we just let them die other companies will fill the void and the economic impact. Capitalism like nature; it abhors a vacuum.

  • Report this Comment On April 02, 2010, at 8:44 AM, catoismymotor wrote:

    Revised:

    "To big to fail" is a failure of a government that is too big. Putting our tax dollars at risk to prop up a dead or dying company is irresponsible. If we just let them die other companies will fill the void. Capitalism like nature; it abhors a vacuum.

  • Report this Comment On April 02, 2010, at 8:53 AM, ram7017 wrote:

    Too big to fail needs to end.

    My only question is are you for creating another government beuracracy to split up these "Too big to fail" firms or just all out, letting them fail and have other more responsible ones take their place? I'd prefer the latter.

  • Report this Comment On April 02, 2010, at 8:57 AM, TMFMileHigh wrote:

    Too big to fail must end.

  • Report this Comment On April 02, 2010, at 9:06 AM, andryia wrote:

    Too big to fail must end.

    If a bank's failure would bring down our economy, it should be required to split up.

  • Report this Comment On April 02, 2010, at 9:14 AM, VGFORBES wrote:

    Ok hahaha I get it ...forgot the date (seniors moment) but I am relieved as I was about to terminate my Motly Fool subscription because the entire package had just gone into Ga GA land

  • Report this Comment On April 02, 2010, at 9:17 AM, rajasi wrote:

    Too big to fail needs to end.

    Tell that to the Romans.

  • Report this Comment On April 02, 2010, at 9:20 AM, FoolishScientist wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 9:30 AM, panchocharlie wrote:

    to big to fail

  • Report this Comment On April 02, 2010, at 9:31 AM, Aargon wrote:

    Too big to fail must end.

    The people writing the laws for the banks and other groups receive campaign contributions from those organizations that cause them to grease the wheels of the system. Until we come to the realization that this grease often moves us in the wrong direction it won’t end. The politicians know we have a short memory (6 months is the consensus) and as such if they have enough time to reelection there will be no real after effect.

    The change is not a simple reformation of the banking system but a change in the good old boy system. WE must hold our representatives accountable. How is it that only 22% of the people think congress is doing a good job yet 85% think there representative is doing a good job? Are we holding our elected officials to the same level of accountability we hold our children?

  • Report this Comment On April 02, 2010, at 9:31 AM, panchocharlie wrote:

    needs to end

  • Report this Comment On April 02, 2010, at 9:33 AM, shelkeith1 wrote:

    You got me!

    Thankfully it was a joke and not a real scam. I would have been had, apparently along with a few others.

    Another lesson learned with your humor (I hope).

  • Report this Comment On April 02, 2010, at 9:39 AM, money4eds wrote:

    Too big to fail must end.

    If you cant regulate then break them up.

  • Report this Comment On April 02, 2010, at 9:40 AM, TMFBomb wrote:

    Too big to fail must end.

    And that's no joke!

    -Anand (TMFBomb)

  • Report this Comment On April 02, 2010, at 9:41 AM, MizzouFanVan wrote:

    Too big to fail needs to end.

    I still really liked the April Fool's joke when you decided to stop covering any stocks until the recession ended. I guess you'd still be covering sports, chess and White House fashion (or some other such boring nonsense).

    Great job with the prank this year!

  • Report this Comment On April 02, 2010, at 9:56 AM, Noobs16 wrote:

    "Too big to fail needs to end"

  • Report this Comment On April 02, 2010, at 10:04 AM, atandydot wrote:

    So not many people saw the official letter "in writing" on the Hooters napkin? Loosen up people! Great gag guys.

  • Report this Comment On April 02, 2010, at 10:07 AM, KCN007 wrote:

    Too big to fail needs to end.

    This was a great gag, guys! You had me going for about 30 seconds.

  • Report this Comment On April 02, 2010, at 10:09 AM, Jimage wrote:

    RE getting responses from members of Congress. I've heard the the best (only?) way to 1) get your message in front of the actual Rep. and 2) to garner a response is to write a handwritten letter.

  • Report this Comment On April 02, 2010, at 10:12 AM, Hokie33 wrote:

    Too big to fail needs to end!!

  • Report this Comment On April 02, 2010, at 10:13 AM, diamondboy wrote:

    I for one am happy to say that while I didn't realize it was a joke, I did walk away from what seemed like an absurd offer, especially considering WHAT JUST HAPPENED TO OUR COUNTRY AND PLANET!! Argh! I'm relieved, because I thought our beloved Motley crew had finally lost it.....nope, they are as sharp as ever :) Hah! I didn't get Googles April fools joke either!

  • Report this Comment On April 02, 2010, at 10:26 AM, copperbeeches wrote:

    Didn't see until April 2 -- you guys scared the crap out of me. Glad it was a hoax!

  • Report this Comment On April 02, 2010, at 10:26 AM, blesto wrote:

    It wasn't just a good joke,

    It was a very good lesson.

    Too big to fail needs to end!!

  • Report this Comment On April 02, 2010, at 10:46 AM, BasilNM wrote:

    I am a gin u wine fool. Thanks for reminding me.

  • Report this Comment On April 02, 2010, at 11:01 AM, indyjoneses wrote:

    To Big to Fail must end (although one must question whether this should also apply to the Federal Government).

    'Great article / lesson / Joke...

  • Report this Comment On April 02, 2010, at 11:06 AM, WidgetJG wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 11:09 AM, rged101 wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 11:12 AM, guidomam wrote:

    Too big to fail has been a disaster but with banks and congress being so cosy I don't see any change coming soon.

  • Report this Comment On April 02, 2010, at 11:22 AM, VirtualToro wrote:

    It was hilarious. I read very fast; I usually skip words too so I had to reread to make sure what I was reading but I laughed for 10 minutes. Way to go guys!!! C'mon this is fooldom.

  • Report this Comment On April 02, 2010, at 11:25 AM, VirtualToro wrote:

    WOW I am surprised how many serious comments - It was the best April fools joke I ever saw. Thanks again!

  • Report this Comment On April 02, 2010, at 11:26 AM, Whitelabowner wrote:

    To good to be true, I thought at first.

    THEN, I realized this is absolutely absurd!!!

    Great Hoax MF, Fool on.

  • Report this Comment On April 02, 2010, at 11:41 AM, dschleicher wrote:

    Too big to fail needs to end!

  • Report this Comment On April 02, 2010, at 11:42 AM, ctonrick wrote:

    tbf needs t end

    another good annual laugh.

  • Report this Comment On April 02, 2010, at 12:12 PM, dvmgallego wrote:

    Great joke TMF.

    After reading thru all the hyperbole, I tried to digest your solicitation during the day, I realized I didn't understand any of it.

    I also realized- and hope you'll agree- that the LTMM script read like much of your legitimate solicitations (TMF Pro, Opions, RMM). Maybe some future in house editing/restraint is in order?

    Fool On

  • Report this Comment On April 02, 2010, at 12:22 PM, simplicius wrote:

    Terrific prank. It had me going until I started reading the FAQ section and realized that your answers literally violated everything that TMF has been preaching since I first started subscribing in 2004. At some point before I reached the end of the section, I remembered what date it was and my sense of horror immediately was transformed into admiration. A well thought-out and entertaining spoof, and with a lesson to boot!

    Bravo!

  • Report this Comment On April 02, 2010, at 12:27 PM, seinfeld38 wrote:

    They already get to make money with OPM (Other People's Money), the least they should do is be responsible about it.

  • Report this Comment On April 02, 2010, at 12:29 PM, seinfeld38 wrote:

    P.S. I really liked how the prank extended all the way to your HR page. The description of the job related to LTMM compensation head was a scream!

  • Report this Comment On April 02, 2010, at 1:10 PM, SpyGlass500 wrote:

    Too Big To Fail needs to end.

    I got as far as the Q&A on the Fool's program, and bailed. All I could think about was "How in the world can this be legal?", I gave up on ethical when it comes these giants long ago, and steer REAL CLEAR of all of them.

    Good one!

  • Report this Comment On April 02, 2010, at 1:25 PM, xbows wrote:

    End too big to fail!

  • Report this Comment On April 02, 2010, at 1:28 PM, Verbauwhede wrote:

    Excellent AFJ!

    I’m going to take a dissenting position on too big to fail.

    I own shares (not a large amount) of what used to be General Motors, now essentially worthless. I bought them when I became convinced that the economic repercussions of GM failing would be orders of magnitude greater than the cost of the bailout. What I didn’t foresee was the government diluting my holding out of existence. Of course, my analysis could equally have applied to buying Ford, in which case I would now be claiming to be a genius.

    Here’s why I think the bailout was the way to go.

    The shutdown of GM would have made large numbers of suppliers to the auto industry uneconomic to operate. The disappearance would have tightened supply and raised prices, which would have impacted Ford and Chrysler and others manufacturing in North America. What you would get would be a ripple effect that would depress the whole economy and demolish a lot of businesses.

    The dismissal of GM’s labor force would have created a massive unemployment shockwave that would take years or decades to work off.

    The breakup value of GM’s manufacturing capability would be a fraction of its value as an operating entity, and this loss would be a cost to the nation as a whole.

    While the government’s exchange of GM’’s equity for a bailout was a bad thing for me, it was the best thing for taxpayers. Someday, potentially, this equity will get sold into private hands, and deliver tax-offsetting revenue to the government.

    So I say, if it’s too big to fail, take it over, fire the management, but try to preserve the value.

    I think that much the same reasoning would apply to the banks. Forcing them into being what they need to be is a better way than wholesale destruction.

  • Report this Comment On April 02, 2010, at 1:54 PM, eggwis wrote:

    Too big to fail needs to end! It is virtually a license to repeat. That IS insanity!!! Just because Wall St. is once again walking on sunshine and the ecoonomy is supposedly recovering, doesn't mean that all is behind us and forgotten. Are the big banks that CREATED this mess, also going to repay the billions of dollars lost by the guy on main st. because his business folded while banks had their purse strings all knotted up? Or the people who lost their homes and jobs? Those of us who populate the America, outsidde of Wall St., will be paying for their greed and stupidity for decades. When Wall St. and corporate america begin to realize that they are people too, we may have a chance. Until then, it's just a matter of time 'til it all happens again.

  • Report this Comment On April 02, 2010, at 2:03 PM, mnjones wrote:

    Even The "Father of Capitalism," Adam Smith, admitted that oligopolies and monopolies were inherently destructive and should not be allowed.

    To big to fail needs to END!

  • Report this Comment On April 02, 2010, at 2:03 PM, melbelliott wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 2:05 PM, ardale1960 wrote:

    To big to fail needs to end NOW!!!

  • Report this Comment On April 02, 2010, at 2:06 PM, tallman68 wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 2:07 PM, tallman68 wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 2:13 PM, clayman14 wrote:

    To big to fail needs to end!

  • Report this Comment On April 02, 2010, at 2:18 PM, Jwk567 wrote:

    "Too big to fail needs to end"

  • Report this Comment On April 02, 2010, at 2:20 PM, jhende514 wrote:

    Too big to fail needs to end. "Too big to fail" is antithetical to American principles of capitalism. If a business can't sustain itself, then it needs to restructure, innovate, or go bankrupt so other better managed companies can step into the gap.

  • Report this Comment On April 02, 2010, at 2:23 PM, ruralfreedeliv wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 2:23 PM, jrod212 wrote:

    Too big to fail needs to end!

    Loved the joke and lesson.

  • Report this Comment On April 02, 2010, at 2:27 PM, instersting wrote:

    Too big to fail needs to end, sure. But will we still be saying that when the recession is over and our stock portfolios have recovered? Or will we just go back to calling any efforts to regulate the financial markets 'socialism'?

  • Report this Comment On April 02, 2010, at 2:29 PM, mnjones wrote:

    In fact, now that you have me going, I have something else to say: Too many times I have read articles or comments that assume "Capitalism" is about exploiting your society, or that it is about "making all the money you can no matter the method or consequences." Capitalism is about adding value and quality of life to the people that make up your society. Litterally, the theory is that if you help your society, it will automatically reward you. The big banks aren't capitalists, they are exploiters and grafters, and my constitution says I should bear arms against exploitive government. Unless I want to die, that isn't possible in this country, but I certainly can use words rather than bullets!

    BIG Corporations that have the power to BUY government need to END!

  • Report this Comment On April 02, 2010, at 2:31 PM, tazar wrote:

    Too Big To Fail needs to end.

    Y'all got us too! We were pooling our money together to take advantage of your 'can't lose' proposition. Now our retirement is that much further out...Should have known you guys were fooling us, isn't that your name?

    Keep up the humor, God knows we will need it going forward with the crap our government is forcing down our throats. Best of Luck!

  • Report this Comment On April 02, 2010, at 2:49 PM, grantrick wrote:

    "Didn't get fooled again..." Story looked rotten from the start.... MBSs, just had to see past the 'M'.

    But, well done and great way to reinforce common sense.

    And, 'yes', too big to fail has to end.

  • Report this Comment On April 02, 2010, at 2:59 PM, tabooma wrote:

    Let's go back to Glass-Steagall. It worked just fine before Sandy Weill and his henchman Robert Rubin got to Clinton. b/r T.

  • Report this Comment On April 02, 2010, at 2:59 PM, WATJ wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 3:01 PM, TigerPack1 wrote:

    Trust me, Congress is not "too-big-to-fail," and neither are the bigger political star names on Capitol Hill.... My personal message to each and every one of you is: time is up - most every existing member of Congress is going to be replaced in the November 2010 mid-term election, regardless of party affiliation or ideology... Congress has failed America in dozens of ways over the last 18 months, and will soon be replaced... Sorry boys and girls in Washington, you had your chance, now pack your bags and go home... A wave of anger, resentment and change like never seen in modern times in this country is quickly approaching... This tsunami is about to take you all out to sea. The Treasury debt downgrade now slated for September or October, just before the election, will be the final straw for this once great nation of thinkers and common sense policy makers. I am sorry but McCain and Reid, both important Senators from the leading 2-party system that has "failed" U.S., your days are numbered also... I suspect half the Senators up for re-election will not win in November either. Even outspoken Rep. Ron Paul may be replaced in a few months. Just thought I would give you idiots and nation destroyers (I am talking about America, not a Middle Eastern variety of nation hit by our military) some heads up, so you are not shocked at the coming result. THROW THE BUMS OUT!

  • Report this Comment On April 02, 2010, at 3:03 PM, Shark52 wrote:

    To Big to Fail needs to end. We need to make bankers only do banking - as Charlie Munger aptly puts, real boring stuff. If it is not boring banks should not be doing it.

  • Report this Comment On April 02, 2010, at 3:05 PM, posauneprof wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 3:09 PM, maikusan wrote:

    Not only does Too Big To Fail need to end, but the government needs to get their act together and resolve US debt and spending issues or the TBTF will be US! Who do you think is going to bail US out?

  • Report this Comment On April 02, 2010, at 3:11 PM, clchapman43 wrote:

    Too big to fail needs to end.

    Nothing is too big too fail and I'm afraid that inclues our country!

  • Report this Comment On April 02, 2010, at 3:12 PM, aborner wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 3:16 PM, RonbonBFhon wrote:

    Too Big to fail needs to end.

  • Report this Comment On April 02, 2010, at 3:16 PM, sergan wrote:

    too big to fail has future in nowhere land

  • Report this Comment On April 02, 2010, at 3:16 PM, LakeDaisy wrote:

    "Too big to fail needs to end"

  • Report this Comment On April 02, 2010, at 3:24 PM, HODGEPODGE73 wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 3:28 PM, WOODNEYE wrote:

    If too big to fail means fire the management and take their holdings then I'm in big time!

    Now...I wonder if I can return the $1.5 million yacht and convince them it has appreciated?

    Too big to fail needs to end!!!!

  • Report this Comment On April 02, 2010, at 3:28 PM, MaxTheTerrible wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 3:31 PM, ScottRichard wrote:

    Hoax?

    Please return my $750 million in BSBS non-recourse paper insured by an undisclosed company. The certificates were sent via overnight courier for arrival Friday a.m.

    SR

  • Report this Comment On April 02, 2010, at 3:32 PM, ironyworks wrote:

    April 1 at the Fool had me grinning yesterday morning...thanks folks.

    The concentration of capital in so few hands is an invitation to disaster.

    Capitalism needs tempering.

    Big money needs to be isolated from politics.

    "Too big to fail" institutions are a serious threat to our national security.

    The regulations need to be greatly stiffened; and financial crimes must be punished in proportion to their economic impact. A good standard would be the punishment meted out to a black man stealing beer in the deep south....in days in jail per dollar value stolen.

  • Report this Comment On April 02, 2010, at 3:38 PM, umedge91066 wrote:

    From the beginning I felt it must be a joke as it was somewhat absurd. But was more intrigued when you were looking for a compensation specialist ( though the creative executive pay schemes should have been a big clue). Had i clicked on the link, it would have been a dead giveaway. Great joke!!!

  • Report this Comment On April 02, 2010, at 3:49 PM, JIMRH1 wrote:

    The expressions on Dave and Tom Gardners faces pretty much gave it away. Dave with an awestruck look of amazement and Tom with a ludicrous look of great arrogance as if only he can comprehend some untold secret, which is exactly what big banks and politicians want everyone to believe they are capable of.

  • Report this Comment On April 02, 2010, at 3:50 PM, afool4allseasons wrote:

    Government is the fat slob who freeloads off of working people and is too lazy to get a job. And what's worse, government crowns itself King and acts as if it's the indispensible guardian of a vast hoard of juveniles.

    "Too big to fail" is just an idiotic excuse by government to stick its lazy, obese hands into the marketplace so it can gain more control of free America.

    Creative destruction is the yang of the marketplace booming ying.

    There are a lot of people out there not paying attention right now, and that's scary.

  • Report this Comment On April 02, 2010, at 4:12 PM, blkdrgn wrote:

    too big to fail has to end....or it will be the end of us

    All Fools who slobber all over "moats" ought to reflect on "too big to fail" being the greatest moat of all. Fact is monopolies and oligopolies how ever formed are anathema to the notion of "efficient markets" and therefore the very premise of capitalism's virtue.

  • Report this Comment On April 02, 2010, at 4:12 PM, sphhps wrote:

    I was reamed. I completely forgot it was the fool day. Grand job.

  • Report this Comment On April 02, 2010, at 4:13 PM, bretco wrote:

    Too big to fail needs to end and Chris Dodd needs to be tarred and feathered, along with the rest of his committee.

  • Report this Comment On April 02, 2010, at 4:14 PM, Aorion wrote:

    That one yesterday had me responding with "This could be interesting If I didn;t think it was an April Fools joke from the Motley Fool" But it was fun to read and the Hooters napkin gave me a chuckle.

  • Report this Comment On April 02, 2010, at 4:15 PM, bretco wrote:

    Too big to fail needs to end,

    and Chris Dodd needs to be tarred and feathered

    along with the rest of his committee

  • Report this Comment On April 02, 2010, at 4:18 PM, rajeshbella wrote:

    Too big to fail needs to end.

    While petty crime (and compared to the 2008 collapse, it's all petty) gets people years in the slammer and life savings of fines, the crooks of Wall Street have got no fines and have seen no prisons. In fact they continue to enjoy the FRUITS of their crime.

    This is not a question of right or left, it is a question of right or wrong. The lobbiest have bought both parties.

  • Report this Comment On April 02, 2010, at 4:18 PM, themoment wrote:

    To big to fail needs to end.

  • Report this Comment On April 02, 2010, at 4:19 PM, RSue wrote:

    As always, an ingenious April Fool's Day prank from the Motley Fool. I agree wholeheartedly -- too big to fail needs to end for once and for all!!!

    If anyone would like to watch the account of a fascinating cautionary tale from the past that encompasses all of the above lessons in one form or another -- CNBC has today begun to air the documentary film on the Enron debacle in the early years of this decade called "The Smartest Guys in the Room". I would highly, highly, highly... recommend that all investors watch and learn from this eye-opening film.

    RSue

  • Report this Comment On April 02, 2010, at 4:32 PM, Lowellash wrote:

    I loved the joke! The Q&A was hilarious, too.

    I'm not convinced about too big to fail needing to end. I do believe the big banks are too big, but more than anything they need comprehensive and effective regulation. Even small banks can fail - that's what happened in the '30s. And the regulation that was enacted after that failure worked quite well until it was removed prior to this one. All banks must be regulated to prevent another meltdown.

  • Report this Comment On April 02, 2010, at 4:41 PM, rega99 wrote:

    Hay, is it to late to get in on this great deal. I want to invest my life savings into the new fund!!!!!

  • Report this Comment On April 02, 2010, at 4:43 PM, goldilocks52 wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 4:58 PM, bonawant wrote:

    I read several pages late last night and just went to bed thinking it had to be a joke. didnt realize it was April FOOLS till today. Nicely done!

  • Report this Comment On April 02, 2010, at 5:00 PM, BubbleLight wrote:

    TOO BIG TO FAIL NEEDS TO END!!! NOTHING IS TOO BIG TO FAIL, INCLUDING GOVERNMENT.

  • Report this Comment On April 02, 2010, at 5:02 PM, greyhound44 wrote:

    Get all of your assets offshore ASAP!

    Certainly between now and May - July!

  • Report this Comment On April 02, 2010, at 5:22 PM, EquityBull wrote:

    Too big to fail needs to end. Break the banks up so any bank can fail and not be systemic

  • Report this Comment On April 02, 2010, at 5:26 PM, ET69 wrote:

    OH OH! Now you tell me its a joke! I already sold a secondary derivative of your investment plan to my colleagues!......Fool on!

  • Report this Comment On April 02, 2010, at 5:32 PM, ecloud wrote:

    Heh it's hard to believe how many fell for that one. It was a pretty obvious April fools joke, I thought.

  • Report this Comment On April 02, 2010, at 5:33 PM, jrice wrote:

    Too big to fail needs to end

  • Report this Comment On April 02, 2010, at 5:45 PM, bigcat1969 wrote:

    Too big to fail must continue! I'm a contrarian.

  • Report this Comment On April 02, 2010, at 5:47 PM, KayGee70 wrote:

    Too big to fail needs to end!

    I came to the Fool looking for the April Fool's Day joke and figured this was it. At first, I didn't think it was very funny, but after I read more, I kind of liked it. I thought the FAQ and the descriptions of the people you hired on for LTMM were funny, but I really liked the small-print disclaimer under the instructions "Do not read this disclaimer." Funny stuff!

  • Report this Comment On April 02, 2010, at 5:59 PM, emoe wrote:

    Yes, you got me. I'm not as "foolish" as I thought.

    Achmed the terrorist suggested I send you the message: "I'll Keell you!!!", but I think that would be over kill (oh man I can't stop). :-) If you need some help on the next April fools article, don't call Achmed.

  • Report this Comment On April 02, 2010, at 6:22 PM, truckinfool77 wrote:

    Too big to fail needs to end.

    I took it hook, line and sinker. This showed me that I can't be too trusting of this service or any other. I still have to understand what I'm reading & do my homework. Thanks for the wake up call.

    Although I really was hoping for something that would allow me to retire before 80. (o:

  • Report this Comment On April 02, 2010, at 6:33 PM, MisterRogers wrote:

    I was so ready to call and place an order. It sounded too good to be true, but I said to myself, "I've trusted the Motley Fool for almost 10 years now, and they would never offer something like this unless it was well thought out." Thankfully, I decided to do my homework first, and caught on to the joke about halfway through the FAQ. This was the best April Fool's Day gag ever.

    On a serious note, "too big to fail" needs to be abolished along with the Federal Reserve.

  • Report this Comment On April 02, 2010, at 6:54 PM, QuandoInQuando wrote:

    The use of "too big to fail" as a justification to overspend taxpayer's money needs to end. Now!

    If sometning is "too big to fail", then it is, umm, well, TOO BIG!

  • Report this Comment On April 02, 2010, at 6:58 PM, PENAV1942 wrote:

    A great April Fool joke as the more I read I thought that, my God they are actually going to do this then it hit me, and I knew I had been had.

  • Report this Comment On April 02, 2010, at 6:59 PM, Kahayag wrote:

    Too big to fail needs to end. I'm so ticked off at our lawmakers that I'm seriously considering voting against ALL incumbents in the coming election. I can't believe that these people who are supposedly our country's brightest can screw things up so badly.

    On a brighter note, I loved the joke. Having been duped a few previous times by Motley Fool on April Fool's Day, I knew something was coming so I had my guard up somewhat.

  • Report this Comment On April 02, 2010, at 7:00 PM, bigkansasfool wrote:

    WHO REALLY DIDN'T SEE THIS AS AN APRIL FOOLS JOKE? Anyone that responded to that crazy mortgage investment pitch shouldn't own individual stocks. That pitch was so over the top scam-like that I assumed everyone saw it for what it was. Obviously it did catch some people so it served a much better purpose than most April Fools jokes. Well Done.

  • Report this Comment On April 02, 2010, at 7:08 PM, PISCESMAN wrote:

    Too big to fail needs to end. It was refreshing to note that agreement among those who posted here was virtually unanimous.

    The April Fools humor was exceptionally well done!

  • Report this Comment On April 02, 2010, at 7:20 PM, ProudMarketTimer wrote:

    Regarding the securitization markets and banking in general, I think it was Milton Friedman who first proposed simultaneously raising the reserve requirements on banks while "printing money" to pay off the national debt, where the expansion in the narrower monetary base number (M0) would be essentially cancelled out by the contraction in the broader monetary numbers related to lending activity (M1->M3), leaving us essentially free of inflationary pressures. Since the fed has already jacked the monetary base in order to bail out the to-big-to-failers, and political pressure seems to be pushing the fed in the direction of attempting to reduce the size (and potential negative impact) of banks, one conclusion as to where we go from here might be that the fed will monkey with the progressive reserve requirements (tranches) as follows:

    Current Federal Reserve/liability Requirement:

    $0 to $10.7 million 0%

    More than $10.7 million to $55.2 million 3%

    More than $55.2 million 10%

    could be changed to something more like the following

    $0 to $10.7 million 2.5%

    More than $10.7 million to $55.2 million 5%

    More than $55.2 to $100 million 10%

    More than $100 to $150 million 12.5%

    More than $150 to $200 million 15%

    More than $200 to $250 million 17.5%

    More than $250 million 20%

    see: http://www.federalreserve.gov/monetarypolicy/reservereq.htm

    Stock market timing-wise, the impact of such a move would be to suck liquidity out of the market, thus putting downward pressure on stocks. Raising the reserve requirements would also help stop inflation, which would have a negative impact on commodity prices, also potentially putting downward pressure on the stock market.

    With the current loss of liquidity due to the fed not buying up any more bad debt (for now), seasonality factors at play ("sell in May and go away"), and the potential for this on the horizon, things could get bad for stock investors very quickly. That's the part that isn't funny.

  • Report this Comment On April 02, 2010, at 7:29 PM, HIGHNLOW wrote:

    "Too big to fail needs to end"

    Yes anything written on this site on 4/1 is taken with an entire can of Mortons Iodized Salt. Keep it Up!! When will an elected official actually draft and get passed some meaningful financial legislation? Dodd--Go play some tennis or something with Mazillo or whatever his name is from Countrywide. And why are these companies too big to monitor??

  • Report this Comment On April 02, 2010, at 7:39 PM, JayInJapan wrote:

    The idea that companies which have failed--whether through incompetance, stupidity, greed, trickery, or some other actions that go against the basic tenants found in a Business 101 textbook--should be propped up through a bailout is absurd. Please end "Too big to Fail."

  • Report this Comment On April 02, 2010, at 8:34 PM, RCS2rocks wrote:

    Too big to fail needs to end!

  • Report this Comment On April 02, 2010, at 8:37 PM, tcalhoun3 wrote:

    "Too Big to Fail" needs to end!

  • Report this Comment On April 02, 2010, at 8:46 PM, tpearse wrote:

    Too big to fail MUST end!!!! How can we go through the last two years of financial caos and not do what is necessary to protect our financial system as well as our tax payer dollars? I encourage everyone to learn more... do more... and most importantly talk to your Congressmen and make them realize you are not willing to let lobbist dollars keep them in power! A good source of information is... www.anewwayforward.org

    Please participate in this issue for the sake of our country and our kids!!

  • Report this Comment On April 02, 2010, at 8:52 PM, tpearse wrote:

    One more recommendation... GO TO www.moveyourmoney.com and speak loudly with your dollars Take your money OUT of TOO BIG to FAIL and invest locally with a Community Bank. Keep your money local and support your local economy!

    ps: I used to work for Bank of America... their HR Department was in INDIA ??? We need US jobs!

  • Report this Comment On April 02, 2010, at 9:07 PM, bigcat1969 wrote:

    Fake shopping ads need to end!

  • Report this Comment On April 02, 2010, at 9:23 PM, TMFKnightly wrote:

    Too big to fail needs to end.

  • Report this Comment On April 02, 2010, at 11:10 PM, xetn wrote:

    Motley Fool = The Fed (NOT!)

  • Report this Comment On April 03, 2010, at 12:22 AM, 2beewise wrote:

    There are thousands of brilliant, conscientious, honest financiers and investors across this country; starting with Charlie Monger, Warren Buffet, Jack Bogle, Tom Gardener, David Gardener and the list goes on and on. And you guys in Congress are listening to the damn lobbyists!!! You still have time to do the right thing before you die. Step out of the box and listen to the people who care for the nation rather than big business, bent on destroying America's financial system for corporate and personal gain. If you wish to enter the history books in a blaze of infamy, stay-the-course. If you wish to leave a legacy of wisdom and honor, step out of the lobbyist box and join the women and men of wisdom.

  • Report this Comment On April 03, 2010, at 12:41 AM, Rowants wrote:

    The government is too big, and has failed.

  • Report this Comment On April 03, 2010, at 2:40 AM, texill97 wrote:

    Too big to fail needs to end.

  • Report this Comment On April 03, 2010, at 3:52 AM, johngcosta wrote:

    Too BIg to Fail = Too Big to Function!

  • Report this Comment On April 03, 2010, at 7:02 AM, kookamonga wrote:

    Too big to fail needs to end.

  • Report this Comment On April 03, 2010, at 8:01 AM, carmell100 wrote:

    Too Big to Fail needs to END!

    By bailing out "Too Big" companies, you remove the consequences of failing for Bad management decisions. This will cause MORE Bad decisions and more risk to be taken with Shareholders money.

  • Report this Comment On April 03, 2010, at 11:19 AM, Jedowning wrote:

    Too big to fail is government deficit spending spread to the private sector. Now we can go down the tubes as an economy twice as fast if we don't stop it.

  • Report this Comment On April 03, 2010, at 11:33 AM, leehendrick wrote:

    I read parts of your e-mail with such incredulity that I read parts a second time. I wondered how two men I respect so much could get sucked into such a scheme. I never once thought of April 1st, but it did seem like a joke.

    Could a sufficiently profitable scheme with a government bailout guarantee possibly detail Tom and David? I set the e-mail aside to read yet again later. I knew I must be missing something. Well done.

    The lesson is quite clear: 'too big to fail' needs to end now.

  • Report this Comment On April 03, 2010, at 11:46 AM, SSchey wrote:

    Too big to fail MUST stop!

  • Report this Comment On April 03, 2010, at 12:22 PM, EdNowak wrote:

    I agree with MPov who said "I'm in favor of regulation that limits certain kinds of speculation, that strengthens capital requirements, and that makes it easier to wind up failed institutions." We need to end "too big to fail" not by limiting the size of banks, but rather by limiting the reach of government into our economy. It was decades of wrong-headed government policy and actions that caused this mess. If an entity fails, there will be disruption but there will always be someone to pick up the pieces and carry on. If General Motors had failed, Americans would not have stopped making cars or driving them. If we had let institutions fail this time around, we would have gotten through this recession much more quickly than is currently the case. Starting with the Bush administration in the fall of 2008 and accelerating with the actions of the Obama administration, we have done the exact wrong thing at almost every step. Capitalism is the only moral political system and it has immensely improved the lives of billions of people. We need to sustain it, not tear it down.

  • Report this Comment On April 03, 2010, at 12:24 PM, jsudol99 wrote:

    I agree, "Too big to fail needs to end" however, if we keep our banks small what keeps foreign nationals or governments from taking them over?

  • Report this Comment On April 03, 2010, at 12:42 PM, jdlech wrote:

    Q: Is this too good to be true?

    A: This is a once-in-a-lifetime opportunity.

    Which is why I don't subscribe to any of your premium services. You advertise them as too good to be true.

  • Report this Comment On April 03, 2010, at 12:44 PM, jdlech wrote:

    "too big to fail" does not mean you must keep investment firms small. What it means is we need another program like the FDIC to clean up the mess when they do fail.

    Banks under the FDIC should be allowed to fail. That's what 'free market' is all about.

  • Report this Comment On April 03, 2010, at 3:25 PM, mrstcao wrote:

    Too big to fail needs to end!

  • Report this Comment On April 03, 2010, at 7:53 PM, Zaneyjaney wrote:

    Too big to fail needs to end.

    Luv u guys!

  • Report this Comment On April 03, 2010, at 8:39 PM, Aoshiwik wrote:

    Too big to fail needs to end

  • Report this Comment On April 03, 2010, at 9:39 PM, 1sweet1 wrote:

    To big to fail needs to end.

  • Report this Comment On April 03, 2010, at 9:58 PM, shenoy2206 wrote:

    "Too big to fail needs to end

  • Report this Comment On April 03, 2010, at 9:58 PM, shenoy2206 wrote:

    "Too big to fail needs to end

  • Report this Comment On April 03, 2010, at 10:24 PM, JestYourFool wrote:

    Damn, I missed the joke! I just now read the April Fool's post and responses. I'm hoping I would not have been duped. The biggest tip offs:

    - Only $500 to invest - you charge more for your subscription services

    - Promise on a Hooter's napkin

    - You think Hooter's is a "elite" restaurant!

    Wonderful joke, though. Unfortunately, too many similar opportunities have been written to big banks by Congress - which is not so funny!

    Jest

  • Report this Comment On April 04, 2010, at 2:52 AM, Glycomix wrote:

    The micro-loan system practiced by Muhammad Yunis' Grameen Bank is the ONLY sound system for enriching the poor. It has a 98% repayment rate(1) and it’s above board. I feel abused by Barney Franks successfully conning us into thinking we're buying shares in the conservative standard of the VA-loan banks. Bless Greenspan he was cared that we’d get hurt because we didn’t KNOW. No one is upset with the idea of helping people better themselves. However as the 1980s experience of Latin American countries show, deficit spending destroys the middle class and starves the poor(3) that it's intended to help.(2)

    (1) http://www.businessweek.com/magazine/content/05_52/b3965024....

    (2)

    http://www.youtube.com/watch?v=ScXCBJkp3s4

    http://en.wikipedia.org/wiki/Hyperinflation

    (3) http://news.bbc.co.uk/2/hi/africa/1966365.stm (May 2002)

    http://allafrica.com/stories/200302080103.html (Feb 2003)

    http://www.globalpolicy.org/component/content/article/217-hu... (May 2004)

    http://www.dailymail.co.uk/news/article-365652/Hungry-gangs-... (Oct 2005)

    http://www.guardian.co.uk/world/2007/mar/01/zimbabwe.andrewm... (March 2007)

    http://www.timesonline.co.uk/tol/news/world/africa/article36... (April 2008)

    http://news.bbc.co.uk/2/hi/africa/8118880.stm (June 2009)

    http://allafrica.com/stories/201001251399.html (Jan 2010)

    . With more bank failures, additional areas of the economy faces failure as some representatives mentioned during Geithner's hearing on GSEs.

    http://www.c-spanvideo.org/program/292675-1

    By using the reserve, Bernanke put the entire banking system at risk. If further banks fail, there will be no reserve to bail them out, neither is there a FDIC, because that was put into the pot in 2008. The fly-by-night payday loan companies have now ruined the fiscal discipline that used to be the hallmark of a good commercial bank.

    The innovation that could bring us out of this depression is stymied by a lack of funds. Banks are being destroyed by subprime loans while equity markets (stock markets) may be stymied if Mr. O'Bama's fulfills his threat of further taxing it.

    In August 2007, Dodd strongly suggested that caps be taken off of Fannie and Freddie.(1) Schumer also demanded that caps be taken off Fannie Mae so that they could buy more subprime loans, and promised to pass a bill if Bush and Lockhart didn’t take the caps off(2). Schumer opined at the Brookings Institute that subprime lending was sound. Dodd encouraged subprime loans.(4)

    (1) http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...

    (2) http://schumer.senate.gov/new_website/record.cfm?id=282215

    (3) http://jec.senate.gov/archive/Documents/Releases/12.19.07bro...

    4) http://dodd.senate.gov/index.php?q=node/4027/print

    In 2007 William Poole’s speech “The GSE’s: Where do we stand” Fannie and Freddie were already bankrupt by $1, 170 Billion ($1.17 trillion) by the end of 2006.

    http://research.stlouisfed.org/publications/review/07/05/Poo...

    Full of themselves, Schumer and Dodd ignored and fired Poole as quickly as they had Greenspan. As a plank in his presidential platform, Dodd said that congress should take off all restraints on the GSE’s, Fannie Mae and Freddie Mac.(3) On June 11, Chris Dodd suggested that Fannie Mae and Freddie Mac were “Fundamentally Strong”(4). He was paid well for his efforts; according to CNN, Dodd received very favorable mortgages in 2004 from defunct lender, Countrywide.(3)

    (3) http://www.marketwatch.com/story/sen-dodd-calls-fannie-fredd...

    (4) http://edition.cnn.com/2010/POLITICS/01/06/chris.dodd.bio/

    The subprime mess destroyed the stock market(5), and is continuing to endanger our banks.

    Since 2003, Greenspan had been trying to get Congress to lower the risk Fannie and Freddie posed by limiting it to 5% of the market because at 23% of Mortgages, because 40% subprime mortgages (6) risked a 9.5% default. Most banks are capitalized at 8% or less. What is the US bank’s system’s current exposure to subprime loans forced by Dodd, Schumer and Frank? Is that still a secret? Everyone who tries to tells us gets fired.

    (5) http://online.wsj.com/article/SB122212948811465427.html

  • Report this Comment On April 04, 2010, at 8:35 AM, CDupuis wrote:

    Failure is an important part of capitalism.'

    Among other benefits failure supplies the cheap resources for the next enterprise.

  • Report this Comment On April 04, 2010, at 12:01 PM, rmw8478 wrote:

    goes to show...no matter where the info is coming from, please think it through. Sniff test. Common sense is incredibly uncommon, even with a bunch that're smart enough to seek out a Fools advise.

    If you can't make sense of an investment, stay far away. If it seems too good to be true, it ALWAYS is. Do NOT be afraid to miss the bandwagon. A Fool once said, once you see a bandwagon, it is already too late. You're buying at the top, you're buying what you don't understand. You're buying from the smart guys who're selling.

    Fool - thank you so much for teaching you're flock another valuable lesson. I'm sure we'll all think (at least) twice before being foolish again. The only thing that could have been better is if you had people send in a $50 'deposit' to secure their position.

    I never cease to be amazed...at the thoughtfulness of your service, or at the foolishness of the greedy. Greed is good, however we must be greedy with what we already have (rather than give it away) to successfully apply the philosophy.

    my 2p.

    Rob

  • Report this Comment On April 04, 2010, at 12:39 PM, russwest wrote:

    Too big to fail is too colossal to succeed. This insane policy must end. The world cannot afford the inevitable consequences of this kind of perilous financial strategy.

    As SamGompers points out; failure is necessary for any system to evolve. Let’s preserve natural selection in our financial system. Survival of the fittest does not necessarily mean survival of the biggest. - Ask any old (or young) dinosaur.

    By the way, great April fools joke. Actually had me going for about ten minutes. I was about to talk to my wife about moving some money around, then thought "wait a minute here. . . "

  • Report this Comment On April 04, 2010, at 12:49 PM, TigerPack1 wrote:

    Most every honest and critically thinking, political scientist I know believes the revolving door in Congress must be shuttered.

    Term limits should now be written into the U.S. Constitution as follows: three 2-year terms for the House and one 6-year term for Senators... I would also like to see one 6-year term for President.

    When this country was just beginning and the writers of the Constitution envisioned our fledgling democracy's future, most saw elected public service as a noble pursuit for the common good, later in life for those that had already accomplished feats of business success and spiritual leadership.

    Today, most Representatives, Senators and Presidents spend at least half their time in office raising money for the next campaign to retain power. And after their time in office, they quickly jump to a high paying job offered from one of their largest political donors, or to a Washington lobbyist firm perpetuating our corrupt and ineffective system of "representative" government.

    The original intent of elected "service" to all Americans is no longer relevant for members of Congress as a group. It is today a game of personal enrichment first... The only way America will get leaders of real, long-term focus on the future, will be through a Constitution Amendment change to the way the political system is structured to better benefit U.S. as a nation of free and "honest" men and women. Today special interests and corporations hold the real power over government, not "WE THE PEOPLE!"

  • Report this Comment On April 04, 2010, at 1:04 PM, mmmm101 wrote:

    Really funny! If it was named anything but Long Term Capital (okay, Madoff whatever, too) I would have been the first one to send you everything I own to get in!!!

    This just confirms what P.T. Barnum said, "there's a sucker born every minute".

  • Report this Comment On April 04, 2010, at 6:10 PM, TMFTaurean wrote:

    Too big to fail must end.

  • Report this Comment On April 04, 2010, at 6:30 PM, dsp2008 wrote:

    Too big to fail needs to end

  • Report this Comment On April 05, 2010, at 12:10 AM, PatentAtty wrote:

    Please end too big to fail . I guess the idea that the Federal Government would turn to Motley Fool to help the economy was too good to be true. LOL

  • Report this Comment On April 05, 2010, at 8:39 AM, farhangp wrote:

    That was nasty and not fair at all to waste our valuable time.

    SHAME ON YOU.

  • Report this Comment On April 05, 2010, at 9:21 AM, rwpaules wrote:

    Too big to fail needs to end.

  • Report this Comment On April 05, 2010, at 11:29 AM, Schneezy wrote:

    Too big to fail should never have started to begin with. It's time to correct the error and end it now!

    Tip-o-the Hat to the effort and execution but I didn't buy into it one bit.

  • Report this Comment On April 05, 2010, at 11:33 AM, DJDynamicNC wrote:

    To big to fail needs to end.

    Corporate oligarchy does NOT equal capitalism.

  • Report this Comment On April 05, 2010, at 1:11 PM, chuckbreaux wrote:

    Too big to fail needs to end!

  • Report this Comment On April 05, 2010, at 1:55 PM, Ojoajoman wrote:

    Well OBVIOUSLY, too big to fail needs to end! But to do it, it seems like we will have to follow the money one level higher and seriously regulate the lobbying. Start by making it transparent. Open it up! Make them wear bright red suits in order to get into any government office. Stripes?

  • Report this Comment On April 05, 2010, at 2:09 PM, techfule wrote:

    Too big to fail does need to end. However, it does not have to end by outlawing successful growth, it would be sufficient to outlaw government intervention. Start by setting FDIC premiums by the size of the institution - the larger the size of the bank, the higher the premium per depositer. That way larger banks would have to find ways to compartmentalize their operations, and thus their risk to the taxpayers.

    Outside of the FDIC, ban bailouts altogether. Only a ban with the force of law will give the message that whatever risk you take, it is yours, not the taxpayer's. As Lewis noted almost as an aside at the end of his book, there is no way to know how many credit default swaps are out there at any time, or who holds them - so ANY company could be "too big to fail" if enough people are betting on it to do so.

  • Report this Comment On April 05, 2010, at 2:09 PM, techfule wrote:

    Too big to fail does need to end. However, it does not have to end by outlawing successful growth, it would be sufficient to outlaw government intervention. Start by setting FDIC premiums by the size of the institution - the larger the size of the bank, the higher the premium per depositer. That way larger banks would have to find ways to compartmentalize their operations, and thus their risk to the taxpayers.

    Outside of the FDIC, ban bailouts altogether. Only a ban with the force of law will give the message that whatever risk you take, it is yours, not the taxpayer's. As Lewis noted almost as an aside at the end of his book, there is no way to know how many credit default swaps are out there at any time, or who holds them - so ANY company could be "too big to fail" if enough people are betting on it to do so.

  • Report this Comment On April 05, 2010, at 2:34 PM, MyDonkey wrote:

    And all the clever mice agreed: The cat needs to wear a bell!

    But the cat just laughed and continued eating mice.

  • Report this Comment On April 05, 2010, at 5:28 PM, omt68 wrote:

    To big to fail needs to end.

    It should be surprising that members of congress has not realized that and acted long time ago. Unfortunately, few people are surprised, and that is the saddest statement!

  • Report this Comment On April 05, 2010, at 7:37 PM, SwampBull wrote:

    TTTTTT Big to Fail Must End! Hear us or lose your

    TT seat in the House! You must protect this

    TT country from its own greed - especially that

    TT coming from Congress itself!

    OOOO

    O O

    O O

    O O

    OOOO

    OOOO

    O O

    O O

    O O

    OOOO

  • Report this Comment On April 06, 2010, at 12:45 AM, Clint35 wrote:

    Too big to fail needs to end. It's taxpayer money not yours.

  • Report this Comment On April 07, 2010, at 11:03 AM, suziew99 wrote:

    Too big to fail needs to end along with extreme disparity between rich and poor.

  • Report this Comment On April 07, 2010, at 11:43 AM, trtwo wrote:

    Well shame on me, for believing The Fool. This time.

    Here I was set to make a killing and pulled some money out of the market to invest with the Fool and I just now found out that it was an April Fools day joke.

    Its not that I mind a prank but this has a potential to do damage to people. A prank should be harmless. Did I loose money in the market, no, but I could have. This did help in my education. I think the terms - look before you leap, due diligence, looking a gift horse in the mouth, don't count your chickens all apply to investing.

    Did anyone get the April Fool's Day email from the Fool?

    I did call the number twice. OUCH!

  • Report this Comment On April 07, 2010, at 2:10 PM, judm wrote:

    The big April Fools Joke is the government's "To

    Big To Fail Policy". I have read a number of books on what happened in 08 and 09 and the failure to anticipate the problems was incomprehensible.

    I fell for the April Fools joke. What is really interesting is that I bank with Chase and more than twice they have made an eerily similar investment proposal to me. I did not invest as I did not trust their proposal but I did call your hot line with some pointed questions that I had written down.

  • Report this Comment On April 07, 2010, at 6:08 PM, XMFCommodore wrote:

    Too big to fail needs to end

  • Report this Comment On April 07, 2010, at 10:32 PM, frugala wrote:

    too big to fail needs to end.

  • Report this Comment On April 08, 2010, at 5:30 PM, KKnese wrote:

    As a wisdom major (finance), I especially appreciated the help wanted ad. I ended up getting a job as an accounting clerk in a government agency, but ever since the meltdown I've been saying that I could have done just as good of a job managing those banks as the executives did, and at less than half the price! A college senior could have done as well using just the skills they teach in college. These executives aren't half as smart as they have led the public to believe, just better connected!

  • Report this Comment On April 09, 2010, at 7:29 PM, heidi115 wrote:

    t0 big to fail nees to end

    you had me bobbing and weaving on that prank.

    good job

  • Report this Comment On April 09, 2010, at 7:49 PM, bc0203 wrote:

    Honestly, I never got past the first "offer" email. I thought someone in high places had duped TMF into some sort of program that was going to rip off it's members, and was concerned! Glad it was a joke!

  • Report this Comment On April 10, 2010, at 1:44 PM, bluedogpoker wrote:

    Stop "Too Big To Fail"

    I believe that financial institutions must be limited in size so that any one can fail and we, the Taxpayers, can just let it go.

    If we do not set these limits I believe it'll be just a matter of time (less than a generation?) before it happens again and we'll be asking ... but why didn't we repair it last time?

  • Report this Comment On April 10, 2010, at 2:26 PM, IntlWaters wrote:

    Too big to fail needs to end. I heartily endorse your efforts to prod Congress into action. I'll be sending the article to my congressional representatives separately as well.

  • Report this Comment On April 11, 2010, at 1:53 AM, redhead77 wrote:

    Yes, end the "too big to fail" concept.

    Have a structured approach to the dissolution of any component of a financial services company at whatever price the market will offer. Government participation in the dissolution should only be at rates highly beneficial to taxpayers and highly disadvantageous to shareholders.

    Make investors fear inadequate governance, opaque transactions, and taking outlandish chances without disclosure.

  • Report this Comment On April 12, 2010, at 12:06 PM, jwoll wrote:

    Too big to fail needs to end.

  • Report this Comment On April 12, 2010, at 8:47 PM, xminakawa wrote:

    TBTF needs to end.

    Risk taking i-banks don't mix well with "traditional" commercial/residential banks and insurance companies.

    Slightly related too, the "firewalls" in place between ibank and trading operations obviously are in name only - anyone with common sense would see that you wouldn't want to chase off your big clients/targets by saying less than flattering things about their stock.

  • Report this Comment On April 01, 2012, at 9:40 AM, tracyall wrote:

    Too big to fail needs to end.

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