Regulators Shutter Silver State Bank
Per the WSJ:-
"State and federal regulators on Friday shut down Silver State Bank, the latest in a series of bank failures and one that could ripple through the presidential campaig
Until recently, the son of Republican nominee Sen. John McCain sat on Silver State's board and was a member of its three-person audit committee, which was responsible for overseeing the company's financial condition.
Andrew McCain left the Henderson, Nev., bank July 26 after five months on the board, citing "personal reasons." He is Sen. McCain's adopted son from his first marriage.
There is no evidence that Mr. McCain, 46, committed any wrongdoing. Nor are there signs that Sen. McCain, the Arizona Republican who on Thursday accepted his party's presidential nomination, had any knowledge of or involvement in Silver State's problems."
Haven't we been down this route before (cough "Keating five")? McCain is up to his neck with the free market, deregulation crowd who have created a crisis that has the potential to become something far, far worse than the S&L mess of the late 80s. The irresponsibility of allowing banks to put litle or no capital up against assets, (via conduits, Sivs & CDO structures (which may be looked at as stand alone self liquidating bank books with a rather fancy capital structure but so all equity), came about through the intense lobbying of the likes of McCains buddy Gramm.
What makes it even more scary is that there is very little evidence that people like Gramm even understood what they were lobbying for, I expect the first journalist to ask him about the pros & cons of using Gaussian copulas will be met with blank stares. However beyond the fancy financial engineering lie the root of all banking crisis throughout history, overleverage & poor loan making decisions - the unique nature of this crisis is that through the wonders of securitisation the former created so much demand for assets the latter became inevitable, especially as many originators were not required to retain any "skin in the game".
Similarly they lobbied for the retention of absurdities such as "gain-on sale" accounting (there is not exactly a real sale), level 3 "mark to model" (auditors bamboozled by complex derivatives they hav no hope of checking) & booking profits on the impairment of one's own debt which has made US Gaap an international joke.
Many of the originators of this crisis belong in prison, I would not go so far as to say that about the lobbyists and lawmakers who enabled it but surely their negligence should bar them from ever holding office again.
[By way of disclosure I am a fund manager in the UK, I have no positions long or short in the US other than ETFs & ADRs used in the management of my Asian portfolio, I do not trade macro but am furious at the outrages I have seen perpetrated in my industry over the last decade)