This is actually a real album
Swear ta.

Someone please help me, I can't stop writing about deliciously awesome Fedgate (yeah, I said it. "Bank of America/Merrill/Fed" just doesn't have the same ring to it. Gotta let it roll right off your tongue. Say it with me now, kids: FEDGATE!) and strangely I'm entirely okay with that.

If only you knew how excited this makes me. Seriously. SERIOUSLY.

Again, see my June 26th: Next Up on the Hill for Bank of America/Merrill/Federal Reserve BS Part 64: Hank Paulson! for a not so brief refresher on the situation. And as we prepare for Hank Paulson to hit the Hill to discuss his part in this debacle, I remind dear reader of this King Henry winner from last fall (remember last fall? Yeah, I don't want to think about it either): "If you've got a squirt gun in your pocket, you may have to take it out. If you've got a bazooka and people know you've got it, you may not have to take it out."

Bloomberg:

Former U.S. bank regulators warned that lenders and supervisors may share less information with each other in day-to-day dealings after lawmakers released dozens of confidential Federal Reserve e-mails.

“The regulatory process could be chilled or stifled because of a reluctance to speak candidly,” said Robert Clarke, a former comptroller of the currency and now a senior partner at Bracewell & Giuliani LLP in Houston. At a minimum, supervisors may communicate less via e-mail, said Oliver Ireland, an ex-Fed attorney now at Morrison & Foerster LLP in Washington.

The criticisms may slow a push for greater transparency among regulators by President Barack Obama’s administration, which is seeking the biggest overhaul of U.S. financial rules in decades. Consumer advocates have hammered the Fed and other agencies for failing to publicly identify banks with lax lending standards during the credit boom that turned to bust.

The House Oversight Committee’s release of internal Fed documents at hearings in June showed confidential supervisory discussions and data can end up subject to public scrutiny.

Included in the releases were the Fed’s private gauge of Bank of America Corp.’s financial strength, and communications between officials including Chairman Ben S. Bernanke and Richmond Fed President Jeffrey Lacker on the bank’s threat to call off purchasing Merrill Lynch & Co.

Blah blah blah, we already know that part. "Pound of flesh" and "scary and ugly" and whatever else lurked in the exchanges (don't forget Fed governor Kevin Warsh, might as well throw him in there too) blah blah blah.

Now this part? Might be new:

Critics say the financial crisis shows that confidentiality doesn’t guarantee sound banking regulation. The Fed and other regulators have acknowledged they didn’t do enough to police lending standards during the credit boom earlier this decade that turned to bust in 2007. Since the start of that year, financial firms worldwide have reported $1.47 trillion of writedowns and losses, according to Bloomberg data.

“The idea that you can only do bank regulation with secrecy -- that’s a model that’s failed,” said Ed Mierzwinski, consumer-program director at the U.S. Public Interest Research Group, part of a coalition of consumer, labor and civil-rights groups lobbying on financial regulation. “Is total transparency the answer? Maybe not,” he said. “But some more transparency would help, and some more accountability would help as well.”

Richard Spillenkothen, former director of the Fed’s bank- supervision division and now with Deloitte & Touche LLP, said that while he recognizes the argument for more transparency, keeping supervisory information private “is better for the system, which should benefit taxpayers over time as well.”

Oh I get it! Bank supervision is a private matter. Like Mark Sanford boning some Argentinian chick on the Appalachian Trail. Because it's not like any of the Fed's previous failures got us in this mess as a country, right? It wasn't our $700 billion used to bail them out, wasn't it Bernanke himself who said it was akin to printing money? So? Crisis averted!

Regulators and the Treasury clashed in April over how much information to make public about stress tests of the biggest 19 U.S. banks, with some officials concerned about potential damage to weaker institutions. The Treasury, led by Secretary Timothy Geithner, had pushed for broader disclosure, people familiar with the matter said at the time.

That danger remains, according to Mark Williams, a former Fed bank examiner who now teaches at Boston University. He said disclosure of confidential information may lead to short sales of a bank’s shares and make it harder to manage weakened banks. Short sellers borrow shares and sell them in anticipation of profiting from a drop in price.

“Transparency isn’t solving the problem -- we need to get to the root,” which is to improve training, pay and retention of examiners, Williams said.

Let me save everyone a whole bunch of time here: transparency is a lie of a word, sort of like the Santa Claus of financial regulation, thrown out to keep the children quiet in their beds. That's it. It has no real meaning, no substance, and most certainly does not live at the North Pole.

Disclosure is also sensitive at a time when the public is “jittery” about the safety of insured deposits, said McCoy at the University of Connecticut.

Among confidential data revealed by the subpoenaed documents was Bank of America’s “Camels” rating, a judgment based on measures including banks’ asset quality, earnings and liquidity.

“If banks start to feel that the Camels ratings will be made public, that would be bad both for banks and for regulators,” said Mark Tenhundfeld, regulatory-policy director at the American Bankers Association. “Examiners need to be able to do their jobs and not worry about how the judgments that they are passing on the banks play out in the public light.”

That's all well and good but let's be honest here: the public is stupid (oh please, "bah" all you want, America, you know I'm right). After all, look what happened to WaMu. A few well-placed rumors by the $JPM boys (ooops, did I just say that out loud?) and the bank was crippled in a matter of days. Were the public well-informed, $JPM could have gunned for WaMu all it wanted to no avail. But people are stupid. We know as much.

America seems willing to grab the pitchforks but still doesn't know why. Meanwhile, the bad guys are slipping through the back door with the goods and no one seems to care.

If anyone needs me, I'll be laughing hysterically in the street in front of my office waiting for the zombies we were promised if California didn't reach a budget resolution by midnight (which we of course did not...) - is it Armageddon now? How bout now? NOW?