Ten years after the collapse of Bear Stearns, and there is still a debate about its implications and the wisdom of big bank bailouts and subsequent rule-changes.

Proponents of the bank bailout point to the government recovering all its money and making a profit. 

But, others point out unintended consequences, like the biggest banks only getting larger, thus posing the same risk or more to the financial system.  Plus, the new rules, which ostensibly were said to curb risk-taking, are only curbing lending to Main Street.

Today, half of mortgages are made by non-bank companies, and community banks have deliberately slowed their growth to avoid even greater financial scrutiny that would only hurt their bottom line. 

According to a research note by then Fed government Jerome Powell, charters for new community banks dropped to zero after Dodd-Frank resulting in fewer overall community banks.

Moreover, with $10.0 billion being the max assets for those banks before facing more expensive compliance, most of them deliberately stopped growing. That means fewer loans and fewer opportunities for Main Street America.

I suppose the lessons of Bear Stearns are in the eyes of the beholder, but as long as there is a chance big banks can privatize huge profits on risky bets, but share huge losses with taxpayers, nothing really has changed.

Oil is down today after crude inventories rose more than expected.  In the latest EIA inventory report, the U.S. crude oil refinery averaged 16.4 million barrels per day during the week ending March 9, representing 432,000 barrels per day; more than the previous week’s average. Refineries operated at 90.0% of their capacity.

Trade war fears resurfaced today as concerns that China may retaliate by purchasing less planes from Boeing(BA).  We believe these fears are unfounded, nonetheless, they are weighing on equity markets today.  BA is down 13 points accounting for roughly 100 of the 270 points the Dow has shed at this point in the day.  Chemicals are trading lower, down 1.06%, as investors concerns over a potential trade war weigh on the group as well. The Dow is currently down 273 (1.06%) points at 24,727, which is slightly below our support number of 24,750.  Next support comes in at 24,471. 

Sources say that Larry Kudlow will be named the New Economic Chairman, replacing Gary Cohn.  Kudlow has been outspokenly against tariffs, but he has said to be softening his tone on the topic of late.  He is a veteran of the Ronald Regan administration. 

Tomorrow, I will cover the stakes of the Section 301 investigation launched by the United States Trade Representative (USTR) against China for stealing the intellectual property of U.S. firms and the trade war that could be brewing, which again, I don’t believe will happen.