Wall Street Huddles for Safety

Small banks, it seems, have precious few friends these days; even the big banks worry about surviving alone, and so they're pooling their resources. $7 billion each, to be precise, from Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Merrill Lynch, Morgan Stanley, and UBS -- which makes $70 billion in total. Any bank on the list can borrow up to a third of that sum ($23 billion), using anything it has lying around as collateral: real estate, paperclips, the Gerhard Richter in the lobby.

Who's not on the list? There aren't any French or Dutch or Spanish or Italian or Japanese banks, for starters, and there's only Barclays from the UK: no HSBC, no RBS. But any big American bank with a significant investment-banking operation seems to be there. And Merrill Lynch is on the list twice, if you include Bank of America. Does that mean the merged operation will have put up $14 billion for the right to borrow $23 billion? My guess is that once the merger closes, Merrill will drop out of the consortium.

If you're looking for silver linings, it's clearly the investment banks which are most worried right now, not the big commercial banks in Europe or even in the US (Wells Fargo). When Wall Street's alpha males stop competing and start cooperating like this, you know you're living in historic times.