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A few weeks ago, we wrote about how Ambac Financial Group (ABK) had a liquidity problem and was in default on billions of dollars in debt. The stock, as expected, tanked – shooting down to penny stock levels.

Then, on April 8th, despite a delay in their 10-K filing and statement of earnings for 2009, Ambac came out with Q4 earnings of $1.93 per share, compared to a Wall Street consensus of -$3.34. The Street was stunned and just like that, ABK flew up overnight and has continued to climb, especially yesterday when it shot up over 100%.

But today, after shares soaring more than 40%, JP Morgan warned that, despite the killer Q4 earnings report, Ambac is still a dog with fleas and that their 10-K filing will support their belief the company has no equity value according to The Fly On The Wall. Thus Ambac began to decline as investor confidence was wiped out. The stock is now down 11% at the $2.00 range.

And even more killer is the amount of shares being traded in this stock. Ambac has 287.6 million shares floating on the market with an average volume of 34.5 million shares traded every day. Today alone, nearly 570 million shares of Ambac have been traded which is absolutely nuts. This is a liquid stock in the truest sense of the term. Investors will no doubt see volume taper off in coming days but the stock won’t calm down completely until Ambac puts out the ever-important 10-K.

Check out the chart below showing what’s happened over the past five days:

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We’ve all been there. There’s a big fat booger entrenched inside one of your nostrils, and if you don’t shift it you’re not even sure if you’ll be able to breathe much longer. And let’s be honest, if there isn’t a handkerchief or a tissue to spare, there’s only one option: like a call to action in a strike – pick it. The only thing is, in the glossier-than-glossy world of the celebrity, something at once so commonplace and taboo is funnier and more disgusting than ever. It doesn’t matter that most of the population picks its collective sniffer. For a celebrity to do it, and worse to be caught doing it in public, amounts to a scandal as juicy as – well now let’s see…

Penelope Cruz

It’s always even more embarrassing when the celebrity caught scratching at their snout is a lady – in this case Hispanic cinema diva Penélope Cruz. The multiple award-winning actress was here caught mid-scrape as she cruised for a booger clinging to her right nostril while at a 2004 movie premiere in Cannes.

Jake Gyllenhaal

Star of critically acclaimed gay cowboy movie Brokeback Mountain and other serious films, Jake Gyllenhaal is used to dealing with difficult issues – and he seems to be taking the one inside his left nostril in his stride here in 2005. We wonder whether he’s giving the person on the other end of the line a running commentary.

Pamela Anderson

Pam Anderson is no stranger to allowing things normally left behind closed doors out into the public arena. But while there’s certainly a massive market for stolen sex tapes, we’re not sure the same can be said for photos of former Baywatch stars cum Playboy models picking their noses. Then again, if they dive in with the gusto of Pammy – snapped here in Malibu in 2006 – we might stand corrected.

Tom Cruise

Looks like everyone’s favourite Hollywood scientologist was trying to charm the lovely Cameron Diaz by giving her the thumbs up… up his snout. Now we know the vertically challenged A-list star has had his moments, but this one from 2009 should count among them. At least Cameron – co-star of Wichita , the movie they’re currently filming – seemed impressed by whatever it was he was digging; shame it doesn’t appear to have been her.

Hillary Clinton

It’s comforting to know that the US Secretary of State has such a firm and penetrating grasp on the state of her nostril, in a television image from 2007. If it’s any reflection on her knowledge of home affairs, the American people are in safe hands.

Ethan Hawke

Hollywood big-hitter and ex-husband of Uma Thurman Ethan Hawke has certainly been round the block in the movie industry. Even so, here in 2005, the star of Gattaca and Alive can look as shifty as he likes beneath his baseball cap – he isn’t going to get away with that surreptitious thumb pick with the prying eyes of the paparazzi taking pictures of him with a mystery blonde.

Katie Price

Ex-glamour model and mainstay of the British gossip magazines Katie Price is usually making the headlines for one reason or another, but with the stories usually focused on the gunk coming out of her mouth, and the cameras trained on other parts of her anatomy, it’s almost a surprise that this covert little thumb pick got picked up.

Kate Hudson

Star of films such as Almost Famous and You, Me and Dupree, Kate Hudson was here spotted picking her way through the aisles of a clothing shop in Santa Monica back in 2006. We sure hope what the daughter of Goldie Hawn dug out was to the consumer’s taste.

Nicky Hilton

Nicky Hilton is more often getting upstaged by older sister Paris when it comes to shaming her family name though outrageous public displays of indecency, but the younger fashion model, socialite and heiress – shown here at a drugstore in Beverley Hills in 2005 – can also prove that money can’t buy class.

Ed Westwick

Best known for his role in the American TV series Gossip Girl, English actor and musician Ed Westwick was here caught in the act doing some heavy duty gold mining. We just hope he managed to excavate a 24-karat clingenberry. He deserves it after the effort he put in. Just look at that concentration!

Michael Keaton

Although his star seems to have long since fallen, Beetlejuice and Batman star Michael Keaton could probably have done without being snapped in Santa Monica plunging his pinkie into his proboscis – and at the table too! Manners, Michael!

Lindsay Lohan

Lindsey Lohan seems to have a habit of battling with her resident boogers, with other shots around of her doing the same. The paparazzi-pursued actress, model and pop singer is no stranger to controversy, but more often makes the headlines for what she puts up her nose than what she pulls out of it (now maybe there’s a connection…). Here she was caught taking a plunge in Malibu sometime in 2006.

Wilmer Valderrama

Wilmer Valderrama once dated Lindsay Lohan, so maybe there was something in their mutual predilection for morsels from the muzzle that brought them together. Here, the star of That ’70s Show and host of MTV series Yo Momma is clearly enjoying himself as he gets stuck in with an index finger while sat an LA cafe back in 2004. Look at those eyes rolling. Sheer bloody ecstasy!

Kelly Brook

English model, ‘actress’, sometime TV presenter and lads mag favourite Kelly Brook is well known for her stunning good looks and killer figure, but her beautiful veneer was besmirched somewhat when she was snapped making a decisive lunge for her nose with a well varnished finger while walking in LA in 2005.

Matthew McConaughey

Hollywood actor Matthew McConaughey scored hits with movies like How to Lose a Guy in 10 Days and The Wedding Planner, but the only thing the sportily dressed star looks likely to score in this photo – taken in Malibu in 2006 – is first prize in a booger picking contest. We’re routing for you Matthew!

Mischa Barton

A successful actress Mischa Barton may be, but the Anglo-American star of US television series The O.C. is not averse to showing off her skills in mining the dried mucus lining the inside of her nose, once again in public. Barton takes the lady-like approach, plumbing for a pinkie while out in West Hollywood in 2004. Let’s hope she didn’t get any booger in her burger. That’s a relish we wouldn’t relish.

Steve Coogan

The actor and comedian known to American audiences as that English guy from some movie or another is here more reminiscent of the alter ego for whom British audiences know him best – the un-PC and socially inept local media personality Allen Partridge. Here old Steve was caught well and truly green handed while making a point in LA in 2007.

The Queen

This one’s from way back, but it’s clearly a classic: Elizabeth II, the Queen of England, caught white-gloving her nostrils at a ceremony in 1996. Her Royal Highness has understandably kept mum about this public indiscretion, but it just goes to show – it doesn’t matter how much money you’ve got, you’re never too rich to go digging for gold. How about that Queen ladies and gentlemen!

Behavioral economist Dan Ariely, whose experiments with how people value “free” we’ve discussed before, has a fascinating column in the Harvard Business Review, explaining why companies don’t experiment, where the basic answer is that they’re afraid that some consumers will get a less acceptable experience during the experiment compared to others. For example, Ariely had worked for a while with a company to get them to put in place a series of experiments to see if offering things for “free” worked — but eventually the company balked:

Several months later, right before we were due to go live, we had a meeting about the final details of the experiment–this time with a bigger entourage from marketing. One of the new members noted that because we were extending differing offers, some customers might buy a product that was not ideal for them, spend too much money, or get a worse deal overall than others. He was correct, of course. In any experiment, someone gets the short end of the stick. Take clinical medical trials, I said to the team. When testing chemotherapy treatments, some patients suffer more so that, down the road, others might suffer less. I hoped this put it in perspective. Fortunately, I said, price testing household products requires far less suffering than chemo trials.

But I could tell I was losing them. In a sense, I was impressed. It was a beautiful human sentiment they were conveying: We care about all customers and don’t want to treat any one of them unfairly. A debate ensued among the group: Are we willing to sacrifice some customers “just” to learn how the new pricing approaches work?

They hedged. They asked me what I thought the best approach was. I told them that I was willing to share my intuition but that intuition is a remarkably bad thing to rely on. Only an experiment gives you the evidence you need. In the end, it wasn’t enough to convince them, and they called off the project.

I’m not actually convinced Ariely is correct on the reasoning here. It might not be this “beautiful human sentiment” where they “don’t want to treat any [customer] unfairly.” I suspect that it’s the same reason why dynamic pricing often gets shunned by companies: because if customers find out that someone else got a better deal, even if they were happy with the original deal they suddenly change their minds and believe they got ripped off. It’s because we tend to judge things relatively, rather than in absolutes, and companies that have been caught charging different prices to different customers often have found that the backlash is worse than the benefits of differential pricing.

However, it is interesting that many companies fear experimenting and prefer to just make a decision and go with it. I think this is less true in some tech companies. Google, for example, is infamous in their ridiculous level of experimenting and detailed A-B testing on things before going live with a final decision. But for companies that are worried about how any sort of “experiment” is viewed by consumers, you could see them being afraid to even try a concept like “free.” I’m not convinced this is really a strong enough effect to keep companies from using “free,” but it could be one explanation for why legacy companies are often so resistant to the idea.

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Remember when it looked as though consumers might enter into some new age of thrift and austerity?

Well, it’s true that there was in fact a brief, unprecedented dip, but the key word is: brief.

As you can see, the steady march higher continues apace.

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Play. Create. Share. That’s how the ModNation Racers credo goes, and based on what we’ve seen so far, that’s what you get to do. Put in the hands of Insomniac Games founder and CEO Ted Price, he

As I write this, I am squeezed into a coach seat on a 12 hour flight from an undisclosed location in the middle east to New York City. Once I get done with this, I have another 6-hour jaunt to Los Angeles, and the memory of my last 2-hour flight here fades with every drop of overpriced airline beer. In these trying times, a man needs to keep entertained. My DS is charged, but alas, I have completed Castlevania already.

There are three – no, four crying infants on board. The man to my left has clearly not showered since the Reagan administration. If I don’t survive, let me leave you with these thoughts of what could have been, if only I had taken this frightening possibility into deeper consideration.

Hit the jump for my last coherent thoughts before the chilling onset of complete madness.

Continue reading Gaming gear I wish I had on this 12-hour flight

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Ryan Phillippe’s got a new rule for dating: “No one with a publicist!”

The Crash hunk is on the hunt for love…..as long as you don’t have “people,” an agent, or anyone else capable of leaking information to the press.

“I have a new rule not to date anyone who has a publicist,” Ryan told Howard Stern on Sirius XM radio on Monday. Ryan’s still healing after either dumping or being dumped by (depending on who’s telling the story) ex-girlfriend Abbie Cornish last February. Therefore the star wasted no time hitting out at the Aussie actress and her loose-lipped representatives when quizzed on the split by Stern: “Who announces a breakup?” Ryan fumed. “I don’t understand that! There’s no need for that.”

Oh — and while we’re on the topic, Ryan’s really tired of how he’s been treated by the media, since his split from former wife of seven years Reese Witherspoon in 2007. “I’ve been dumped on in the press for relationship stuff since Reese and I divorced. I’m tired of getting shit on. I don’t feel like I deserve it. Things happen!”

Ryan, 35, adds that not only are he and Reese great friends, they even help each other through breakups.

Ryan – – who has daughter Ava, 10, and six-year-old son Deacon with Witherspoon — said: “It’s gotten to a place where we’re great friends and great co-parents. After I had my breakup, she called, and after she did, I called.”

Despite their closeness, Ryan insists he hasn’t been intimate with Reese since they called it quits.

“That’s never happened.”

Today, HP unveiled the worlds first plug and play laser printer. Now users can plug in the new HP LaserJet printer’s to a computer/netbook/notebook and start printing their documents. HP have ditched the traditional method of installing the software via a CD. A user-friendly as well as an eco-friendly move. HP also states that the HP LaserJet Pro P1100 Printer series is “the most energy efficient laser printer on the planet.”

HP also introduced its first mobile scanner – the HP Scanjet Professional 1000 Mobile Scanner. This portable scanner can scan documents on the go, without the need of AA batteries or an AC adapter.

“Our customers demand easy printing and we’re giving it to them – no clumsy CD-ROMs to install, no drivers to download. HP Smart Install offers the future of printing, today,” said Ron Coughlin, senior vice president, LaserJet and Enterprise Solutions, Imaging and Printing Group, HP.

The new printers from HP features a new Auto-On/Off technology. The printer automatically detects a print command when send to the printer and, switches the device to “on” mode from the “off” mode. HP says that the Auto-On/Off technology makes the new HP LaserJet P1100 Printer series up to 72% more efficient. The HP LaserJet Pro P1100 printer series is the cheapest laser printer ever announced by HP. The HP LaserJet Pro P1100 series also feature wireless connectivity and its price ranges from $129 to $149.

Press Release

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Pop on light rail from Sea-Tac airport

Editor, The Times:

Who says that Seattle is not a baseball town? [“Sea-Tac Airport offers Mariners’ deal,” seattletimes.com, April 7.]

Some years back, we financed construction of Safeco Field. Now we are throwing in even more public support. The Port of Seattle is offering cut-rate parking for baseball fans at the Sea-Tac airport parking garage.

Who can argue with the idea of supporting the Mariners by encouraging the use of publicly funded airport parking and at the same time increasing revenues for publicly funded Link light rail to get to the game?

— Ed Wittmann, Seattle

No M’s for basic cable subscribers?

As media companies consolidate, the consumers get increasingly worse deals.

Take Comcast, for instance. I can only afford the bottom rung of cable TV service, but cannot even watch my hometown Seattle Mariners team playing. To “upgrade” will cost me about $50 more each month. Right now this is not in the budget.

Who is to blame? Fox Sports NW? The Mariners? Comcast? I suspect the latter.

My elderly mother is also a huge Mariners fan, but likewise, cannot afford the upgrade on her limited Social Security income.

I would gladly trade in all my home-shopping and fundamentalist-religion channels just to watch my team play. Apparently that is not in the cards, since cable providers claim they cannot afford to offer a la carte programming. I feel it is time they be forced to do so. That must be done or the M’s (or Fox Sports NW) need to force the issue with Comcast to include this local program on their lowest tier. It could easily afford to do that.

— Michael FitzPatrick, Vashon

Officers’ families wanted to change the system

I am ashamed of the people of Western Washington for their outpour of anger toward the families of the victims of the Lakewood shootings. I am amazed at how quickly the tide turns. [“Slain officers’ families right to drop claims,” Opinion, April 12.]

What I do not understand is why everyone is so angry. What if it had been a roomful of schoolchildren who were gunned down in cold blood in that coffee shop and it was later learned that there was evidence that the perpetrator had made several threats about shooting children? Would everyone be as angry at the parents of those children if they sued?

Why don’t the families of those police officers deserve the same right? We all walked away from that funeral with a sense of closure. Those officers are still dead, and their children still do not have their parents and will not for the rest of their lives.

Why? Because it is too expensive to pay someone to actually do the job that he or she should already be doing —making sure the person who is about to be released for good behavior (after assaulting a police officer) is actually safe to release back into society.

The Seattle Times editorial staff says it was a good thing for the families to drop their lawsuits and that we should all be angry at Maurice Clemmons and his family for what happened. Obviously, Clemmons is responsible for his actions and should be held accountable. But do we really think Clemmons’ family has more responsibility for ensuring that he does not do something violent than the people we pay to ensure that violent people stay in jail?

I have worked for one form of government or another throughout my life and I can tell you that the only thing that most governments understand is money. They do not change anything until it is too painful to maintain the status quo. The only way, often, to get anyone in a bureaucracy to change the rules or even admit that there is a problem, is to hit where it hurts —in the pocketbook.

I believe the families when they say it is all about changing the system. Our system screwed up and it will continue to screw up until someone forces it to do something about it. Shame on you all for attacking the victims in this.

— Isabel Cole, Federal Way

Three strikes for you too, Seattle

When I read that the wives and sister of the slain officers had filed a lawsuit against Pierce County, I groaned —not another one. [“Cop’s widow: ‘We don’t want this ugliness,’.” page one, April 10.]

Instead of holding those responsible, we turn to suing those who have the money, or rather those we think have the money. It has become second nature to us, but I could not blame the family, especially after reading the newest story on their reasons for filing a lawsuit.

I am glad I did not jump on the bandwagon, where an untold number of people called or wrote of their disdain at these families. My first thought at these people: Shame on you.

The women are not to blame; they are too new in their grief to have thought this through and probably got bad advice.

Do we then point fingers at the lawyers who gave the bad advice, the Pierce County Jail, the employees responsible for monitoring the calls or the politicians for taking the “three strikes, you’re out” law so far off course that the jails are now filled with people the law was not made for.

I ask all those who are angry and looking to blame someone else to take a look in the mirror and ask what you really are angry about. I bet you find your own finger pointing is pointing at you —I know I did.

— Kendall Rooney, Federal Way

Filed under: Videos

Our brethren over at AOL Autos have just launched a new video series called Translogic. Hosted by the always-effervescent Bradley Hasemeyer, who we’re convinced is somehow related to J.D. Roth, and the equally bubbly Caitlin Thompson, Translogic’s goal is to introduce viewers to the cool, techy side of transportation in four weekly installments that add up to one mondo episode per month. You’ll also be able to subscribe to the larger monthly episodes in iTunes once they complete the first four installments.

They’ve already released episodes 1.1 and 1.2, which you can view over at the Translogic website. In the duo’s first two outings, Bradley and Caitlin visit Tesla, get a ride in an Ariel Atom (we know what that’s like), talk to the man behind the Velozzi turbine-powered green supercar, and explore one of our all-time favorite topics: jet packs.

Head on over to check them out and let us know what you think in the comments. The AOL Autos team reads Autoblog everyday just like you and would appreciate some thoughtful suggestions from the community on how to keep improving Translogic.

[Source: Translogic]

AOL Autos launches Translogic originally appeared on Autoblog on Tue, 13 Apr 2010 14:02:00 EST. Please see our terms for use of feeds.

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If there’s anything cuter than a baby ring-tailed lemur, it must be twin baby ring-tailed lemurs!

These two, who were born to mother Susen at Germany’s Dresden Zoo on March 17, haven’t yet been named. (We were tempted to suggest Irish-themed names as a reference to their St. Patrick’s Day birthdate, but then we remembered that lemurs are native to Madagascar — far, indeed, from the Emerald Isle — so we will respectfully refrain.)

Ring-tailed lemurs, like most of their lemur cousins, are endangered — in large part due to deforestation but also because, in some parts of Madagascar, they’re considered bad luck and are often killed by villagers as a result. In other parts of the country, they’re sometimes hunted for their meat. The troubles facing Madagascar’s lemurs are compounded by political upheaval. All of this means, of course, that any ring-tailed-lemur birth is great news for the species.

See more photos of the baby lemurs and their mother after the jump!

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Your morning adorable: Baby ring-tailed lemur at the Singapore Zoo

Your morning adorable: Coquerel’s sifakas at the Bronx Zoo

— Lindsay Barnett

Photos: Norbert Millauer / AFP/Getty Images

We’re pleased to announce another giveaway of Slacker Radio Plus accounts!  If you’re not familiar with the streaming music service and Android application, it allows for personalized radio stations built around artists, songs, and genres.  The Radio Plus accounts give you all the great features of the free version plus a host of other options!

• No Audio or Banner Ads
• Unlimited Song Skips
• Complete Lyrics
• Unlimited Song Requests
• Mobile Station Caching

One of the great new additions to Slacker Radio Plus is cached stations. These act like your normal stations except they can be stored on you handset to be played back where there is no data or WiFi connection!

What’s Up for Grabs?

Three 3-month subscriptions
Two 1-year subscriptions

How to Enter

We’re big fans of the nice and easy contest approach. Leave a comment below to be entered into a random drawing for one of the five prizes!  We’ll draw the winning names on Thursday night and read the winners off on the new podcast!

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• Reuters: Nexus One Available Directly Through Google Website January 5
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United States has enough mouths to feed

This is a response to “Thousands rally for immigration bill” [NWSunday, April 11].

Our representatives should be rallying for jobs for Americans — not illegals who have broken our laws, taken our identity, obtain fraudulent documents.

We are not the ones who have broken their families; their choices did that. Every country has borders for protection. They are there for a reason, just like how we have police who patrol our streets.

We are a country of laws. If our laws are not respected and obeyed, then we are lowering our standards to that of other countries that have no laws or laws that are not enforced. We have drug dealers, smugglers, kidnappers and now even murderers at our borders —Washington still does not secure our borders.

How many people have to be at risk for government to do something?

We have 25 million people out of work and more every day. If we cannot keep our people employed, how could anyone think we could employ the world? American companies are sending all our manufacturing jobs to foreign countries so we have fewer and fewer jobs here. We are a generous country. We have a million legal immigrants every year, but to Washington, it is not enough.

— Kathleen Bukoskey, Everett

Unwarm welcome to immigrants unwarranted

After reading this story, I went through the comments people wrote and I truly was shocked by the majority of the opinions.

They make me believe that I live in a country full of heartless, selfish people. All these people talk about obeying the law and why illegal immigrants expect this country to treat them differently than other individuals for breaking the law.

But have they all really forgotten that regardless of whether immigrants come into this country illegally, they are human beings just like everyone else?

Many immigrants live in very impoverished countries with hardly any access to drinkable water and food to eat, with corrupt governments where their lives are endangered. If you lived in these conditions wouldn’t you do anything you could to establish a better life — not just for yourself but your children as well?

— Daisy Flores, Pullman

‘I am a racist’

U.S. Rep. Jim McDermott believes my opposition to mass immigration, or immigration reform, is because of “thinly veiled racism.”

If his definition of that is opposition to becoming a minority in one’s own country, then yes, I am a racist. In fact, I would be as overt a racist as any other ethnic group member in a similar situation.

— Scott Martin, Woodinville

The Emmy Award that Barry Morrow received for writing the 1981 TV movie “Bill” is now on display in the University of Iowa Main Library in the Special Collections on the third floor. Morrow, an award-winning screenwriter who worked at the UI from 1974 to 1981, gave the Emmy to the university earlier this year.

Included as part of the Emmy display is a video loop that contains selected clips from the acclaimed documentary “A Friend Indeed: The Bill Sackter Story,” produced and directed by 1990 UI graduate Lane J. Wyrick. The display is available during the Library’s regular business hours. The film will be shown in its entirety at 7 p.m. on Tuesday, April 13, in Room 1505 of the Seamans Center as part of the second annual Bill Sackter Day. Other Sackter Day festivities will begin at 4:30 p.m. that day at Wild Bill’s Coffee Shop in North Hall on the UI campus.

The special “Bill” Emmy display and video loop in the UI Main Library were made possible in part by gifts to the UI Foundation from Richard S. and Jeanne M. Levitt of Des Moines, Iowa, and Eileen S. Schmidt, of Greenwich, Conn.

Over two years, chinook catch has become dismal

As an avid blackmouth salmon angler for many years, I have to comment on your story “State’s expensive catch: the $768 Sound salmon” [page one, April 10].

I have fished the same areas for years and they have always been productive. It has only been the past two years that has shown a remarkable drop in the catch in these areas. Either the blackmouth no longer inhabit these areas after many years of doing so or these fish simply are extinct.

Your writing specifically blamed environmental conditions for the decline —pollution and habitat loss. That is a lot of bad things people are doing in just two years.

My understanding is the Puget Sound is cleaner now than it was 30 years ago. I see an ever-increasing number of seals and sea lions, which should be controlled. But I doubt that predators, while partly to blame, are the main cause of catch decline.

My sonar indicates an abundance of baitfish, so the salmon should not be starving. “Their survival lately hasn’t been very good,” the division manager for Washington Department of Fish and Wildlife (WDFW) hatcheries said.

Maybe the state auditor’s office that came up with these data (one fish caught for every 900 released) should audit the actual number of fish released by WDFW. The migratory fall chinook catch in the same areas has become dismal in the last few years also. The ocean must have been ruined by mankind, too.

— Robert Vandeputte, Bremerton

Headline misleading; tax revenue, local jobs not considered

The salmon story’s headline is very misleading because it does not take into account all the tax revenue and local jobs that salmon fishing creates in the Puget Sound region.

There are many local tackle manufactures, fishing tackle stores, marinas, boat-repair shops, bait companies and all the support industries that cater to the salmon fishing industry in King County and Snohomish County. All these jobs create family living wages.

There is good evidence that releasing chinook salmon so small that they only cost 11 cents is just an effort in futility. Chinook salmon released into the wild from a hatchery that small would only produce food for birds and other predators.

Nonetheless, chinook salmon released from a hatchery that miniature will never survive. The result: The few chinook that are caught will be $5,000 a pound. Jobs will be lost. Tax revenue will decrease. Fishing tourism will disappear. The only salmon in the Seattle area will be at Pike Street Market. Priceless?

The state should concentrate on repairing the environmental damage done to the Puget Sound rivers and cleaning up the pollution in Puget Sound. When those tasked are accomplished, there will be plenty of salmon.

— John Martinis, Mukilteo

The Federal Deposit Insurance Corporation is trying to do its part to respond to the crisis. It has proposed to change how it charges large financial institutions for depository insurance. The FDIC wants additional measures of risk to dictate its assessments on institutions over $10 billion in size. That sounds sensible. But why limit the change to big banks?

Small Banks Can Take On Big Risk Too

Here’s what the press release says will change:

Under the proposal, risk categories and long-term debt ratings would no longer be used. The FDIC would continue to use the supervisory ratings as a factor in measuring risk. The FDIC would replace the financial ratios currently used with a scorecard consisting of well-defined financial measures that are more forward looking and better suited for large institutions. The proposal also includes questions about how to incorporate other risk measures, like the quality of underwriting or risk management practices, in the future.

These changes make a lot of sense. Debt rating was an aspect of finance found to be deeply flawed during the financial crisis, both for bonds and firms. Regulator risk categories had some problems too. A broader set of variables used to evaluate riskiness would force more aggressive firms to pay more for their insurance. Think of it like auto insurance: aggressive drivers often end up paying higher premiums than cautious drivers. Since there are many ways by which a firm can engage in risky behavior, there should be a number of variables taken into account, as the FDIC indicates.

Yet, this doesn’t only go for large institutions — why not apply the same standard to small banks? For example, if a regional bank in Florida had become heavily involved in subprime lending and engaged in very lax underwriting standards during the housing bubble, then shouldn’t it have paid more to the FDIC for depository protection? The savings and loan crisis demonstrated that lots of little bank failures can add up.

Moreover, mostly smaller and mid-size banks failed. Only a few large depository institutions went bust during the crisis, and most of those were ultimately acquired. Obviously, the cost of unwinding bigger firms is greater, but so is their relative premium based on their larger depository base. So why does the FDIC seek to only penalize big banks here?

Today’s proposed rule change seeks to put pressure on large banks to behave more prudently. If they don’t, they’ll have an added cost for their depository insurance. The goal is a safer industry, both through changes in risk appetite and additional cushion in the FDIC’s depository fund to cover failures.

This all sounds great. But again, it’s unclear why across-the-board changes aren’t sought. Directing bank strategy away from aggressive behavior would also be a positive change for smaller institutions. The FDIC should not worry disproportionately about risky behavior on the part of big banks. The loss its resolution fund faces from a hundred banks of $5 billion in assets failing should be similar to that of one firm of $500 billion in size.

The FDIC is right to put additional emphasis on how bank risk is considered to determine depository insurance premiums. But it’s perplexing why the regulator only thinks risk-taking matters for large banks. This rule change would create a system where large banks are penalized for aggressive risk taking while small banks are not.

Gross Assessments Won’t Rise?

The press release also said:

The proposal also would alter the assessment rates applicable to all insured depository institutions to ensure that the revenue collected under the proposed assessment system would approximately equal that under the existing assessment system. Chairman Bair said, “By better differentiating risk among large institutions, the proposal would reduce insurance assessments paid by lower-risk institutions–both large and small.”

The massive wave of bank failures following the crisis has caused some headaches for the FDIC. This was documented in a nice chart in this month’s edition of The Atlantic. Its fund used to wind down institutions and pay out customers got so low that it forced a prepayment of bank assessments through 2012 to ensure it had enough cash to cover claims. That move implies that it didn’t assess firms enough prior to the crisis. So why wouldn’t the FDIC want to collect higher gross premiums going forward? The crisis proved that its fund’s size wasn’t sufficient to guard against severe financial turmoil.