Understanding the Why the Market Went Up Mid-Week and the Coming Congressional Debate/Hearings Over Bank Lending and Bonuses

Why You Care has gotten numerous questions about two things: 1) How can the market go up amidst bad news?, and 2) Now that taxpayers own a piece of big time financial institutions, what's Congress going to do?

First to the market's behavior...

Here's why you care: The New York Times Michael Grynbaum deftly explains today that sometimes if the market is simply not surprised by more bad news, that in itself is reassuring. In other words, much like we've pointed out in earnings coverage, it is a game of expectations. For instance, our Thursday futures calendar for the following week lists off key earnings, well, often times you find stories on Friday and Sunday preceding the week on those companies. Why? To frame the earnings report for the purposes of managing expectations. Read Mr. Grynbaum and feel smarter.

As to Banks and Congress...

Here's why you care: This week House Oversight and Government Reform Committee chairman Henry Waxman sent letters to the financial institutions receiving tax payer funds seeking an explanation for their end of the year bonus plans. Today, House Financial Services Committee chairman Barney Frank announced a second hearing on November 12 (he previously announced one for November 18) to examine if banks receiving tax payer funds are in fact using the money to lend. In other words, Congress is REALLY interested. Fortunately, there are two pieces out there that frame both sides of the debate. The Washington Post's Steven Pearlstein lays out the problems of tinkering with financial institutions in "Hank Paulson's $125 Billion Mistake." And, the New York Time's Clyde Haberman frames the questions that we often hear from readers in "We're All Bankers Now. So Why's the A.T.M. Still Charging Us $2?"

Both pieces are well written and combined they will take three minutes of your day. We know most of you are looking at presidential polling numbers, but believe us when we say you want to get ahead of understanding this debate.