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The 5 Dumbest Things on Wall Street This Week: July 12

1. Lew's Lulu

The boys at the Delta House have already demolished Faber College and now Jacob "Dean Wormer" Lew is putting them on double secret probation.

Talk about better never than late.

The Financial Stability Oversight Council pronounced American International Group (AIG - Get Report) and GE Capital (GE) as "systemically important" non-bank firms Tuesday. The designation means that the two companies are so humongous that their failure could once again threaten the entire financial system. As a result, both companies will now be forced to meet capital requirements and be regulated by the Federal Reserve.

Last thing first. Under these new rules, Ben Bernanke, or should we say the next Ben Bernanke, will not merely be responsible for getting the unemployment rate below 6.5%, keeping inflation in check and running a $3.5 trillion balance sheet, but he or she will now be supervising "Too Big to Fail" banks and non-banks as well.

Boy, is there anything this unelected branch of government can't do? (Or perhaps we should be asking the reverse, is there anything our elected lawmakers actually do?)

First thing next. The horses are out of a barn that burned down five years ago and now these numbskulls are proudly protecting the American public from AIG and GE. A little freaking late guys don't you think?

What's next on your to-do list, busting Bernie Madoff? Oh, that's right, you didn't even catch him. He gave himself up.

Shares of the so-called risky companies barely budged in reaction to their new categorization Wednesday. The reason why Wall Street didn't even blink is because it knows full well that Dodd-Frank, which all this jabberwocky falls under, is as toothless as Sarbanes-Oxley.

(Sarbanes-Oxley toothless? Next time you see Jon Corzine smiling on the street, you tell us.)

"These designations will help protect the financial system and broader economy from the types of risks that contributed to the financial crisis," said Treasury Secretary Jacob Lew. Lew also heads the council that sprung from the 2010 Dodd-Frank financial reform law.

Hit the road Jack. We know you are trying to prevent AIG and GE from becoming the next, well, AIG and GE, but the whole thing is flat-out farcical.

If these non-banks are so risky and the threat is apparent, then break the damn things up already. Sorry to say, but designating these firms "systematically important" does not give the American public a lick of confidence that you and your committee will prevent the next catastrophe. The government couldn't see or stem the collapse before, so there is no expectation it can or will do it the next time.

You want more proof that the whole thing is ex post facto absurdity? Check out AIG's reply to the announcement.

"AIG did not contest this designation and welcomes it," the company said in a statement on Tuesday.

Think about it.

The government says AIG is "Too Big to Fail" and a systemic risk.

AIG essentially says "That's cool. You saved us last time and you'll do it again."

To which we say, "The toothpaste is out of the tube, so why are these schmucks smiling?"

-- Written by Gregg Greenberg in New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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