and she said.. "how you interpret the dream is probably more important than the dream itself"

When nobody was looking, the poor wee little banks got another handout favour, the Washington Post reports.

A Quiet Windfall For U.S. Banks:

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes.

Oh, that's rich. But it gets even more saucy:

More than a dozen tax lawyers interviewed for this story -- including several representing banks that stand to reap billions from the change -- said the Treasury had no authority to issue the notice.

While I've never been much of a soap opera fan, I have to think my giddy incredulity at each new unfolding octopus arm of this sea-creature financial crisis is similar to the emotional high a house wife gets when the opening theme to General Hospital can be heard in the background.

Although the department's action was prompted by spreading troubles in the financial markets, [Deputy Assistant Secretary for Tax Analysis, Robert Carroll] said, it was consistent with what the Treasury had deemed in the December report to be good tax policy.

The notice was released on a momentous day in the banking industry. It not only came 24 hours after the House of Representatives initially defeated the bailout bill, but also one day after Wachovia agreed to be acquired by Citigroup in a government-brokered deal.

The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

The Jones Day law firm said the tax change, which some analysts soon dubbed "the Wells Fargo Ruling," could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.

Over at the New York Times, the wee $85 billion bailout for AIG gets a hair larger when nobody cares anymore (the shock is gone by now, right).

A.I.G. Secures $150 Billion Assistance Package:

The American International Group said on Monday that it lost almost $25 billion in the third quarter and had secured a new $150 billion government assistance package intended to stem the bleeding from its complex financial contracts.

So what did the taxpayers get?

The new assistance package reduces the original $85 billion loan to about $60 billion, lowers the interest rate and gives A.I.G. five years, instead of two, to pay it off.

Great, those sweet rates you saw on the commercial didn't end up being available when you got to the show room floor, mr. taxpayer.

“We’re funding somebody on the other side” of A.I.G.’s derivatives contracts, said Lynn E. Turner, a former chief accountant with the Securities and Exchange Commission who has been critical of the way the insurer’s crisis has been handled. Even though a large amount of public money is being extended, neither A.I.G. nor the federal government has been willing to provide the names of the company’s biggest counterparties, or their amount of exposure..

.. Another critic said that A.I.G. would still have to contend with other financial contracts that were not addressed in the rescue but that might deteriorate in the future. “I think it will help, but I don’t think it will solve the whole problem,” Donn Vickrey, founder of Gradient Analytics, an independent securities research firm, said of the latest plan.

Mr. Vickrey noted that A.I.G. had insured several different types of debt securities, and the type now being dealt with was the first to go bad because it was linked to subprime debt. “As the economy deteriorates, I would expect the other debt lines to incur more losses,” he said.

I could go on picking juicy bits from both those articles, but I guess I could save myself the trouble and just let you read them instead.