We've got to congratulate Britain's prime minister, Gordon Brown, for his tough stand on bank bonuses. He plans to make some bank bonuses illegal, according to a Bloomberg article.

Regulators will be given "powers if necessary to tear up contracts that would result in payments being made that would cause instability," according to the Sunday Telegraph. Not only that, but the paper reports that City Minister Paul Myners told Sky News that "if those contracts are written, they will be voided under law."

US Senator Bernie Sanders, independent from Vermont, is known for his straightforward and unbiased positions.

His new legislative proposal is to break up big banks that are deemed "too big to fail." To quote Mr. Sanders: "if an institution is too big to fail, it is too big to exist. We should break them up so they are no longer in a position to bring down our entire economy."

The New York Times has a nice write-up on the small, local banks that are taking advantage of their bailout virginity to lure in customers who might prefer to do business with a bank that isn't on welfare.

USAA Federal Savings Bank (Full Disclosure: I have my mortgage and credit card with USAA and it is easily the best financial institution in the world) has begun touting its lack of bailout money in a $25 million ad campaign with the tag line "Banks don't need bailouts, people do." Worthington National Bank put up a sign that says "Just say no to bailout banks."

This morning, ING (NYSE: ING) announced that its quarterly profit dropped as a result of falling property prices and bad-debt charges. The banking group's profit fell to $100.2 million in the latest quarter. Excluding charges, the company's profit dropped to 229 million euros, which was far short of the expected profit of 388 million euros.

The value of the company's real-estate holdings slipped 584 million euros due to falling prices across the globe. ING also incurred 825 million euros of provisions in order to cover customers who may not have been able to repay their loans. These provisions were higher than the 234 million euros set aside during the same quarter a year ago. The real estate charges were far greater than expected, while the loan-impairment charges met expectations.

Financial giant Citigroup, Inc. (NYSE: C) will get its chance to impress Wall Street tomorrow morning when it reports its first quarter results.

The stock, which has been in free fall since late 2007, has actually been doing pretty good over the past month, and now it is time to see if the company can live up to expectations. The stock hit a low of $1.02 on March 5, and since that time has climbed a very impressive 290% to its current price of $4.00 a share.

The earnings parade continues tomorrow, and in the morning Wall Street will get to see how Swiss Bank UBS AG (NYSE: UBS) made out for its fourth quarter.

The company is going to be reporting in the morning, and expectations are not running very high for the troubled bank. Analysts on average are looking to see the company show a loss for the quarter of $1.15 per share. While this looks pretty bad at first glance, it would be a great improvement over the same period last year in which the company showed an actual loss of $5.43 per share.

Barclays (NYSE: BCS) posted earnings that would be the envy of almost any other global bank. In the process, it gave the troubled banking industry some hope that the future will not be one of ongoing losses stretching well into this year, if not into next.

The bank's second half surprised analysts. According to Bloomberg, "It looks like a pretty good underlying performance and start to 2009," said Michael Trippitt, a London-based analyst at Oriel Securities Ltd., who has an `add' rating on Barclays." A lot of the improvement came because many of Barclays large consumer and business service divisions did well when the effects of toxic asset where taken out.

You've asked people to give you ideas, so here's one: Don't recycle Bush's failed ideas and expect them to work. Each of those failed ideas has deep flaws. Instead, if you have to save the banking system -- and I would like to see how things would work if companies and people lived within their means rather than borrowing to pay for things that they can't afford -- then cull and capitalize or create new banks.

Here's what's wrong with the three recycled Bush ideas being floated:

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Warren Buffett said that the two rules of investing are: #1: Don't lose money, and #2: Don't forget rule number one.

He then explained some more basics: When you buy a share do so as though you are becoming a partner in the business; Make sure you use the market to serve you, not to instruct you; And before buying be certain there is a sufficient margin of safety, a cushion of comfort between the price you are paying and the value of the company.

In the months, and perhaps quarters ahead, they'll be a great deal of talk about banking reform, in the context of financial services reform.

You'll hear much about the need 'to ban banks' or 'get control of commerce / economic activity out of banks hands' etc.

The fault, dear Brutus, is in ourselves

These well-intentioned arguments are missing the point. The problem is not banks per se, but the abuse of the FDIC provision and related insurance protections. In other words, what has to end is not banks, but 'heads the bank wins, tails the U.S. taxpayer loses (and pays).'

And as I wrote earlier, one viable solution, outlined by economist Richard Felson, is two-tier banking. An interpretive report by Gretchen Morgenson in Sunday's New York Times (NYSE: NYT) basically describes the themes discussed in the two-tier banking blog, and what appears to be the likely direction for banking.

Briefly, in the future, Felson argues that there should be two levels of banks. The first: private banks that invest in commercial operations, offer higher interest rates and have other exotic investment products, but offer no government insurance on deposits.

The second level: community-based banks that invest primarily in conventional mortgages, offer very low interest rates on deposits, have no high-risk / high interest rate investments, but offer government insurance for depositors.

Last night Saturday Night Live (SNL) ran one of its fake commercials and this one wasn't very funny. The SNL commercial was for a bank that offered to take your deposits and put them in a mattress -- paying no interest. That same bank promised to turn down 99% of the loan requests it received. Maybe it wasn't funny because it reminded me too much of the mess we face thanks to the excess power of banks in the world.

One of the good things about the current financial catastrophe is that it demands a change. Things simply can't keep going the way they have over the last 30 years. No more of this idea of borrowing huge amounts of money to create financial products that nobody can understand so that bankers can get millions in bonuses and stick taxpayers with their losses.

As I've posted, we could replace banks with a network of information about your money. You could deposit your salary and other money electronically and pay for purchases with a credit card or cell phone. If you needed cash for some purchases you could get it at an ATM. And the money would earn interest in government securities. The key difference is that those deposits would not be available to bankers to lend out -- and possibly lose.

If the latest rumors are correct, it looks like Citigroup (NYSE: C) will not change very much from its current structure. So Citi may fail to follow the compelling story arc of repealing Glass-Steagall to form itself in 1998 only to reinstate that 1933 law in 2009 by splitting its investment and commercial banking operations. Instead, it looks like Citi will do a bit of trimming around the edges.

At the core of the problem is $150 billion in toxic assets -- consumer, corporate, and leveraged loans -- which appears to be the amount of cash Citi will need to raise assuming it writes off all that toxic waste and then attempts to raise the same amount of capital through asset sales.

So Citi's new strategy is to find buyers who in total are willing to pay $150 billion for the various pieces of Citi's business. And this push appears to be coming from FDIC chair Sheila Bair who may be representing taxpayers' 7% stake -- the single largest -- in Citi. But after all the selling Citi will still have consumer, commercial, and investment banking operations (basically the same corporate strategy).

So what is Citi going to try to hawk? Here are four candidates:

The New York Times took a look at the problems that led to the collapse of Washington Mutual: Fraudulent mortgage applications were approved with nothing in the way of oversight from the boss -- who was snorting methamphetamine every morning. Meanwhile, the CEO took home $88 million between 2001 and 2007 before the company collapsed under the weight of the billions of dollars in bad loans it had made.

According to the Times, "By 2005, the word was out that WaMu would accept applications with a mere statement of the borrower's income and assets -- often with no documentation required -- so long as credit scores were adequate, according to Ms. Zaback and other underwriters."

It's great that former employees and the media are stepping forward to tell this story now -- after shareholders have been wiped out along with homeowners -- but where were regulators and Wall Street analysts back when this stuff was happening?

Like every other CEO of a financial services firm, Morgan Stanley (NYSE: MS) Chief Executive John Mack has had a rough year. Given today's poor earnings performance, investors have to wonder whether Mack will join the parade of CEOs of financial services classes who headed for the exits.

The once-proud New York investment bank reported a loss of $2.29 billion, or $2.34 a share, for the fourth quarter. It was Morgan Stanley's first quarterly loss this year. Analysts surveyed by Bloomberg were expecting a 34 cent loss, according to Bloomberg News. It's three major business each showed double-digit earnings declines.

There was nothing to cheer about in these results. Here are some highlights:

• Net revenues were $24.7 billion, 12 percent below last year;
• Advisory revenues were $528 million, a 32 percent decrease;
  
• Underwriting revenues of $215 million, down 63 percent from last year;
• Equity underwriting revenues were $107 million, an 69 percent decrease;
  
• Fixed income underwriting revenues decreased 54 percent to $108 million;
• Fixed income sales and trading net losses were $1.2 billion, compared with net losses of $7.9 billion in the fourth quarter of last year;

This has been a terrible year for financial institutions. However, Wells Fargo (NYSE: WFC) has been able to make it through the obstacle course better than most.

The stock has been up and down with the market but the scandals and large write-downs that have tanked other companies have not been a part of the Wells story.

What has me wondering about Wells today is the prospectus I received from the company to purchase shares at $27 each. The offer is for 407,500,000 shares, far more than I could swallow at a cost in excess of $11 billion -- I have never seen that kind of money!

I'm sure they just figured I might take at least a few shares off their hands, and I have in the open market. If memory serves me correctly, this offering was announced about six weeks ago. The strange thing is that this came to me on a day when the stock closed at a price of $21 and change. Who pays $27 for a $21 stock?