Posts Tagged
‘Bank bailouts’
by ilene - October 26th, 2010 1:53 am
Courtesy of Tyler Durden
SigTarp Neil Barofsky has just released the most scathing critique of all the idiots in the administration, with a particular soft spot for Tim Geithner.
On the failure of TARP to increase lending:
As these quarterly reports to congress have well chronicled and as Treasury itself recently conceded in its acknowledgement that "banks continue to report falling loan balances," TARP has failed to "increase lending" with small businesses in particular unable to secured badly needed credit. Indeed, even now, overall lending continues to contract, despite the hundreds of billions of TARP dollars provided to banks with the express purpose to increase lending.
On TARP’s sole success of boosting Wall Street bonuses:
While large bonuses are returning to Wall Street, the nation’s poverty rate increased from 13.2% in 2008 to 14.3% in 2009, and for far too many, the recession has ended in name only.
On TARP’s failure in general:
Finally, the most specific of TARP’s Main Street goals, "preserving homeownership" has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only approximately 207,000 ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.
On the Treasury’s scam in minimizing publicized AIG losses, and on Geithner as a Wall Street puppet whose actions are increasingly destroying public faith in the government:
While SIGTARP offers no opinion on the appropriateness or accuracy of the valuation contained in the Retrospective, we believe that the Retrospective fails to meet basic transparency standards by failing to disclose: (1) that the new lower estimate followed a change in the methodology that Treasury previously used to calculate expected losses on its AIG investment; and (2) that Treasury would be required by its auditors to use the older, and presumably less favorable, methodology in the official audited financials statements. To avoid potential confusion, Treasury should have disclosed that it had changed its valuation methodology and should have published a side-by-side comparison of its new numbers with what the projected losses would be under the auditor-approved methodology that Treasury had used previously and will
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Tags: AIG, American International Group, Automakers, Bank bailouts, Banks, Barney Frank, bonuses, Chris Dodd, Fraud, Hank Paulson, lending, Main Street, Moral Hazard, Neil Barofsky, Recession, Sigtarp, Steve Rattner, TARP, Tim Geithner, too-big-to-fail, transparency, unemployment, Wall Street
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by ilene - September 4th, 2010 1:52 am
Courtesy of Mish
One year ago the official unemployment rate was 9.7%. Today it is 9.6%.
One year ago U-6 unemployment was 16.8%. Today U-6 is 16.7%
click on chart for sharper image
For more details on the jobs report, please see Jobs Decrease by 54,000, Rise by 60,000 Excluding Census; Unemployment Rises Slightly to 9.6%; A Look Beneath the Surface
For all the trillions of dollars in stimulus and additional trillions of dollars in bank bailouts and trillions of dollars of expansion of the Fed’s balance sheet, this is all we have to show for it.
Moreover, the economy is clearly slowing already by many economic reports including new home sales, existing home sales, the regional Fed manufacturing surveys, sentiment measures, and consumer spending trends. The only major discrepancy is ISM.
This week, none of that matters. However, I would like to point out that bear market rallies end, not on bad news, but on good news. It will be interesting to see how much more good news there is, and the market’s reaction to it.
Mike "Mish" Shedlock
Tags: Bank bailouts, Economy, Employment, Jobs, Stimulus
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by ilene - August 1st, 2010 7:49 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
The losses from the mortgage securities frauds and the subsequent bubble collapse continue to debilitate the US financial system, particularly the regional banks, in a slow bleed costing the US government additional millions each week. The public relations campaign promoting the idea that the bank bailouts are done and successful, and that the US made money on this egregious abuse of public monies is patently false, and probably can be described as corporatist propaganda.
The banks continue to mount a campaign to resist reform and regulation. They are taking advantage of the weakness of the Obama administration in failing to reform the banking system through liquidations and managed bankruptcies, including indictments and investigations as was seen in the Savings and Loan scandal.
It is difficult to continue to assume good intentions in this administration, or even mere incompetence. The objections put up by Geithner and Summers to the appointment of Elizabeth Warren as the head of the new consumer protection agency shows how reactionary they continue to be, and resistant to fundamental reforms.
American Banker
Failures on Two Coasts Stretch Toll for Year to 108
By Joe Adler
Friday, July 30, 2010
Five bank closures in four states Friday cost the federal government an additional $334 million in losses.
Regulators shuttered the $373 million-asset Coastal Community Bank in Panama City Beach, Fla., the $66 million-asset Bayside Savings Bank in Port Saint Joe, Fla., the $168 million-asset NorthWest Bank and Trust in Acworth, Ga., the $529 million-asset The Cowlitz Bank in Longview, Wash., and the $768-asset LibertyBank in Eugene, Ore. The failures brought the year’s total to 108.
The hammered Southeast bore the brunt of the failure activity, as it has for so many Fridays since the financial crisis began. Twenty banks have been seized in Florida in 2010, while 11 have failed in Georgia so far this year.
The two Florida institutions that failed Friday went to one buyer: Centennial Bank in Conway, Ark. The acquirer agreed to take over Coastal Community’s $363 million in deposits, Bayside Savings’ $52 million in deposits and roughly all of the assets of both institutions.
The Federal Deposit Insurance Corp. agreed to share losses with Centennial on $303 million of Coastal Community’s assets, and $48
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Tags: Bank bailouts, bank failures, CREDIT CRISIS, FDIC, financial bubble, Financial System, Fraud, mortgage securities, Obama, Propaganda, regional banks
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by ilene - March 18th, 2010 4:15 pm
Not just more honest, more concise too!
Courtesy of Tim Iacono at The Mess That Greenspan Made
Perhaps there is some context, somewhere, that makes yesterday’s words from Fed chief Ben Bernanke’s prepared remarks before the House Financial Services committee on the subject of the Fed’s role in bank supervision seem less filled with hubris than they first appear. But, if there is, I couldn’t find them.
The Federal Reserve is uniquely suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole.
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The insights provided by our role in supervising a range of banks, including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability.
Maybe he’s confusing risk assessment and fostering stability with bailing out the big banks, something that the Fed chief has proven himself quite proficient at over the last few years.
If a few substitutions are made (in bold), this seems to make a whole lot more sense.
The Federal Reserve is uniquely suited to supervise bailout large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole future bailouts.
…
The insights provided by our role in supervising bailing out a range of banks, not including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability guaranteeing that there will be more bailouts.
Yes, that’s much better.
Tags: Bank bailouts, Ben Bernanke, regulation, supervision
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by ilene - February 23rd, 2010 4:56 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
This Treasury Supplemental Financing Program is designed to provide public funds for the Fed’s efforts to purchase and then liquidate toxic assets and derivatives from the financial sector, effectively absorbing their losses and monetizing them.
The Treasury creates new notes and sells them on the open market. The money obtained in these sales is deposited at an account at the Federal Reserve. The Federal Reserve uses this money to purchase toxic assets from the banks at its own discretion and pricing, subject to little oversight and market discipline.
Senator Chris Dodd said "the Fed could become an ‘effective Resolution Trust Corporation,’ purchasing and ultimately disposing of depreciated assets.
It looks very much like a stealth bailout. It is even more of a scandal because of the Fed’s resistance to any disclosures on the principles and specifics by which they are allocating taxpayer money.
Where this gets even more interesting is that the Fed in turn is buying Treasury debt after issuance through its primary dealers, debt that was issued by the Treasury to provide funds to the Fed.
Even more than a stealth bailout, this is starting to smell like ‘a money machine.’ Money machines are what Bernanke euphemistically called ‘a printing press.’ What is odious about this particular printing press is that the output is being given directly to a few big banks by a private organization which they own.
I believe that it is still illegal, by the letter of the statutes, for the Fed to directly purchase Treasury paper. But in this case, the Fed is buying Treasury paper with money supplied by the Treasury. Since the paper is passing through the marketplace, and the Primary Dealers are taking their commissions, it may be in conformance with the letter of the law. But it looks like it violates the spirit of the law.
And given that in many cases the Primary Dealers are the principal beneficiaries of the subsidy programs, selling their toxic debt to the Fed at non-market prices, this starts to appear like a right proper daisy chain of self-dealing and fraud.
As you can see from the background information below, this is a ‘temporary’ program from 2008 that the Treasury keeps promising to ‘wind down.’
This is not a resolution trust by…
Tags: Bank bailouts, hyperinflation, Monetization, MONEY MACHINE, TREASURY MANIPULATION
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by ilene - January 31st, 2010 6:59 pm
Courtesy of Jesse’s Café Américain
And that is the nature of Goldman. Gather up as many customers as possible, aggregate the available information to achieve a superior market view and then relentlessly extract rents from the marketplace. Better yet, tell yourself you’re smarter than everyone else and you’ve earned the rents from the symbiosis."
James Rickards, former General Counsel of Long Term Capital Management
This is a nice, concise, albeit somewhat simplified description, from a more mainstream and highly credible source, of how the markets are operating today to the extreme disadvantage of the public and the real economy. Between front-running and naked short selling the banks have things pretty well under their control.
The market makers are the Wall Street banks are the prop trading desks, trading at high frequency slightly ahead of the markets while peeking into your accounts, gaining just enough unfair advantage to defy the odds of winning and losing in a fairly regulated market.
From James Rickards, The Frog, The Scorpion, and Goldman Sachs:
"Now consider another example of data mining, not done by retail firms, but by giant investment banks such as Goldman Sachs. These banks have thousands of customers transacting in trillions of dollars in stocks, bonds, commodities and foreign exchange daily. By using systems with anodyne names like SecDB, Goldman not only sees the transaction flows but some of the outright positions and whether they are bullish or bearish. Data mining techniques are just as effective for this market information as they are for Google, Amazon, Wal-Mart and others. It’s not necessary to access individual accounts to be useful. The data can be aggregated so that the bank can look at positions on a portfolio basis without knowing the name of each customer.
One need not be a market expert to imagine the power of this information. You can see which way the winds are blowing before the storm hits. You get a sense of when momentum is draining out of a trade so you can get out of it before the market turns. You can see when bullish or bearish sentiment reaches extremes, suggesting it may soon turn the other way. This use of information is the ultimate type of insider trading because it does not break the law;
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Tags: Bank bailouts, financial reform, regulatory capture
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by ilene - January 31st, 2010 6:46 pm
Courtesy of Jesse’s Café Américain
"The banks must be restrained, the financial system reformed, and balance restored to the economy before there can be any sustained recovery."
We have been saying this for some time. The report below from Neil Barofsky says essentially the same thing.
"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.
The US is heading towards a double dip recession, and the next leg down may be more fundamentally damaging than before.
The reason for the decline will be the abject failure of the Obama Administration to address the roots of the problem, instead wasting trillions to prop up a banking system that is a useless distortion.
Worse than useless really, because it actually presents a huge negative influence by stifling the recovery, channeling funds to the crony capitalists and non-producing wealth extraction sector, who tax the people like feudal lords under license of a corrupt government.
So far, Obama has failed the people, but preserved the banks. A source of his failure has been his weakness in listening to Larry Summers and Tim Geithner, the Rubin-Clinton wing of Democrats, who have well established their incompetence and inability to act at a level suitable to their positions. They are captive to special interests, locked into the ways of thinking that brought the world to the point of crisis.
In response to the next leg down, Bernanke will monetize debt at an even more furious and clever pace, perhaps in alliance with the Bank of England and Bank of Japan. The ECB resists, and all who balk will be chastised by the monied powers and their demimonde, the ratings agencies and global banks. This is modern warfare of a sort.
We do not expect the corruption of the world’s reserves to be so blatant that the inflation will immediately appear, except in more subtle manner. At some point it may explode, especially if Ben is particularly good at concealing its subtle growth.
Monetary inflation is the growth of the money supply in excess of the demands of the real economy, not nominal growth of the supply. The US has been shifting…
Tags: bailouts, Bank bailouts, Barofsky, Financial Engineering, financial reform, monetary inflation
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by ilene - November 14th, 2009 5:18 pm
Courtesy of Mish
Yesterday I stated FHA Bailout By Taxpayers On The Way. The FHA denies a bailout is coming.
Please consider Inside the FHA’s financial audit, with David Stevens, FHA commissioner and CNBC’s Diana Olick.
The Term Bailout Does Not Apply
David Stevens: "Bailout is a term widely used with financial institutions. FHA is a government agency so let’s just be clear. …. FHA does not operate under the same context as a typical financial institution. So the term bailout really just does not apply technically"
Lovely
Given that Fannie Mae and Freddie Mac are institutionalized, I guess the term bailout technically no longer applies to them either.
This is good news because it means no bailout will be needed for PBGC either.
Bair calls U.S. bank bailout "not a good thing"
Inquiring minds note that Bair says U.S. bank bailout "not a good thing"
Leading U.S. bank regulator Sheila Bair said on Friday that the government’s capital injections into the largest banks was "probably not a good thing."
Bair, the chairman of the Federal Deposit Insurance Corp, said the billions of dollars of capital infusions last year had a terrible impact on public perception of the financial industry and government regulators.
"I think at the time it sounded like the right thing to do and, again, it was part of an international effort, but I just see all the problems it’s created," Bair said during an interview with PBS NewsHour. "I think we would have tried to dissuade Treasury from making these capital investments."
Public outcry followed the investments, which largely came to be referenced as government bailouts. Lawmakers raced to attach more conditions, such as restrictions on compensation, to the capital injections.
"It’s had a terrible, terrible impact on public attitudes toward the financial system, toward the regulatory community," Bair said. "It’s created all sorts of issues about government ownership of these institutions, what happens if they get in trouble again."
PBGC $22 Billion In The Hole
Inquiring minds are reading the PBGC Annual Management Report for Fiscal Year 2009
The Pension Benefit Guaranty Corporation (PBGC) ended fiscal year 2009 with an overall deficit of $22 billion, according to the agency’s Annual Management Report
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Tags: Bank bailouts, deficits, Mish, Stock Market
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site