Thursday, May 07, 2009

Stress

Tim Geithner explains how he did it. Lambert at Corrente thinks he did it wrong.
I will note only in passing that Timmy conflates "detailed loan data" with loan records. Only an examination of the records would show the scale of the accounting control fraud, since the computer data already has the fraud "priced in", as we might say.
Geithner's article is a real piece of work. He tries to convince his readers that banks will be able to "de-stress' themselves without taxpayer help, by selling off non-core businesses and converting "other forms of capital" into common equity. But...
Banks will also have the opportunity to request additional capital from the government through Treasury’s Capital Assistance Program....
Isn't that a sweet way to phrase it? This is all about opportunity. You're not against opportunity, are you?

I see nothing here about what, not so very long ago, was called moral hazard. Nothing about those obscene bonuses. Nothing about making the bastards who got us into this mess feel pain.

There's another potential problem. Geithner:
Some banks will be able to begin returning capital to the government, provided they demonstrate that they can finance themselves without F.D.I.C. guarantees. In fact, we expect banks to repay more than the $25 billion initially estimated. This will free up resources to help support community banks, encourage small-business lending and help repair and restart the securities markets.
Trouble is, Congressman Brad Sherman (who has opposed the Geithner bailout) thinks that this practice may be illegal
Sherman points to language in the Emergency Economic Stability Act -- the bailout bill that created the Troubled Asset Relief Program -- that specifically states that revenues and proceeds from sales of troubled assets "shall be paid into the general fund of the Treasury for reduction of the public debt."

In other words, the taxpayer is supposed to get his money back.
It occurs to me that half of this $25 billion could solve GM's problems. Must the cash head back into the banks...?

Let's close with a few words from Naomi Klein:
If you mean the bank bailout, I think it’s a disaster, crony capitalism at the absolute worst.
Larry Summers and Tim Geithner came up with a plan to bail out the banks that is actually a disguised bailout for the hedge funds — where the government is not bailing out the hedge funds directly because they can’t sell that, but hedging the hedge funds to buy the toxic assets of the banks — instead of nationalizing the banks and breaking them up, which is what needs to happen. This is very different from what FDR had the guts to do. He used that progressive movement, he used the rage at the banks, to pass Glass-Steagall. And there’s no excuse for the fact that there’s been no serious re-regulation of the financial sector. The idea that you would somehow hand out trillions of dollars to the banks and then regulate them months later is crazy. You have the leverage when you’re handing out the money. “You say you want a bailout? Well here are the new rules.”
Yeah, I noticed the same thing a while back. The Obots are very quick to blame eeeeee-vil Bill Clinton for the end of Glass-Steagall, even though it was not his fault. But when you mention that Obi and the congressional minions have done nothing nothing nothing to re-impose the regulations that would have prevented this crisis, what do the bots say?

Nothing. Not a thing.

4 comments:

Bob said...

You know... In the good old days the ordinary folk - when they had a bellyfull of the crooks - would take the scheming thieves out, tar and feather them, and ride them out of town on a rail.

Some of the really bad ones were just hung.

I suppoese it was a simpler world back then.

PS:
I wonder what Nancy Pelosi would look like in basic black - with feather accessories?

Peter of Lone Tree said...

Some quotes from Mike Whitney at Global Research:
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale....
We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac....
...only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service.
...banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses.
And the commercial real estate market is a can of worms that hardly anybody seems to want to talk about.

Anonymous said...

Its all disgusting, and has been for a while. You already know the answer - Obi is a bankster, bought and paid for.

However its important to understand something. The time value of money. The Banksters need to stall. If they stall long enough they get to keep the dominant position and pass the bill on to the American people. Simply cos their current operations are incredibly lucrative. The deal with the Fed and Obi's Admin is making them more money than they have ever made before and at their customers expense . The only problem is they are hiding simply enormous losses on past lending. Give them 5 years and they will have made most of it back, provided they dont lend any more money in the meantime- and trust me, they wont be doing much lending.

Dont be slaves America. Take your country back! You dont need the existing bank managers and bonds holders. Take your banks into into public ownership! After all, you have already bought them!

Harry

Anonymous said...

Another great article Joe...

Back in 1996 the family I was in explained in detail 911 only then we were told it was something huge that was going to start everything and the economy collapse. There is actually more planned that hasn't happend yet and hopefully they won't be able to pull it all off. It will be the end of all of us if this is allowed to happen.

Meet the family:
Mexico drug plane used for US 'rendition' flights: report - Sep 4, 2008
http://afp.google.com/article/ALeqM5j6QonBKKMo2gw1e3ql-xUcQEZbVg

There is a lot more but for another time...

Marty Didier
Northbrook, IL