Financial News

[mr_genius]

How many times on this site have I been told that Toxic assets do not have zero value?

 

how am i supposed to know? i stopped reading pro-banker bailout bonus posts long ago.

 

anyways, you were against the bank bailouts, then Obama wins and you totally change your tune. i would imagine you all of a sudden agree with the majority of the pro-bailout posts.

Edited September 23, 2009 by mr_genius

[Balta1701]

how am i supposed to know?

 

anyways, you were against the bank bailouts, then Obama wins and you totally change your tune. i would imagine you all of a sudden agree with the majority of the pro-bailout posts.

They've been a terribly designed policy, they made a bunch of very rich bankers even richer. But the weird thing is...they also saved the banking system. It's been an enormous waste of money but it did its job; it allowed the credit markets to unfreeze because they understood that the government had basically given BofA, Citi, etc., the ability to back their loans with the full faith and credit of the U.S. government.

 

It's a disaster in implementation and half the money has been wasted because we needed to make sure the bankers got their bonuses. It did have the intended effect though. So I'm just not sure how to look at that thing right now. I'm not going to sit here and insist that the credit markets are still frozen like they were last year, and that their unfreezing hasn't been a positive thing.

 

Where we go from here depends a lot on whether or not we're willing to undertake legit regulatory reform. And so far, this administration isn't willing to do that.

[southsider2k5]

How many times on this site have I been told that Toxic assets do not have zero value?

 

But according your market to market accounting, they are.

[mr_genius]

They've been a terribly designed policy, they made a bunch of very rich bankers even richer. But the weird thing is...they also saved the banking system. It's been an enormous waste of money but it did its job; it allowed the credit markets to unfreeze because they understood that the government had basically given BofA, Citi, etc., the ability to back their loans with the full faith and credit of the U.S. government.

 

It's a disaster in implementation and half the money has been wasted because we needed to make sure the bankers got their bonuses. It did have the intended effect though. So I'm just not sure how to look at that thing right now. I'm not going to sit here and insist that the credit markets are still frozen like they were last year, and that their unfreezing hasn't been a positive thing.

 

it didn't work. the economy and banking system would have been better without the bailouts; creative destruction. s***, a bunch of the banks just gave the money back because they didn't want the strings attached to the money. it was an epic failure.

 

Where we go from here depends a lot on whether or not we're willing to undertake legit regulatory reform. And so far, this administration isn't willing to do that.

 

i'll tell you exactly where we go from here. in 10 - 20 years there will be a more massive bailout given. there is no penalty for taking insane risks. the bailouts destroyed the entire schema of our economy. this is a socialist country, with billionaire bankers on a platinum welfare plan.

 

[Balta1701]

But according your market to market accounting, they are.

Isn't it Mark to Market?

[Balta1701]

it didn't work. the economy and banking system would have been better without the bailouts; creative destruction. s***, a bunch of the banks just gave the money back because they didn't want the strings attached to the money. it was an epic failure.

They gave it back because they were able to raise private capital to plug the holes in their balance sheet. They were able to do that because the new investors new that their money wouldn't be lost; the bank wasn't going to be allowed to go belly up. The money that the banks raised to pay back the bailouts was done with an implicit government guarantee that the money would not be lost. Had it not been for the bailout, the banks wouldn't have been able to pay back the bailout money (How's that for bizarre?)

[mr_genius]

They gave it back because they were able to raise private capital to plug the holes in their balance sheet. They were able to do that because the new investors new that their money wouldn't be lost; the bank wasn't going to be allowed to go belly up. The money that the banks raised to pay back the bailouts was done with an implicit government guarantee that the money would not be lost. Had it not been for the bailout, the banks wouldn't have been able to pay back the bailout money (How's that for bizarre?)

 

bulls***. without the bailout, those banks DO NOT go under. if it was a GOP president, you would not have agreed with ANYTHING you just posted.

[Balta1701]

bulls***. without the bailout, those banks DO NOT go under. if it was a GOP president, you would not have agreed with ANYTHING you just posted.

They didn't go under because the Fed stepped in as well and because we've allowed them to pretend that the assets they're holding are worth more. It's certainly plausible that the fed actions could have been enough. But I'm 100% convinced that BofA and Citi and the others would have been in FDIC hands somehow had the Feds (including the federal reserve here) not stepped in. Especially when you consider the amount of paper the Federal Reserve has bought.

 

(This, btw, is a great argument for why we need to support the bill in Congress calling for an audit of the Federal Reserve).

[mr_genius]

They didn't go under because the Fed stepped in as well and because we've allowed them to pretend that the assets they're holding are worth more. It's certainly plausible that the fed actions could have been enough. But I'm 100% convinced that BofA and Citi and the others would have been in FDIC hands somehow had the Feds (including the federal reserve here) not stepped in. Especially when you consider the amount of paper the Federal Reserve has bought.

 

(This, btw, is a great argument for why we need to support the bill in Congress calling for an audit of the Federal Reserve).

 

http://www.soxtalk.com/forums/index.php?s=...t&p=2017082

[jasonxctf]

bulls***. without the bailout, those banks DO NOT go under. if it was a GOP president, you would not have agreed with ANYTHING you just posted.

 

i'm calling you on this. I know for absoute certainty that some of the banks, would have gone under. Others, would have had a "run" like what happened to Washington Mutual and been forced either under or to be bought out for pennies on the dollar. Others, would have been frozen in time, thus managing deposits and collecting loan payments for years without lending out another dollar.

 

Now the biggest problem going forward is that these financial institutions are too big. "too big to fail". At some point, and I hope its during the next 4-5 years, we force these banks to break up into multiple smaller ones. (like AT&T back in the day)

 

I always go back to the same story... First Chicago Bank was a big bank. 10th largest in the US back in the early 90's.

They merge with Bank of Detroit (18th largest) to create the 7th largest bank in the US.

Then First Chicago NBD merges with Banc One.

Then the new Banc One acquires Louisiana First Commerce Corp (size unknown).

Banc One becomes Bank One.

Bank One is acquired by JP Morgan Chase in 2004. (which is a combination of Chase Manhattan buying JP Morgan.. Chase by the way, also merged with Chemical Bank in 1996.)

Then, in 2008 JP Morgan Chase acquires Bear Stearns and Washington Mutual (6th largest in 2008)

 

Big enough for you?

 

You can do the same with BOA and Wells.

[Cknolls]

Not if you do the math, actually. The $2-$3 trillion price tag for Iraq is still less than the $800 billion stimulus and $700 billion bank bailout and even the other things like AMT reform, SChip expansion, etc. put together.

 

Of course, GWB alwo managed to cut taxes by well over $2 trillion over 10 years in his first 3 years in office as well. And added the $750 billion Medicare drug and insurance company bailout bill of 2003.

 

 

Ah, the AMT, another fine Democratic idea to try to get what,less than 50 families to pay more. How is that working out for us? Who would have thought to index it?

[mr_genius]

i'm calling you on this. I know for absoute certainty that some of the banks, would have gone under.

 

no s***. no one is denying that.

 

Edited September 24, 2009 by mr_genius

[mr_genius]

I always go back to the same story... First Chicago Bank was a big bank. 10th largest in the US back in the

Now the biggest problem going forward is that these financial institutions are too big. "too big to fail". At some point, and I hope its during the next 4-5 years, we force these banks to break up into multiple smaller ones. (like AT&T back in the day)

 

early 90's.

They merge with Bank of Detroit (18th largest) to create the 7th largest bank in the US.

Then First Chicago NBD merges with Banc One.

Then the new Banc One acquires Louisiana First Commerce Corp (size unknown).

Banc One becomes Bank One.

Bank One is acquired by JP Morgan Chase in 2004. (which is a combination of Chase Manhattan buying JP Morgan.. Chase by the way, also merged with Chemical Bank in 1996.)

Then, in 2008 JP Morgan Chase acquires Bear Stearns and Washington Mutual (6th largest in 2008)

 

Big enough for you?

 

so you think Chase was going under? really?

 

they didn't even use the bailout loot to give out loans, they used it to buy more banks. so the bailout actually made that problem, of super mega banks, worse.

Edited September 24, 2009 by mr_genius

[NorthSideSox72]

The idea that Iraq will cost less than the bailout is just manifestly false, no matter what your feelings are on either one.

 

Also, even if they are similar in cost, is anyone seriously going to argue that a $2T war that bought us a nice broken Iraq, is a better investment than $2T to at least somewhat help economy and avoid financial collapse? Really?

 

I didn't like a lot of the bailout (some of it I did), and I found nothing useful in the Iraq debacle, but seriously, there is no contest on this one at all.

 

[southsider2k5]

so you think Chase was going under? really?

 

they didn't even use the bailout loot to give out loans, they used it to buy more banks. so the bailout actually made that problem, of super mega banks, worse.

 

I could make a really convincing argument that it very well could have if nothing was done by the fed and Congress.

[Balta1701]

I could make a really convincing argument that it very well could have if nothing was done by the fed and Congress.

I think they'd all have cascaded down one after the other. Although the scary thing is...watching how much influence the banks lobbyists have, part of me wonders if that might not have been the best thing. 5-10 years from now when the next bubble pops because the Obama admin didn't push nearly hard enough to reregulate this sector, it could well be an even worse calamity.

[jasonxctf]

so you think Chase was going under? really?

 

they didn't even use the bailout loot to give out loans, they used it to buy more banks. so the bailout actually made that problem, of super mega banks, worse.

 

 

No, I think you are combining my two thoughts into one.

 

Yes, I think without the bailout/investment, many additional banks would have gone under. And since the banks lend to each other, this would have effected others. (In fact, there is a great article on Lehman/Barclays in Esquire Magazine this month)

 

No, I don't think that JP Morgan Chase would have gone under. My second thought is that we need to eliminate "too big to fail" in the long-term, and break up these gigantic financial institutions who have gotten even bigger (3-5x bigger) over the past 10-15 years.

[southsider2k5]

No, I think you are combining my two thoughts into one.

 

Yes, I think without the bailout/investment, many additional banks would have gone under. And since the banks lend to each other, this would have effected others. (In fact, there is a great article on Lehman/Barclays in Esquire Magazine this month)

 

No, I don't think that JP Morgan Chase would have gone under. My second thought is that we need to eliminate "too big to fail" in the long-term, and break up these gigantic financial institutions who have gotten even bigger (3-5x bigger) over the past 10-15 years.

 

Kinda like the federal government? Can we trust bust them too?

[mr_genius]

The idea that Iraq will cost less than the bailout is just manifestly false, no matter what your feelings are on either one.

 

you are wrong, there is no way around it. i'm against both, but unless you add together everything for Iraq (like buildings destroyed), not the cost to the US, you will not hit the bailout total sums.

Edited September 24, 2009 by mr_genius

[mr_genius]

No, I don't think that JP Morgan Chase would have gone under. My second thought is that we need to eliminate "too big to fail" in the long-term, and break up these gigantic financial institutions who have gotten even bigger (3-5x bigger) over the past 10-15 years.

 

I agree. But the thing is, the bailout was actually designed to have banks merge. There was pressure on certain banks to take over some of the failures, and they were paid to do so. See Bank of America taking Merrill Lynch.

 

So the bailout, in it's nature, made this problem worse.

Edited September 24, 2009 by mr_genius

[mr_genius]

http://www.businessweek.com/ap/financialnews/D9ATPP483.htm

 

Volcker: Obama plans maintain 'too big to fail'

 

A top White House economic adviser says the Obama administration's proposed overhaul of financial rules preserves the policy of "too big to fail," and could lead to future bailouts.

 

Former Federal Reserve Chairman Paul Volcker said Thursday that by designating some companies as critical to the broader financial system, the plans create an expectation that those firms enjoy government backing in tough times. That implies those financial companies "will be sheltered by access to a federal safety net," he said.

 

Lawmakers should make clear that nonbank companies will not be saved with federal money, he said.

[mr_genius]

http://www.cnbc.com/id/33001468

 

Existing-Home Sales Decline Unexpectedly; Market Weak

 

 

http://finance.yahoo.com/news/Home-sales-d...ml?x=0&.v=6

 

Home resales dipped unexpectedly last month after a four-month streak of gains, providing evidence that the housing market recovery remains fragile.

 

Sales dropped 2.7 percent to a seasonally adjusted annual rate of 5.1 million in August, from a pace of 5.24 million in July, the National Association of Realtors said Thursday. Compared with a year ago, however, home sales are up 3.4 percent.

 

The results surprised analysts, who had expected sales to rise to an annual pace of 5.35 million, according to Thomson Reuters.

 

 

[mr_genius]

$4 Billion bailout for post office

 

Democrats moved Thursday to give special relief to the financially strapped Postal Service, which would be allowed to defer $4 billion in payments due at the end of this month to cover retirement benefits for its employees.

 

Read more: http://www.politico.com/news/stories/0909/...l#ixzz0S31mDnVZ

Edited September 24, 2009 by mr_genius

[NorthSideSox72]

http://www.cnbc.com/id/33001468

 

 

 

 

http://finance.yahoo.com/news/Home-sales-d...ml?x=0&.v=6

Yeah, today was interesting news-wise in the markets. Sales of existing homes dipped unexpectedly, but new and recurring unemployment claims dropped unexpectedly.

 

[NorthSideSox72]

$4 Billion bailout for post office

I've said before, I don't think the USPS has a good financial model at all. They shouldn't be spending money on advertising and marketing like they do, nor should they be pouring money into competing with private business. They should stick to the mail.