It is time to for a real change. It is time to stop allowing the country to be held hostage by a relatively small number of financiers who have gamed the system and corrupted the regulatory and legislative process. It is time to stop allowing those deeply involved with the problem to manage the investigation and the solutions.
Put the money center banks into a managed restructuring, and stop calling it nationalization, which wrongfully suggests the British socialism of the post World War II era. We did not have to use that sort of language or raise these emotional issues when the Savings and Loan scandal was cleared.
Let's get this open sore cleaned, bound and stitched.
But one thing we might wish to keep in mind is that it may not be AIG, BAC, and C that are pulling the strings, that are at the center of this. They look more like patsies than prime motivators.
Transparency would be interesting in this case with regards to the CDS market and the derivatives markets.
Who has the most to gain and lose if Citi, Bank of America, and AIG are put into managed restructuring? Who has the most and biggest bets on their failure?
Let's have transparency of positions now. And we cannot afford to take anyone's word on this.
The real sticking point is not the shareholders or managers of these companies, although they may be making the most noise at this point.
We will be surprised, if transparency is actually provided, and new and independent regulators armed with the full array of investigative tools, dig into this mess to see where the strings lead, if we do not find many of them in the hands of the other major Wall Street banks, media giants, and corporate conglomerates, among others.
We will keep an open mind, but do not expect any light or serious new information to come from these Congressional Committees with their circus, show trial atmosphere.
Time to bring back Glass-Steagall and to enforce the Sherman Anti-Trust laws. Time to compel the three or four banks to unwind their trillions in opaque derivatives. Time to audit the Federal Reserve, and clarify their role in our system to them, and nail a copy of the Constitution to their front door.
We do not need or want fewer, bigger, more powerful banks as a drag on the real economy, taking a tax on each transaction whether it be through credit cards or fees or loans or subsidies.
Time for a real change. Time to remind Congress where the power and legitimacy of their offices resides. Time for the lobbyists, corrupt regulators, corporate princes and the enablers and motivators of this grand theft to find a place in an unemployment line or a witness stand.
We must demand action from the Congress and the Administration who we recently put in place through the elections to clean this mess up and then change the system that delivered it.
Contact the White House
Contact Your Senator
We do not want fewer, bigger banks exacting a fee on every commericial transaction in this country.
1. Bring back Glass-Steagall.
2. Clean up the derivatives mess, starting with J.P. Morgan.
3. Enforce the various anti-trust laws, enacting new ones where necessary, and break up the media and banking conglomerates.
4. Enact aggregate position limits in all commodity markets and transparency with immediate disclosure of all position over 5% in any market.
5. Effective restrictions and enforcement of naked short selling, price manipulation, reinstatement of the 'uptick rule,' the prohibition of regulated banks from engaging in any speculative markets either for themselves or as agents, and usury laws and regulation of all interstate financial transactions at the national level.
And for the sake of the country, establish a vision, a model, of what the system should look like in accord with the Constitution. And then strike out for it, as painful as that may be, and stop this management by crisis, and weaving a shroud for our freedom out of a web of endless fixes, concessions and necessities.
"If there must be trouble, let it be in my day, that my child may have peace." Thomas Paine.
http://jessescrossroadscafe.blogspot.com/2009/02/who-benefits-who-is-pulling-strings.html
Wednesday, February 25, 2009
Stanford employees had advisory roles at FNRA
Two employees of Allen Stanford's financial business, which U.S. regulators have accused of massive fraud, held advisory roles at a watchdog group overseeing U.S. broker-dealers aimed at preventing abuses.
Lena Stinson, director of global compliance at Stanford Financial Group, is listed as serving on the membership committee of the Financial Industry Regulatory Authority, or FINRA, which describes itself as the largest independent regulator of U.S. securities firms.
Frederick Fram, the chief operating officer of Stanford Group Holdings, serves on the FINRA continuing education content committee, "where he participates in creating material for the Regulatory Element continuing education program," according to a biography on Stanford's website.
http://www.reuters.com/article/newsOne/idUSTRE51N5RO20090224
Lena Stinson, director of global compliance at Stanford Financial Group, is listed as serving on the membership committee of the Financial Industry Regulatory Authority, or FINRA, which describes itself as the largest independent regulator of U.S. securities firms.
Frederick Fram, the chief operating officer of Stanford Group Holdings, serves on the FINRA continuing education content committee, "where he participates in creating material for the Regulatory Element continuing education program," according to a biography on Stanford's website.
http://www.reuters.com/article/newsOne/idUSTRE51N5RO20090224
Tuesday, February 24, 2009
Today, Bernanke was good
The stress test for banks won't be "pass" or "fail" but instead, it will be what the banks need to meet their obligation. Bernanke also said that banks won't be able to "hide anything."
Of course, we know these statements aren't true, but Bernanke sold it nicely on the hill.
So we rallied.
Of course, we know these statements aren't true, but Bernanke sold it nicely on the hill.
So we rallied.
The bank "stress test"
Now we hear that the administration is going to put a stress test on the 20 largest banks to make sure they have sufficient capital. The stress test is a farce, but to sell it, they have the best capitalized bank, JP Morgan, slash their dividend, as an example of a bank being precautionary about the current banking environment.
Thus, the liars at the FDIC, Treasury, OCC, OTS and the liar in chief, Ben Bernanke seem to think that their statements can sell the public, especially when Sheila Bair comes out today and says the banks are "well capitalized!"
http://www.google.com/hostednews/ap/article/ALeqM5iZKNwRyOoCx_vnwxKUC0bfIxE1EAD96HUTPO1
Do you really need a stress test to see if the banks have adequate capital? Use the $1 test. Vikram Pandit, the CEO of Citigroup is taking a salary of $1. He probably thinks this will allow shareholders to forget that he sold his now defunct hedge fund to Citigroup for $800 million!
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070416/FREE/70416004/1001
And that Citigroup is essentially still insolvent!
http://aaronandmoses.blogspot.com/2009/02/tangible-common-equity.html
Today the Chinese market lost over 4%. China also has a severe real estate bust. The buildings for the Bejing Olympics in China are now empty:
By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government. He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.
http://www.latimes.com/news/nationworld/world/la-fg-beijing-bust22-2009feb22,0,5564951.story
But don't worry. China's second largest insurance company, Ping An, who lost $2.3 billion in Fortis, has decided to follow Vikram Pandit's lead of Citigroup and take a $1 salary also:
Feb. 24 (Bloomberg) -- Ping An Insurance (Group) Co., China’s second-largest insurer, said Chief Executive Officer Peter Ma will forgo his salary for 2008 after the company lost $2.3 billion on its investment in Fortis. Ma, who earned 66.16 million yuan ($9.7 million) in 2007, made the decision after the financial crisis “affected company performance,” Ping An’s Shenzhen-based spokesman Sheng Ruisheng said in a telephone interview today.
http://www.bloomberg.com/apps/news?pid=20601080&sid=a9m9uJdnwB7k&refer=asia
Stress test? How about the Chinese real estate that is on Ping An's books with a 14 year supply? But Ma was one-upped by China's Liang Wengen, who is chairman of Sany Heavy, China's biggest supplier of concrete-making equipment. (With a 14 year supply of commercial real-estate who needs concrete equipment?)
He cut his salary to 15 cents!
Who needs a bank stress test?
Just check out who's paying their CEO's a dollar!
AIG offers the Government it's Level III assets
AIG can't sell any of it's businesses at any of the prices that AIG thinks they are worth, so now AIG wants to offer these businesses to the taxpayer in lieu of cash!AIG says, "There is a trade-off between protecting the value of the assets for the government and just selling them in the short term."
So in the meantime, AIG wants their deal with the Government renegotiated.
Remember the deal that Bernanke made with AIG? He said it was punitive so it would force the market to accept discipline and force AIG to quickly sell it's assets and pay back the loan. Bernanke said AIG was so important systemically that they couldn't allow it to fail, but at the same time it wasn't that important systemically to give it sweetheart terms.
Now AIG wants to treat it as a PIK loan!
And give the taxpayer businesses it can't sell!
And now the AIG gangsters are threatening to dissolute their marriage with the Fed with bankruptcy if they don't make it sweeter!
It's almost a Valentine made on Wall Street!
In the real world, Annie Leibovitz had to pawn her her work to Art Capital, so she could get out of debt.
Maybe AIG should have Annie photograph them wrapped up in the flag, so the world can know that AIG is so important to this country that it can't be allowed to fail.
Even though it already has.
It's just that the bankers on the other end of AIG's trades just want to be sure they get paid.
And that's why Treasury has wrapped up the flag around AIG!
FDIC's Bair: All big banks are well-capitalized
Oh that's news!
No wonder the WSJ had this article this morning:
Financial markets have clung to every word from policy makers' mouths throughout the raging financial crisis, with poor results. Stocks rebound on hopes the government will save everything, then fall on the realization it can't.
http://online.wsj.com/article/SB123543279916253905.html
And today, we hear from the pontificator in chief, Ben Bernanke as he goes up on the hill. He'll tell us that credit markets are loosening up!
No wonder the WSJ had this article this morning:
Financial markets have clung to every word from policy makers' mouths throughout the raging financial crisis, with poor results. Stocks rebound on hopes the government will save everything, then fall on the realization it can't.
http://online.wsj.com/article/SB123543279916253905.html
And today, we hear from the pontificator in chief, Ben Bernanke as he goes up on the hill. He'll tell us that credit markets are loosening up!
Biden's family had hedge fund marketed by Stanford
A fund of hedge funds run by two members of Vice President Joe Biden's family was marketed exclusively by companies controlled by Texas financier R. Allen Stanford, who is facing Securities and Exchange Commission accusations of engaging in an $8 billion fraud.
The $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and a Stanford Financial Group entity and was known as the Paradigm Stanford Capital Management Core Alternative Fund. Stanford-related companies marketed the fund to investors and also invested about $2.7 million of their own money in the fund, according to a lawyer for Paradigm. Paradigm Global Advisors is owned through a holding company by the vice president's son, Hunter, and Joe Biden's brother, James.
http://online.wsj.com/article/SB123543815326954907.html?mod=testMod
The $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and a Stanford Financial Group entity and was known as the Paradigm Stanford Capital Management Core Alternative Fund. Stanford-related companies marketed the fund to investors and also invested about $2.7 million of their own money in the fund, according to a lawyer for Paradigm. Paradigm Global Advisors is owned through a holding company by the vice president's son, Hunter, and Joe Biden's brother, James.
http://online.wsj.com/article/SB123543815326954907.html?mod=testMod
Monday, February 23, 2009
The gift at the Washington Monument
55 feet wide, and 555 feet tall, the Washington Monument looks over the Lincoln Memorial Reflecting Pool with it's 864,000,000 ounces of water.The monument was dedicated on Washington's birthday, which is February 22.
It's a day later, but today is the birthday of "the gift."
Tangible Common Equity
So how is the Fed going to convert Citi's preferred into common and magically create some equity? Look at the above chart. In Citigroup's case, it has $28.5 billion of deferred tax assets, that sits on their balance sheet--The same "assets" that did in Fannie and Freddie. Is it any wonder why Citigroup is toast?http://www.bloomberg.com/apps/news?pid=20601039&sid=az2Y5BBLNYj8&refer=home
Citigroup's figure of TCE also doesn't include the hundreds of billions of off-balance sheet items. But somehow, you, the taxpayer, are, with Geithner's blessing, going to convert your preferred stake in Citicorp to equity.
What kind of a joke is that??? What is with this smoke and mirrors?? Why do you think Geithner wants to give you, the taxpayer Citigroup's equity?
Because it's worthless!
Subtract the $28.5 billion of deferred tax assets from Citi's TCE, and Citi's leverage goes up to 360X, and Citi's Tangible Common Equity goes to zero.
And that's what you the taxpayer will get, with this new cramdown from Geithner.
The same Treasury Secretary that won't allow judges (so far) to cramdown the mortgage principle in bankruptcy, but he will surely cram down Citi's worthless equity to the taxpayer!
So much for the "bad bank"......
Feb. 23 (Bloomberg) -- Treasury Secretary Timothy Geithner’s financial-rescue plan may be doomed if he doesn’t offer low-cost loans to hedge funds and other investors to help them buy toxic assets weighing down bank balance sheets.
Creating a so-called bad bank or aggregator bank that would use federal funds to acquire and warehouse the assets, as some have proposed, would be costly for taxpayers and require too much government interference, say two experts on distressed securities who have pitched an alternative plan to officials.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aGqIiR1PCrq8&refer=home
Atlas Shrugged
Since how the pseudo intellectual bankers from Greenspan down, think Atlas Shrugged is one of the finest works ever, I'll leave you with a quote directed to the Government officials, Treasury, The Federal Reserve and the executives at the banks across the country who repeatedly lie to the American people:"People think a liar gains victory over his victim. What I've learned is that a lie is an act of self-abdication, because one surrenders one's reality to the person to whom one lies, making that person one's master, condemning oneself from then on to faking the sort of reality that person's view requires to be faked. And if one gains the immediate purpose of the lie -- the price one pays is the destruction of that which the gain was intended to serve. The man who lies to the world, is the world's slave from then on."
AIG threatens the Government with a bankruptcy filing
AIG is going to have a $60 billion quarterly loss, and now needs money again from the taxpayer. AIG needs the money so badly, they hired Weil, Gotshal & Manges LLP to "prepare" a bankruptcy filing if they can't extort any more money from the Government-which is you!
So now we see, that $150 billion for AIG isn't enough! Let them put AIG's financial products business in bankruptcy. Why else do we get AIG sympathy pieces like the one in the Washington Post this weekend regarding AIG's Financial Products divison, that blew up over $100 billion dollars. Even then, the AIG workers were wondering-"What's in it for me?"
In recent years, Financial Products wrote a series of private contracts that faltered and came back to haunt its parent company in a very public way, leaving the insurance giant on the brink of collapse. Fearing that the failure of AIG could send shock waves throughout the financial system, the federal government stepped in last September with the single largest bailout of a company in U.S. history, a total rescue package of up to $152 billion...
"In a situation like this, it's hard to keep everybody on task, motivated, focused. People know they are going to be out of jobs," Pasciucco said. "So they are constantly doing that calculus in their heads, as to what's left in terms of what I get paid here? What can I get paid in a new career? When should I start my new career?" Haas, the Financial Products veteran, said no one at the firm is looking for sympathy. "The whole world hurts right now," he said. But he said the vast majority of current employees had no role in the problems that wrecked the firm, and many feel a measure of shame and guilt for how its troubles spread to AIG and helped poison the economy.
"People have great pride in this organization. Everyone is horrified at what happened," he said, adding they are determined to close down the firm with dignity and professionalism. "There's a duty. We owe it to AIG. And now we owe it to the government and the taxpayer."
These days, Haas avoids telling people where he works. But he and the others who remain still show up each week at the office park off Danbury Road. They keep framed pictures of smiling children on their desks. Letizia's Pizza in Norwalk still delivers each night to those who stay late, chipping away at the pieces of Financial Products until it is finally gone.
"The great irony in it," Haas says, "is the better job we do, the sooner we'll be out of a job."
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/20/AR2009022003304_4.html
Citigroup is also going back to the Fed for aid for the third time, showing that they too, understand the AIG model.
http://aaronandmoses.blogspot.com/2009/02/aig-model-for-insolvent-institution.html
Ken Lewis of BAC, said they wouldn't need to go back to the Fed, as two times was supposedly enough for them. There was whispers on the street that the traders at Merrill had made a couple billion so far this year, and Ken said business for January was good.
We'll see.
I think Ken Lewis understands the AIG model, and he'll be back!
Just like AIG, and just like Citi!
Until they're terminated!
JP Morgan slashes their dividend
JPM cut their dividend to .05 quarterly from .38 cents.
It was just Wednesday when I wrote about Jamie Dimon's boardroom fantasy when he said he wanted to pay back the $25 billion of TARP money.
http://aaronandmoses.blogspot.com/2009/02/jamie-dimon-bares-his-fantasies-to-wall.html
I said "Maybe Jamie Dimon should talk to Wall Street about paying back the TARP money after he first cuts the dividend! "
http://aaronandmoses.blogspot.com/2009/02/credit-default-swaps-widen-again-at.html
Today Jamie cut the dividend at JP Morgan, and said, "While we recognize our tremendous obligation to shareholders to maintain dividend levels, we also understand that extraordinary times require extraordinary measures. Our action today is being done as a strong precautionary measure to help ensure that our fortress balance sheet remains intact – even if conditions worsen significantly."
http://finance.yahoo.com/news/JPMorgan-Chase-to-Reduce-bw-14444311.html
Two weeks ago, Jamie Dimon said he was comfortable with the dividend and it was an important obligation.
http://www.streetinsider.com/Analyst+Comments/Citi+Maintains+a+Hold+on+JP+Morgan+Chase+(JPM)+After+Meeting+with+CEO+Jamie+Dimon/4371907.html
Today it gets cut 86%.
JPM has such a fortress balance sheet that it has to cut the dividend after getting $25 billion of TARP money that it supposedly doesn't need. Money that would cover the dividend for the next five years.
Obviously, JPM needs the money.
But the dividend cut is a good first step, and it's also a good first step in recognizing the reality that JPM is facing right now.
Conditions will worsen significantly, and maybe Dimon may prod Jeff Imelt of GE to reconsider his idiotic stance on GE's dividend.
That dividend needs to be cut today!
It was just Wednesday when I wrote about Jamie Dimon's boardroom fantasy when he said he wanted to pay back the $25 billion of TARP money.
http://aaronandmoses.blogspot.com/2009/02/jamie-dimon-bares-his-fantasies-to-wall.html
I said "Maybe Jamie Dimon should talk to Wall Street about paying back the TARP money after he first cuts the dividend! "
http://aaronandmoses.blogspot.com/2009/02/credit-default-swaps-widen-again-at.html
Today Jamie cut the dividend at JP Morgan, and said, "While we recognize our tremendous obligation to shareholders to maintain dividend levels, we also understand that extraordinary times require extraordinary measures. Our action today is being done as a strong precautionary measure to help ensure that our fortress balance sheet remains intact – even if conditions worsen significantly."
http://finance.yahoo.com/news/JPMorgan-Chase-to-Reduce-bw-14444311.html
Two weeks ago, Jamie Dimon said he was comfortable with the dividend and it was an important obligation.
http://www.streetinsider.com/Analyst+Comments/Citi+Maintains+a+Hold+on+JP+Morgan+Chase+(JPM)+After+Meeting+with+CEO+Jamie+Dimon/4371907.html
Today it gets cut 86%.
JPM has such a fortress balance sheet that it has to cut the dividend after getting $25 billion of TARP money that it supposedly doesn't need. Money that would cover the dividend for the next five years.
Obviously, JPM needs the money.
But the dividend cut is a good first step, and it's also a good first step in recognizing the reality that JPM is facing right now.
Conditions will worsen significantly, and maybe Dimon may prod Jeff Imelt of GE to reconsider his idiotic stance on GE's dividend.
That dividend needs to be cut today!
John Thain pleads the 5th
The loquacious John Thain, now won't tell Andrew Cuomo about the bonus situation at Bank of America. Thain, of course, blames his reticence for answering because Bank of America's lawyers won't allow him to answer the questions.
It's amazing how the story changes when these thieves have to speak under oath!
It's amazing how the story changes when these thieves have to speak under oath!
Another Madoff story
A little more than a year before he blithely confessed to masterminding the largest Ponzi scheme in history, Bernie Madoff attended the wedding of his niece. That Saturday evening, September 29, 2007, Shana Madoff, the daughter of his younger brother, Peter, his partner for almost four decades at Bernard L. Madoff Investment Securities, married a former official at the Securities and Exchange Commission, an irony that Bernie couldn’t quite keep to himself. He tossed an arm around the neck of one young guest and directed the young man’s attention across the dance floor, toward a clean-cut group sipping cocktails. “See them,” Madoff said, pale-blue eyes flashing incongruously in his kindly face. “That’s the enemy.”..Madoff, though, kept his own mess, his own monstrousness, hidden away. His operation was relentlessly predatory, systematically looting charities, longtime friends, family, as well as investors spread around the globe. And yet it seems unlikely that he was a sociopath in the classic sense, someone indifferent to the feelings of those around him. In daily life, he wasn’t callous or cruel. Just the opposite. He valued people’s good opinion and wanted to impress. He didn’t simply treat people as means to an end. He was a great boss. He took care of his employees as if they were family and, until the end, of his investors, too. “Everybody relied on Bernie,” says one longtime investor. “He was one thing you thought you could count on. And he enjoyed being counted on.”
http://nymag.com/news/businessfinance/54703/
Bernie's Academy Award! When's the screenplay?
Capital Assistance Program to Start Wednesday
Joint statement by the Treasury, FDIC, OCC, OTS and the Federal Reserve
The U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve Board today issued the following joint statement:
“A strong, resilient financial system is necessary to facilitate a broad and sustainable economic recovery. The U.S. government stands firmly behind the banking system during this period of financial strain to ensure it will be able to perform its key function of providing credit to households and businesses. The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth. Moreover, we reiterate our determination to preserve the viability of systemically important financial institutions so that they are able to meet their commitments.
“We announced on February 10, 2009, a Capital Assistance Program to ensure that our banking institutions are appropriately capitalized, with high-quality capital. Under this program, which will be initiated on February 25, the capital needs of the major U.S. banking institutions will be evaluated under a more challenging economic environment. Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital. Otherwise, the temporary capital buffer will be made available from the government. This additional capital does not imply a new capital standard and it is not expected to be maintained on an ongoing basis. Instead, it is available to provide a cushion against larger than expected future losses, should they occur due to a more severe economic environment, and to support lending to creditworthy borrowers. Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares. The conversion feature will enable institutions to maintain or enhance the quality of their capital.
“Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized. This program is designed to ensure that these major banking institutions have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even under an economic environment that is more challenging than is currently anticipated. The customers and the providers of capital and funding can be assured that as a result of this program participating banks will be able to move forward to provide the credit necessary for the stabilization and recovery of the U.S. economy. Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands.”
http://www.federalreserve.gov/newsevents/press/bcreg/20090223a.htm
Now, thanks to the Dodd ammendment we hear that the banks can give back their TARP money without raising new capital. That means that the capital that the banks have from the TARP, is now then, not long term capital.
The rating agencies will have a field day with this.
Everyone is tired of the bankers boardroom fantasies that they are planning to give the TARP money back.
Watch the rating agencies call the banks bluff!
The U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve Board today issued the following joint statement:
“A strong, resilient financial system is necessary to facilitate a broad and sustainable economic recovery. The U.S. government stands firmly behind the banking system during this period of financial strain to ensure it will be able to perform its key function of providing credit to households and businesses. The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth. Moreover, we reiterate our determination to preserve the viability of systemically important financial institutions so that they are able to meet their commitments.
“We announced on February 10, 2009, a Capital Assistance Program to ensure that our banking institutions are appropriately capitalized, with high-quality capital. Under this program, which will be initiated on February 25, the capital needs of the major U.S. banking institutions will be evaluated under a more challenging economic environment. Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital. Otherwise, the temporary capital buffer will be made available from the government. This additional capital does not imply a new capital standard and it is not expected to be maintained on an ongoing basis. Instead, it is available to provide a cushion against larger than expected future losses, should they occur due to a more severe economic environment, and to support lending to creditworthy borrowers. Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares. The conversion feature will enable institutions to maintain or enhance the quality of their capital.
“Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized. This program is designed to ensure that these major banking institutions have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even under an economic environment that is more challenging than is currently anticipated. The customers and the providers of capital and funding can be assured that as a result of this program participating banks will be able to move forward to provide the credit necessary for the stabilization and recovery of the U.S. economy. Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands.”
http://www.federalreserve.gov/newsevents/press/bcreg/20090223a.htm
Now, thanks to the Dodd ammendment we hear that the banks can give back their TARP money without raising new capital. That means that the capital that the banks have from the TARP, is now then, not long term capital.
The rating agencies will have a field day with this.
Everyone is tired of the bankers boardroom fantasies that they are planning to give the TARP money back.
Watch the rating agencies call the banks bluff!
So much for the summer vacation....
The sinking U.S. economy is forcing many Americans to cut back on or give up a hallowed tradition: the family vacation.A USA TODAY/Gallup Poll finds that 58% of people who normally take an annual vacation away from home will shrink their vacation spending this year –– or just not go.
Government to take 40% stake in Citigroup
In tonight's WSJ:
While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%, these people said.
Under the scenario being considered, a substantial chunk of the $45 billion in preferred shares held by the government would convert into common stock, people familiar with the matter said. The government obtained those shares, equivalent to a 7.8% stake, in return for pumping capital into Citigroup.
http://online.wsj.com/article/SB123535148618845005.html
So $45 billion of TARP money, and the ring fencing of $300 billion of bad assets was just not enough for the bank that never sleeps.
Except for the board of directors, and the executive team, who appear to have never been awake!
Friday morning, Obama spokesman, Robert Gibbs, was condescendingly ripping into Rick Santelli, and then later in the day had this to say about the banks:
"This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government."
When Clinton was interviewed by Jim Lehrer about Monica Lewinsky he said, "there is no improper relationship."
Clinton had his "is" and "was" and now Gibbs has his "is" and "was" too!
While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%, these people said.
Under the scenario being considered, a substantial chunk of the $45 billion in preferred shares held by the government would convert into common stock, people familiar with the matter said. The government obtained those shares, equivalent to a 7.8% stake, in return for pumping capital into Citigroup.
http://online.wsj.com/article/SB123535148618845005.html
So $45 billion of TARP money, and the ring fencing of $300 billion of bad assets was just not enough for the bank that never sleeps.
Except for the board of directors, and the executive team, who appear to have never been awake!
Friday morning, Obama spokesman, Robert Gibbs, was condescendingly ripping into Rick Santelli, and then later in the day had this to say about the banks:
"This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government."
When Clinton was interviewed by Jim Lehrer about Monica Lewinsky he said, "there is no improper relationship."
Clinton had his "is" and "was" and now Gibbs has his "is" and "was" too!
Sunday, February 22, 2009
RBS and Lloyds in £500 billion Treasury deal
Gordon Brown, the Prime Minister, and Alistair Darling, the Chancellor, will meet with the Treasury's advisers in Whitehall tonight to hammer out details of the programme, which will involve the creation of a new class of non-voting shares to allow the banks to fund their participation.
Central to the negotiations will be the form of payment used by the banks to insure the assets proposed for inclusion in the scheme. Last night, people close to the discussions said it would see a new type of capital instrument devised that includes a dividend entitlement. However, because the new shares would not include voting rights, their issuance would not be dilutive to existing shareholders...
The solution avoids the immediate prospect of outright nationalisation for the two banks, which are both likely to be charged billions of pounds for their participation in the Treasury scheme. A Treasury source said "There will be some insurance provided for some assets, with the exact figure to be agreed and decided. Our priority is to get some conditions attached to that in the form of additional lending."
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4743375/RBS-and-Lloyds-close-in-on-500bn-Treasury-deal.html
Another nationalisation deal that isn't nationalization!
It's the Geithner blueprint.
Central to the negotiations will be the form of payment used by the banks to insure the assets proposed for inclusion in the scheme. Last night, people close to the discussions said it would see a new type of capital instrument devised that includes a dividend entitlement. However, because the new shares would not include voting rights, their issuance would not be dilutive to existing shareholders...
The solution avoids the immediate prospect of outright nationalisation for the two banks, which are both likely to be charged billions of pounds for their participation in the Treasury scheme. A Treasury source said "There will be some insurance provided for some assets, with the exact figure to be agreed and decided. Our priority is to get some conditions attached to that in the form of additional lending."
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4743375/RBS-and-Lloyds-close-in-on-500bn-Treasury-deal.html
Another nationalisation deal that isn't nationalization!
It's the Geithner blueprint.
Madoff's missing billions
Supposedly, billions in the name of Norman Levy and the Picower Foundation, may be stashed in Switzerland and Africa; supposedly unbeknown to them.
http://economie.moldova.org/news/hunt-for-madoffs-billions-has-leads-184667-eng.html
The Picower Foundation abruptly closed after the Madoff scandal, (and they've dealt with shady rogues for twenty years according to Forbes)
http://aaronandmoses.blogspot.com/2008/12/madoff-bags-picower-foundation.html
and Madoff was in Norman Levy's paid death notice in the NY Times.
http://aaronandmoses.blogspot.com/2008/12/norman-levys-paid-death-notice.html
Maybe we have a Madoff money trail.
http://economie.moldova.org/news/hunt-for-madoffs-billions-has-leads-184667-eng.html
The Picower Foundation abruptly closed after the Madoff scandal, (and they've dealt with shady rogues for twenty years according to Forbes)
http://aaronandmoses.blogspot.com/2008/12/madoff-bags-picower-foundation.html
and Madoff was in Norman Levy's paid death notice in the NY Times.
http://aaronandmoses.blogspot.com/2008/12/norman-levys-paid-death-notice.html
Maybe we have a Madoff money trail.
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