Showing posts with label TALF. Show all posts
Showing posts with label TALF. Show all posts

June 06, 2009

What does 9.4 unemployed mean to Geithner?

Well, as Reuters blogger Felix Salmon kindly notes, shold mean a hell of a lot of concern to Treasury Secretary Tim Geithner, since his bank stress test models were based on the old economic model called Rosy Scenario, and NOT the 9.4 percent non-solution.

No wonder President Obama, Grandpa Biden et al, are claiming the slowing growth in unemployment is such “good news.” They’re probably buying plastering trowels to spread this BS.

May 27, 2009

Just because I haven’t Geithner-bashed in a while …

I probably have been remiss, so I point you to Salon and Andy Kroll’s six-point laundry list on why TARP, etc. sucks.

Let’s not forget the dynamic duo of Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke have done their level, and non-level, best, or worst, to keep not just the general public, but even Congress, in the dark as to just what all this bailout money is doing.

April 21, 2009

Did Geithner rig bank ‘stress tests’?

It’s hard to argue otherwise on Treasury Secretary Tim Geithner’s “stress test” for bank solvency, outstanding loans are getting dinged harder than securities, such as the infamous collateralized debt swaps.
The methodology "certainly penalizes those banks that are more involved in traditional banking, which frankly have been performing better in recent months," said Wayne Abernathy, a former Treasury Department official now with the American Bankers Association.

He said banks' loan portfolios have lost only about 5 percent of their value so far, whereas the value of complex securities are down 30 to 40 percent.

A spokesman for the Federal Reserve would not comment. A Treasury Department spokesman referred questions to the Fed.

Meanwhile, even as evidence of fraud in TARP/TARP 2.0 piles up, with more than 20 criminal probes already launched by special investigator general Neil Barofsky into possible securities fraud, tax violations, insider trading and other crimes, little Timmy G. continues to tout his program.

Given that much of Congress, on both sides of the aisle, is so in the tank for the financial sector, or so ostrich-like, that it needs Barry Bonds’ orchidometer to measure its minuscule cojones, don’t expect anything to change.

April 04, 2009

Tim Geithner – fraudster, part 2 – with Obama & Summers

The Geithner-Summers-Obama troika is wanting to let its TARP buddies off a big financial hook. Here’s the nutgraf, right up top
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

How is the troika trying to do this? By setting up Enron-type “special purpose vehicles” to avoid giving money directly to in-danger financial institutions.

Ahh, we’ve reached the nadir of financial neoliberalism in the Democratic party when the President of the United States and his top financial advisors are taking pages from Enron’s playbook.

Of course, we have a second, pull quote nutgraf on page 2:
“They are basically trying to launder the money to avoid complying with the plain language of the law,” said David Zaring, a former Justice Department attorney who defended the government from lawsuits involving related legal issues. “They are trying to create a loophole to ignore Congress, and I think the courts will think that it’s ridiculous.”

We can only hope somebody sues to see if the courts agree, failure of Congress to pass a veto-proof forbidding of this, and that the courts do indeed rule it’s ridiculous.

Read the full story.



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March 31, 2009

Government bailout approaching annual GDP total?

Maybe, maybe not.

When the federal government has loaned, given or guaranteed nearly $13 billion or, in other terms, nearly one year’s Gross Domestic Product for the entire country, it might be easy to say you blame other industrialized and developing countries for saying, “We’ll give it a second thought” rather than immediately signing up for something similar?

On the other hand, the Bloomberg total includes a lot, a lot, in stuff that’s “guaranteed” but hasn’t been disbursed. If you only include what’s been disbursed, whether through loans, payments or guarantees invoked, we’re still below $2 trillion.

That said, who knows how much of the remaining $11 trillion will be needed or not? Since Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke like being opaque, they’re not going to say.

March 26, 2009

Is Nouriel Roubini OK with Geithner TALF plan? Ehh …

Josh Marshall at TPM marked him down for a cautious yes; let’s take a look at what Roubini says.

From where I sit, I would make that a very cautious, and very caveated, yes.

First, the OK:
With this plan, it will still be a hard swim, but, at least, there is a path to shore.

Next, the caveats:
The deal is structured so that firms will be responsible only for losses on their initial investment. The hope is that by giving this big "freebie," the government will induce investors to participate, and that competition among them will lead to higher offer prices for the loans and securities, thus encouraging banks to sell them.

A lot of ifs …

But let's not have any illusions. The government bears the risk if and when the investors take a bath on the taxpayer-provided loans. If the economy gets worse, it could get very ugly, very quickly. The administration should be transparent in making clear that there is still a wealth transfer taking place here - from taxpayers to investors and banks.

Italics mine, and very needed.

That last is the biggest caveat from where I sit.

It would be one thing to call for that level of transparency from “Abstract Treasury Secretary X.” it’s another thing entirely to expect it from real-world Treasury Secretary Tim Geithner.

Meanwhile, on the same NY Daily News online op-ed pages, Luigi Zingales zings the plan harshly. REALLY harshly:
The irony of the plan is that it seems to replicate the same excesses that brought the crisis - carrying enormous economic and political risk. …

If you think that the revelation of AIG lavish bonuses has shown all the rage of the American people, think again. When former subprime lenders will become the new billionaires, we run the risk of a populist revolution.

Only thing is, as Zingales knows, the idea of a “revolution” here in America? Chuck Norris’ third fist and half brain aside, not so much.

March 24, 2009

Summers bends over for Wall Steet at $5K a pop – insider trading

So, President Barack Obama’s economic czar, Larry Summers, spewed his pearls of wisdom, like a cheap version of ZZ Top’s Pearl Necklace, at $5,000 a pop, to conference attendees specifically invited by the Wall Street Journal.

At the White House.

Closed to the press.

Since this was surely about Treasury Secretary Tim Geithner’s TALF plan, if this had happened within a corporate boardroom, it would be called insider trading.

Summers stiffing Volcker and Geithner connections?

Yesterday, I blogged on the possibility that Treasury Secretary Tim Geithner’s TALF plan might be “all she wrote,” not only, or even primarily, because if he screws this up, Congress won’t give him another shot, but because he doesn’t plan another shot.

Paul Krugman touches on “risking trouble with Congress” angle, as part of his latest column, where he notes this is already the third time Geithner has floated warmed-over Paulsonism.

But, back to my original angle, taking Krugman a step further. Is Geithner simply deliberately regurgitating Paulson in different ways as “take it or leave it”?

I say yes.

More proof of that? The Paul Volcker-led Presidential Economic Recovery Advisory Board has yet to meet.

As Politico notes, this group was originally going to meet every few weeks. Then, it got shoved back to monthly. Then very few weeks. Now, it’s quarterly… but, we’re almost through the first quarter of this year!

And, if they’re meeting in private, it’s apparently in violation of federal open meetings law. (Not that that would surprise me; I think the Obama Administration is quickly proving to be almost as unsurprising in a mix of mendacity and hubris as BushCo was.)

That said, I’ll give you one guess as to who is stiffing the group; this time, his initials aren’t Tim Geithner; they’re Larry Summers.

On TALF itself, Krugman wraps up his latest column by saying Obama is “squandering his credibility.”

He’s lucky Bush was his predecessor, or he’d really look bad.

March 23, 2009

What if Geithner’s TALF plan is his last offer?

Treasury Secretary Tim Geithner’s bad assets buy-up plan has been roundly knocked about by both economics and non-economics bloggers from across the political spectrum.

And, despite the plan now being defended by himself, with bullshit PR such as “legacy assets,” the pig doesn't look any better with makeup.

Here’s the details of Geithner’s “assumption”:
The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.

In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.

In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve.

The third prong has already, in an earlier form, drawn drools from hedge funds and the like, meaning we should be suspicious.

The FDIC partnerships in leg one will also have these types of folks drooling.
To entice private investors like hedge funds and private equity firms to take part, the F.D.I.C. will provide nonrecourse loans — that is, loans that are secured only by the value of the mortgage assets being bought — worth up to 85 percent of the value of a portfolio of troubled assets.

Yeah, where do I sign up to get the government pay for 85 percent of something and still let me call it mine?

That leaves the second leg, and given both Geithner’s and Ben Bernanke’s lack of forthrightness on TARP and TARP 2.0 issues, what sort of guarantee will he have about any clarity re these investment management firms?

Elsewhere, Krugman, Calculated Risk and John Cole weigh in, as do Naked Capitalism and James Galbraith.

One thing all of them miss, though, Krugman hinted at it in a previous blog post, and that is:

What if Geithner (Summers) NEVER, last-ditch never, is going to do the Sweden plan? What if this is, in essence, a take it or leave it offer?

Joe Stiglitz, the man who should be in Geithner’s seat, kind of thinks along those lines, wondering how many more times will he try to ram this crap down our throats.

But, Geithner is not without defenders who are not named Obama or Summers.

Bucking the trend of the almost universal centrist-to-liberal economics blogbashing of Geithner’s TALF plans, Brad DeLong goes totally homer for him. DeLong, who shows that myths of Berkeley being the hotbed of liberal academia are just that in its econ department, and also showing another reason why I thought Kevin Drum was such a squish at Washington Monthly, claims:

1. Geithner actually knows what he’s doing, and for more than his G. Sachs BFFs;
2. TALF as structured by Geithner is actually a bit of a financial burden for them, etc.

Krugman has now responded, congratulating DeLong for “the old college try,” then pointing out how Ihe basically didn’t do the old college homework on a significant part of Geithner’s plan.


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March 22, 2009

Brad DeLong gets him some Geithner loving

Bucking the trend of the almost universal centrist-to-liberal economics blogbashing of Treasury Secretary Tim Geithner’s TALF plans DeLong practically goes Brokeback Mountain with Timmy G. DeLong, who shows that myths of Berkeley being the hotbed of liberal academia are just that in its econ department, and also showing another reason why I thought Kevin Drum was such a squish at Washington Monthly, claims:

1. Geithner actually knows what he’s doing, and for more than his G. Sachs BFFs;
2. TALF as structured by Geithner is actually a bit of a financial burden for them, etc.

Krugman has now responded, congratulating DeLong for “the old college try,” then pointing out how Ihe basically didn’t do the old college homework on a significant part of Geithner’s plan.

March 21, 2009

Not Whoville – Geithnerville

And, is it too early to ask about Obama re-election odds?

Treasury Secretary Geithner’s bad assets buy-up plan is, as I blogged earlier today, possibly the biggest government charity to rich financiers and speculators since Alexander Hamilton’s “assumption” move at the start of the United States.

Except that it is both more deceitful, by far, and more incompetent, also by far, in its conception. Details, details.

Here’s the details of Geithner’s “assumption”:
The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.

In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.

In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve.

The third prong has already, in an earlier form, drawn drools from hedge funds and the like, meaning we should be suspicious.

The FDIC partnerships in leg one will also have these types of folks drooling.
To entice private investors like hedge funds and private equity firms to take part, the F.D.I.C. will provide nonrecourse loans — that is, loans that are secured only by the value of the mortgage assets being bought — worth up to 85 percent of the value of a portfolio of troubled assets.

That leaves the second leg, and given both Geithner’s and Ben Bernanke’s lack of forthrightness on TARP and TARP 2.0 issues, what sort of guarantee will he have about any clarity re these investment management firms?

Answer: None.

Answer No. 2: Don’t be surprise if an investment bank whose initials are Goldman Sachs finds itself just “happening” to be hired.

Anyway, better economic minds than mine in the blogosphere are giving this the smackdown it royally deserves.

Elsewhere, Krugman, Calculated Risk and John Cole weigh in.

Krugman says it is an issue of pretending bad banks aren’t really bad and that we just have cash flow issue. Calculated Risk calls it a direct subsidy to speculators.

Cole goes in more depth:
If this were a medical emergency, it appears it would look something like this:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed.

We are; Geithner buddies, not so much. Only part of the analysis I disagree with is I don’t see any “house guarantee” limiting us to $1 trillion on our stack of chips.

Naked Capitalism points out the shell game angle:
Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone’s eyes to glaze over.

But warns, a la Lincoln, you can get some of the people’s eyes to glaze over all of the time, and all of the people’s eyes to glaze over some of the time, but you can’t get all of the people’s eyes to glaze over all of the time:
Regardless, the equity comes from TARP, and Elizabeth Warren of the Congressional Oversight Panel is no slouch. What will happen when she asks for reports of how the actions have gone (for instance, how many failed because the reserve was not met?) The mechanics will become more apparent to the public over time and may yet come back to haunt Team Obama.

Haunt... around 2012?

Oh, and now add James Galbraith. to the list of the undeceived, who identifies Geithner’s “Rube Goldberg” schemes:
If I’m right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn’t participate in the garbage-loan frenzy.

You’re right as rain, James.

So, is anybody contacting Vegas betting houses on one-term presidency odds? Seriously.

Between this and the CBO’s massive new deficit estimates — which Team Obama, typical of Democratic administrations, is ignoring/dissing since they can’t be used to beat up a Republican president these days, is it too early to ask that question?

I say not.


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Tim Geithner, meet Alexander Hamilton

From where I sit, Treasury Secretary Geithner’s bad assets buy-up plan, the Term Asset-Backed Securities Loan Facility, in its details could be the most controversial proposal to come out of his Cabinet office since his illustrious predecessor’s proposal to buy up Revolutionary War bonded indebtedness at face value.

In case you’re not familiar with the details of that, at the start of Washington’s presidency, Hamilton proposed buying up Revolutionary War debt, in the form of various bonds issued by the old Confederation, at face value, a process known as “assumption.” That was even though many of the bonds weren’t in the hands of their original holders, most of whom had to sell to speculators for much less than face value in the financial crisis of the middle 1780s.

Jefferson and his followers strongly opposed the measure. Hamilton convinced Washington of its soundness and constitutionality, then, as a sop to Jefferson, agreed to throw his support behind establishing the nation’s permanent capital on the Potomac.

Here’s the details of Geithner’s “assumption”:
The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.

In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.

In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve.

The third prong has already, in an earlier form, drawn drools from hedge funds and the like, meaning we should be suspicious.

The FDIC partnerships in leg one will also have these types of folks drooling.
To entice private investors like hedge funds and private equity firms to take part, the F.D.I.C. will provide nonrecourse loans — that is, loans that are secured only by the value of the mortgage assets being bought — worth up to 85 percent of the value of a portfolio of troubled assets.

That leaves the second leg, and given both Geithner’s and Ben Bernanke’s lack of forthrightness on TARP and TARP 2.0 issues, what sort of guarantee will he have about any clarity re these investment management firms?

Answer: None.

Answer No. 2: Don’t be surprise if an investment bank whose initials are Goldman Sachs finds itself just “happening” to be hired.

That said, the story notes that, post-AIG bonuses, many investment firms may be reluctant to get involved.

Fine. Shoot Ed Liddy, then get involved with the asset bailout.

Elsewhere, Krugman, Calculated Risk and John Cole

Krugman says it is an issue of pretending bad banks aren't really bad and that we just have cash flow issue. Calculated Risk calls it a direct subsidy to speculators.

Cole goes in more depth:
If this were a medical emergency, it appears it would look something like this:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed.

We are; Geithner buddies, not so much.

Naked Capitalism points out the shell game angle:
Dear God, the Administration really thinks the public is full of idiots. But there are so many components to the program, and a lot of moving parts in each, they no doubt expect everyone's eyes to glaze over.

But warns, a la Lincoln, you can get some of the people’s eyes to glaze over all of the time, and all of the people’s eyes to glaze over some of the time, but you can’t get all of the people’s eyes to glaze over all of the time:
Regardless, the equity comes from TARP, and Elizabeth Warren of the Congressional Oversight Panel is no slouch. What will happen when she asks for reports of how the actions have gone (for instance, how many failed because the reserve was not met?) The mechanics will become more apparent to the public over time and may yet come back to haunt Team Obama.

So, is anybody contacting Vegas betting houses on one-term presidency odds?

Oh, and now add James Galbraith. to the list of the undeceived, who identifies Geithner’s “Rube Goldberg” schemes:
If I’m right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn’t participate in the garbage-loan frenzy.

You’re right as rain, James.

Secretary Geithner, I never met Alexander Hamilton, but I still know you’re no Alexander Hamilton.


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