New Bank Bailout Plan Calls for Partial Use of Private Money
By Susie Madrak Monday Feb 09, 2009 1:00pm
If this pile of crap has any value at all, well, you'd think they'd all be clamoring for a shot to buy it! And if they're not, it's probably because they know just how worthless it is. But don't worry - if you buy now, Uncle Sugar will step in at some point and pay for it even if it isn't worth a dime:
Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution.
Administration officials said the plan, to be announced Tuesday, was likely to depend in part on the willingness of private investors other than banks — like hedge funds, private equity funds and perhaps even insurance companies — to buy the contaminating assets that wiped out the capital of many banks.
The officials say they are counting on the profit motive to create a market for those assets. The government would guarantee a floor value, officials say, as a way to overcome investors’ reluctance to buy them.
Details of the new plan, which were still being worked out during the weekend, are sketchy. And they are likely to remain so even after Treasury Secretary Timothy F. Geithner announces the plan on Tuesday. But the aim is to reduce the need for immediate federal financing and relieve fears that taxpayers will pay excessive prices if the government takes over risky securities. The banks created those securities when credit and home prices were booming a few years ago.
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..over and over and over again.
It is no wonder the banks treat their customers like crap. It doesn't matter because, they are not allowed to fail, even if they are inept, fraudulent, and corrupt. Make profit-keep it. Lose money-tax bailout. Win/win situation for them.
That is the definition of socialism for the wealthy and the free market for everyone else!
wallStreet was a huge part of this problem. they have been wanting this for yrs. wallStreet/corporations
have been crying free market and the government is bad big time since reagan. wallStreet got their
scam: shadow banking......credit default swaps,mortgage backed securities and option pricing. they overleveraged and took advantage while the BUSH administration looked the other way. the problem is they are too big to fail. that was by design of course. it's certainly a Catch-22 for the Obama administration. wallStreet wanted people to take those subprime loans....that was the fuel for the fire.
the collapse of the banking system would create dire consequences. wallStreet expects winners and losers. in addition to that the public/tax payers will pick up the losses.
not one fucking whit.
[Deleted. Off topic-Sitemonitor]
is the subprime tranche of a synthetic CDO worth with an exploded CDS as collateral.
Something less than a hill of beans. But that didn't stop the rating agencies from calling it AAA before the whole business imploded.
What we have here is massive fraud. The banks have colossal off balance sheet liabilities. Gretchen Morgenson here says there are $15 trillion in Credit Default Swaps waiting to go boom
Paulson the Plunderer knew it and this weasel Geithner knows it.
This stuff is not going away. Here Max Keiser predicts that the US will end up nationalizing the banks anyway. Meanwhile the Banksters will have absconded with vast amounts of our money.
This is a heist.
And the public knows it as well or enough that can carry an economy. Who would trust somebody with their money that just robbed them at gunpoint?
Good one CC! That's precisely what we've got going on here.
Paulson helped Bush rob us and now Obama has Geithner doing the same thing. I really can't believe it.
good post. the rating agencies S&P and others were getting $625,000 per rating. they knew about the mortgages spun into these investment instruments. as we all know, banks/financial institutions lust for fees. just like fucking people after being late on their credit card(s).
Geithner is not Obama's friend; in fact, he's not a friend of the american people. He's a total weasel, as you've said and his plan is to take Obama's 67% approval rating and bring it down to the level of George Bush by the end of February.
This guy is total trouble and it's a shame that Obama hasn't realized that he is a "Bush shill".
The alternative to letting these . . . people . . . partially invest would be to have all of us invest in all of this more, I guess? Perhaps those smarter than I can propose alternatives to hedge fund sharks to jump into this.
Anyone have thoughts as to who should replace these adrenaline junkies as partial investors?
But ONLY if they reap the benefits.
Is all I want to hear about regarding these greedy, filthy criminals...
Awww They just CANT live on 500k a year...
Perhaps they can live lined up against the wall..
Given the choice though, between the firing squad or prison, I'll bet they'd opt for the squad. Bunch of cowards and criminals.
Definitely their assets should be seized. These guys created the problem, the money all went bye-bye, but not into thin air. Let's freeze their accounts, do a serious audit, and when it's all explained, and they have proved their innocence, let them have what they started with. They should be grateful not to be being hanged as traitors.
How many times can you play monopoly with bankers who you know steal??
No no no no no.
I got this news from my banker friend this morning. We haven't discussed it yet, so maybe I don't fully understand it. But if there was any value to this crap, why can't it stay in the financial institutions?
The treasury has already done this. They backed up B of A's bad debt to the tune of 118 billion. They also pledged to B of A that they would pick up any slack on the Merril Lynch deal, which was highly inflated at 29 per share. Why do we have to do it again? In another form?
This is getting surreal.
It worked so well the first time, they want more. AND it will be imperative that a deal gets done right away, or the world as we know it will end. It's quite the dog and pony show. Worthy of having it's own reality tv show.
Hey CC! how you doing?
Before ys beats me to it, this is what Geithner's pose reminded me of in that photo.
http://i8.photobucket.com/albums/a19/jgreenie...
Guaranteed a backstop to Citi of $301 billion by CNNs account, $306 billion by another account.
They guaranteed a backstop to BoA of $118 billion after the Merrill deal started to look like the piece of crap that it was.
Paulson the Plunderer also promised to tinker with the tax code (even though only the Corporate Trained seals in our congress have that authority) thus giving another stealth $140 billion in a secret tax giveaway, section 382 here.
Here is CNNs tally sheet. $9.1 trillion committed, $3.6 trillion spent.
This is a heist.
The banks should go bankrupt, they say they are capitalists, let them behave like capitalists.
Investment banks and their bankers have been going bust for hundreds of years.
The government can buy the good assets and set up a GOOD Bank. Meanwhile the capitalists who bungled and swindled should lose everything.
More than a few should go to jail.
Instead they are absconding with hundreds of billions, trillions even.
It is absolutely immoral to stick the taxpayer, present and into the distant future, with this crap.
Sorta like giving Ginny Mae a blindfold and a blank check I guess...
I hope they can get teh buy-in down to 5K...
No and Hell No to Wall Street, the Banks, Paulson, and anyone bitching and moaning for more tax cuts.
...Hey, you created this problem, and if you don't want to help solve it, you can go get real jobs.
and IOU's are maxed out. Which should be very shortly at this rate.
Then they will have no choice but to cut spending and axe such small things as retirement pensions, what little healthcare assistance there is, and many many more government services, while increasing taxes. Just watch.
Privitize the profit? check.
Socialize the losses? check.
Better start teaching your kid's mandarin in preparation for the new absentee land lord...
I'm feeling better about my vote for Nader each day.
He sure as fuck wouldn't have picked Geithner -- or done a whole bunch of the questionable things Obama's done.
Yeah, I know, Nader's not perfect. But he gets most things right, like Kucinich (and even Paul...ducking for cover).
but Nader (or any other 3rd party) won't get elected. If Teddy R. couldn't do it, no one will...
If Obama mishandles the economy, the American People may get primed for a third party.
And voting for that egomaniac obstructionist Nader last fall was the equivalent of taking a very relieving shit.
I have no confidence in Geithner or Summers.
who do you have complete confidece in? just asking. i don't know who to listen as far as this financial scam goes and the solutions needed to absolutely resolve. personally,
i feel it's much worse than they are telling us.
James Galbraith, William Engdahl.
I'm not an economist, but these guys make sense to me.
Krugman, not so much.
Bitch and moan all you must, but the powers that be know the American taxpayers will bend themselves and bend the generations of taxpayers to come over to ensure that world wide wealth does not take a hit today and to ensure these fine wealthy folks in NYC, Hong Kong, London, Dubuai, etc continue to maintain the lifestyle they have enjoyed for quite some time.
Now get back to worlk slaves!
to the debts they owe.
But people know that when they incur debts. Debts have to be paid. Trouble is, some or a lot of people never thought about that when they charged everything they wanted....way before they could afford it.
thought, and certainly were led to believe, real estate prices would go up forever.
Meaning that if one owned real estate, incurring debt was no problem, because the debt would always be offset by the rise in property value.
Greenspan and his ilk certainly acted as if this was truth.
It was a gamble and the gamblers lost. Common sense said that the housing market was a scam. Prices couldn't continue to go up the way they were and with all the crazy mortgage schemes, that too was bound to fail. Sadly too many people opted to gamble rather than think it through.
Every day on tv you are told you must have something that you know you don't need. Some pulled out the credit card so they could say they had what they were told was a must have. Keeping up with the Jones simply meant being in as much debt as the Jones.
Banks?
fuck 'em...let 'em go bust. It's one of the best things Obama could do.
No banks aren't debt slaves (far from it), but individual Americans are.
The banks hold "no" debit?
just that the banks aren't burdened by their debt.
You and I are taking care of their debt problems (our kids and grandkids too).
You say > "just that the banks aren't burdened by their debt." How can you reconcile that remark, unless you disregard the fact that banks have failed?
And
You say > "You and I are taking care of their debt problems (our kids and grandkids too)."
Are you saying banks are unable or don't take care of their debit problems?
Please understand, I share your frustration and distrust with regards too the malfeasance of many banks though I feel we must focus on the problem and not the industry. Thank you for your time and opinion :-)
With balance on fund that guarantees bank deposits at its lowest level since 1995, FDIC plans to charge riskier banks higher fees to increase reserves. > http://money.cnn.com/2008/08/26/news/economy/...
Where does the money that the FDIC holds, come from?
> http://www.personalfinanceanalyst.com/fdic-yo...
At last count the FDIC had about 50 billion dollars set aside to insure more than 3 trillion in deposits. So that takes me back to my original question… with the increasing pace of bank failures, will the FDIC run out of money?
Either that, or inflation will mushroom so that the debts are covered with newly minted money with a value of pennies on the dollar.
The world needs a new monetary system, one that is global and stable with real treasure supporting it. In the meantime, perhaps we need to return to bartering and make all value exchanges one on one.
You explained it quite well, at least I believe so! I look forward to a new scheme. :-) Thank you
PS. In a changing world...
Just saw Mark Halperin on Charlie Rose, is there anything he doesn't blame on "the liberal wing" of the democratic party? The man could be replaced by a parrot and nobody would know the difference, "liberals! liberals! squawk! Pelosi!" What a joke.
First, there was once a boy who cried wolf too many times, I believe that we are entering the phase where "hope" will give way to panic. This panic will be rooted in the "what do we do now" thought process. Behind the scenes the "what do we do now" process is already occurring. With each and every new plan we were told that "they had it figured out and things would return to normal soon". They haven't, and normal never was and never will be the post 1982 experience where debt was King and wealth was counted by how much debt one had. You can only raise someone's hopes so many times before you are no longer believed. I believe we are very close on this one.
Second, as I wrote about in late 2007, you cannot make bad loans good ones by creating more debt. This "plan" of fixing everything by borrowing more is flawed in so many ways that I won't waste my time writing about it. In the most basic and common sense thought, borrowing more will only make the hole that you dug deeper and more difficult to fill once you declare bankruptcy. If the economic rabbit doesn't come out of the hat this time, Joe and Jane public will exit the theatre in disgust.
Third, the basic economic numbers are cratering now at such a rapid rate that 3-6 months from now, social unrest, food riots, etc. will become a daily event and a new way of life. I am talking on a global basis, this has spread everywhere that paper money is used and barter is not a way of life, yet. Either the kick start works, and fast, or the "confidence" snaps. Once confidence snaps, it will never return until the man on the street can trust again in money and government.
Actually, confidence is what it all boils down to. Bank A doesn't trust bank B etc., suppliers don't trust vendors, citizens don't trust IOU's, governments don't trust other governments, it is all about trust! I say it has to work "this time" because I just don't think trust or confidence will hold any longer, it has been stretched too thin. Maybe I am wrong, maybe I am being alarmist, I don't think so. If you scour world news and not US sources, you will see that civil unrest is already beginning to percolate far and wide.
The most important player to be "trusted" is the U.S. government, in my opinion this "bailout" will be what blows a hole in the bottom of the U.S.S. Confidence. How does it get paid for? Can the American economy really pay for another $2-3 trillion for more "help". The answer is, mathematically no it cannot. The world cannot support the amount of debt we say we will need. "This one better work" is not even mathematically possible but they will say they tried. We will hear all sorts of excuses and explanations, we will hear that it wasn't their fault. It is quite easy to do the math in your head, making the debt hole bigger only sinks the ship that much faster. Ships don't float on confidence.
Remember this post because it will come back to haunt all of us if this current plan goes through.
They are offering me the whopping sum of 2.74% interest on deposits of $10,000 or more! LOL!!!!!
I can put it in the mattress and inflation will do better than that.
And why would private investors WANT to buy the "contaminating assets that wiped out the capital of many banks"?
Seems to me that if you have any cushion at all, only a fool would buy the "contaminating assets that wiped out the capital of many banks". Are private investors supposed to do it out of the goodness of their hearts? For a tax-break on their way down into the collapse with the banks? To spread the collapse over a larger corporate population? Because misery loves company?
Is somebody nuts here?
No damn wonder Geithner bailed on presenting this can of hogwash to americans today. It surely would have tanked Obama's recovery plan right out from under him as he traverses the country to sell it.
What kind of Kool-Aid are these altruistic, unrealistic individuals drinking?
Now let me see if I get this logic: They are going to ask the very criminals who not only "rigged the system" for eventual failure after raping it themselves and selling it as AAA rated to foreign countries but added insult to injury by taking the first traunch and blowing it on junkets and prostitutes......
And going to ask them to pony up now (with what money?) to inject private enterprise back into the system?
The selection of Geithner was a HUGE mistake from the outset.
This is like asking the fox to guard the hen house.
This sounds like one certain way to put this country into another Great Depression.
Frankly, instead of bailing and being ripped off by the banks, they should have given everyone $100,000 or so....the money would have sustained people and pumped it back into the economy.
I don't think anyone in Washington knows what the hell they are doing.
They'd better get their current package approved before letting this cat out of the bag - because when they do, the people will take to the streets. This is a horrendous plan created by a Bushie shill (Geithner). I could never imagine why Obama would keep him on when he, like Paulson, was on the inside track of this corrupt scheme from the beginning. It's time for the american people to absolutely oppose any more money to Wall Street or the banks. If they fail, so be it - they created a self-fulfilling prophesy and knew that when the house of cards would fall, they'd come to the people whom they screwed in the first place for a bailout.
NO MORE BAILOUTS TO THE FAT CATS Wall Street fascists.
So, Geithner delayed spewing his ridiculous "plan" today and plans to present it tomorrow. Today Obama's rating is 67% with clearly the majority of americans supporting him.
Now we can sit back and watch that 67% plummet to under 50% or worse following Tiny Tim's presentation of this plan to reward the crooks who raped our economy. Whoa boy! The american people are going to ape$hit when they hear this.
This will definitely be a boon to the Republican party once this hits the streets. All of the fence-sitting I's will be changing their party next week.
So, you have this bathtub, that doesn't have a stopper in it. The water keeps going down the drain. Do you get a stopper and put it in, or keep running the damn water to try and keep it full? Hello? Washington? Anyone in there? Turn off the damn tap until you have a stopper in place. The only thing you will accomplish is the draining of the hot water tank, and that will wreck it.
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Q U E S T I O N:
If this guy can screw up his own taxes, how can I trust him as a tax manager?
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