previous  1234567  next  · entire list

Derivatives: Don’t Let Exceptions Kill the Rule
2009-10-18, New York Times
http://www.nytimes.com/2009/10/18/business/economy/18gret.html

Congress began the work of reforming our troubled financial system last week, and a bill aimed at regulating derivatives passed the House Financial Services Committee on Thursday. Derivatives — contracts that theoretically protect buyers from unforeseen financial calamities but more often are used to fuel raw speculation — were ... at the heart of the banking crisis. Credit default swaps ... propelled the American International Group off the cliff. Those swaps also linked millions of trading partners, creating a web in which one default threatened to produce a chain of corporate and economic failures worldwide. And derivatives aren’t going away. So reforming the $42 trillion market for credit swaps is crucial if taxpayers are to be protected from future rescues of institutions deemed not only too big but also too interconnected to fail. The best aspect of the House bill is that it requires many swaps to be traded on exchanges just like stocks, subjecting them for the first time to the light of day. But elsewhere in the bill, ... exceptions to this exchange-trading rule undermine its regulatory power. Big banks dealing in swaps don’t want exchange trading, where pricing and the identities of participants would be more publicly transparent. Michael Greenberger, a University of Maryland law professor and an expert in derivatives, criticized the House bill. “The plain language of the legislation can only be read as a Christmas tree of decorative gifts to the banking industry,” he said. “And this is being done when people acknowledge the unregulated O.T.C. derivatives market was a principal reason for the meltdown.”

Note: For lots more on the realities of the Wall Street bailout, click here.

Fed Rejects Geithner Request for Study of Governance, Structure
2009-09-21, Bloomberg News
http://www.bloomberg.com/apps/news?pid=20601068&sid=adjvXg1zP.zY

The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said. U.S. lawmakers have also called for a review of the Fed’s power and structure, saying Fed Chairman Ben S. Bernanke overstepped his authority as he bailed out creditors of Bear Stearns Cos. and American International Group Inc. while battling a crisis that led to $1.62 trillion in writedowns and losses at financial firms. While the report requested by the Treasury hasn’t been formally scrapped, no work has been done on the project, which was due Oct. 1. Treasury spokesman Andrew Williams declined to comment, as did Fed spokeswoman Michelle Smith. Congressional leaders have balked at the notion of giving the Fed more power and are leaning toward vesting authority over capital, liquidity and risk-management practices of big banks in a council of regulators.

Note: To understand how business corrupts politicians watch the heated MSNBC News clip at this link.

Where did that bank bailout go? Watchdogs aren't sure
2009-08-09, Sacramento Bee/McClatchy News
http://www.sacbee.com/838/story/2094756.html

Although hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation's financial sector, it's still difficult to answer some of the most basic questions about where the money went. Despite a new oversight panel, a new special inspector general, the existing Government Accountability Office and eight other inspectors general, those charged with minding the store say they don't have all the weapons they need. Ten months into the Troubled Asset Relief Program, some members of Congress say that some oversight of bailout dollars has been so lacking that it's essentially worthless. "TARP has become a program in which taxpayers are not being told what most of the TARP recipients are doing with their money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested," a special inspector general over the program reported last month. The "very credibility" of the program is at stake, it said. The program was controversial from the start. Critics say it's unfairly rewarded the big banks and Wall Street firms that pushed the economy to the brink.

Note: For many revealing reports from reliable sources on the hidden realities of the Wall Street bailout, click here.

Reported Suicide Is Latest Shock at Freddie Mac
2009-04-23, New York Times
http://www.nytimes.com/2009/04/23/business/23freddie.html?partner=rss&emc=rss...

The pressures were already immense when David B. Kellermann was promoted to the top financial position at the mortgage giant Freddie Mac last September. Mr. Kellermann's boss and other top executives were ousted when the Treasury secretary seized Freddie Mac and its sibling company, Fannie Mae; others left on their own and were not replaced. Early on Wednesday, Mr. Kellermann went to the basement of his brick home and hanged himself, according to people familiar with the situation who were not authorized to speak. His body was removed five hours later, through a throng of neighbors, television crews and others. "David was such an honest and humble person," said Tim Bitsberger, Freddie Mac"s treasurer until he left in December. "It just doesn't make sense," Mr. Bitsberger said. The roots and causes of suicide are often unclear. It is not known if Mr. Kellermann succumbed to the pressures of his job. But in the aftermath of his death, it is plain that at Freddie Mac, as at many of the companies in the center of this economic storm, there are forces so strong they can overwhelm almost anyone. Mr. Kellermann ... was at the intersection of some of the most difficult issues facing the company. Mr. Kellermann was also working in a poisonous political atmosphere. He was recently involved in tense conversations with the company's federal regulator over its routine financial disclosures. Freddie Mac executives wanted to emphasize to investors that they believed the company was being run to benefit the government, rather than shareholders.

Note: For a revealing archive of reports on the hidden realities underlying the Wall Street bailout, click here.

Restrain the credit card industry
2009-04-23, San Francisco Chronicle (San Francisco's leading newspaper)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/22/EDK817761J.DTL

While American consumers have been struggling, credit card companies have been enjoying a field day. Not only are most of them receiving federal bailout money, but they've been jacking up interest rates (there were rate hikes on nearly 25 percent of accounts between 2007 and 2008) and switching the terms of agreements with consumers. Why the rush to gouge consumers in the depths of a recession? In July 2010, the Federal Reserve will impose new, consumer-friendly disclosure and administrative restrictions on the credit card industry. Scrambling to get ahead of the deadline, the card companies have been raising interest rates, slicing credit lines and, in too many cases, simply dumping customers with little rhyme or reason. Defaults and delinquencies have skyrocketed - and consumers are livid. "It's off the charts in terms of their ire about paying higher interest rates, particularly when their money, as they see it, is being given to the banks to prop them up," said Rep. Jackie Speier, D-Hillsborough. Speier's staff says her office has been "flooded" with calls from furious constituents. Speier is ... a co-sponsor of HR627, better known as "The Credit Cardholders' Bill of Rights." The bill - which has the support of the Obama administration - would prevent card issuers from raising interest rates without advance notice and end the practice of "double-cycle billing" so that consumers do not have to pay interest on debts they've already paid.

Note: For a highly revealing archive of reports on the hidden realities underlying the Wall Street bailout, click here.

The U.S. Financial System Is Effectively Insolvent
2009-03-05, Forbes Magazine
http://www.forbes.com/2009/03/04/global-recession-insolvent-opinions-columnis...

With economic activity contracting in 2009's first quarter at the same rate as in 2008's fourth quarter, a nasty U-shaped recession could turn into a more severe L-shaped near-depression (or stag-deflation). The scale and speed of synchronized global economic contraction is really unprecedented (at least since the Great Depression), with a free fall of GDP, income, consumption, industrial production, employment, exports, imports, residential investment and, more ominously, capital expenditures around the world. And now many emerging-market economies are on the verge of a fully fledged financial crisis, starting with emerging Europe. In the meantime, the massacre in financial markets and among financial firms is continuing. The debate on "bank nationalization" is borderline surreal, with the U.S. government having already committed--between guarantees, investment, recapitalization and liquidity provision--about $9 trillion of government financial resources to the financial system (and having already spent $2 trillion of this staggering $9 trillion figure). Thus, the U.S. financial system is de facto nationalized, as the Federal Reserve has become the lender of first and only resort rather than the lender of last resort, and the U.S. Treasury is the spender and guarantor of first and only resort. And even with the $2 trillion of government support, most of these financial institutions are insolvent, as delinquency and charge-off rates are now rising at a rate ... that means expected credit losses for U.S. financial firms will peak at $3.6 trillion. So, in simple words, the U.S. financial system is effectively insolvent.

Note: The author of this insightful analysis, Nouriel Roubini, has a very informative blog, available here.

The Death of 'Rational Man'
2009-02-08, Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/06/AR20090206027...

What allowed some people to see the financial crash coming while so many others missed its gathering force? I put that question recently to Nouriel Roubini, who has come to be known as "Dr. Doom" because of his insistent warnings starting in 2006 that we were heading into a global firestorm. Roubini gave two kinds of answers. The first involves standard number-crunching of the sort that economists routinely do -- and that Roubini just did better and sooner. It's his second answer that's more interesting, because it goes to the heart of what we should take away from this crisis: Roubini decided to discard the assumption of market rationality that underlies most economics and to embrace the psychological insights of what's known as "behavioral economics." Everyone else had those same numbers. Why did Roubini act? The answer is that he decided to trust his gut, which told him there was trouble ahead, rather than Wall Street's "wisdom of the crowd," which -- as reflected in stock prices -- said everything was rosy. He concluded that the markets were not pricing in the degree of risk that was actually present in housing. "The rational man theory of economics has not worked," Roubini said last month at a session of the World Economic Forum at Davos. That's why he and other prominent economists are paying more attention to behavioral economics, which starts from the premise that economic decisions, like other aspects of human behavior, are influenced by irrational psychological factors.

Note: To visit Nouriel Roubini's highly informative blog, click here. For lots more on the financial crisis and bailout, click here.

US Treasury overpaid $78 bln under TARP-watchdog
2009-02-06, CNN News/Reuters
http://money.cnn.com/news/newsfeeds/articles/reuters/MTFH29185_2009-02-06_01-...

The U.S. Treasury looks to have overpaid financial institutions to the tune of $78 billion in carrying out capital injections last year, the head of a congressional oversight panel for the government's $700 billion bailout program told lawmakers. Elizabeth Warren, a Harvard law professor, said her group estimated the Treasury paid $254 billion in 2008 in return for stocks and warrants worth about $176 billion under the Troubled Asset Relief Program, or TARP. Warren said the Treasury, under then-Secretary Henry Paulson, misled the public about how it would price them. "Treasury simply did not do what it said it was doing ... They described the program one way, and they priced it another," Warren said at a hearing before the Senate Banking Committee. She added that Paulson "was not entirely candid" in describing TARP's bank capital injection program. Neil Barofsky, another watchdog for the TARP program, told the Senate committee his office is turning to criminal investigations. "That's going to be a large focus of my office," he said. Warren told the banking committee that after three months on the job, her panel is still not getting enough answers from Treasury. She described the bailout as "an opaque process at best." Barofsky raised concerns about potential fraud in one of several programs funded by bailout money -- the Federal Reserve's Term Asset-Backed Loan Facility (TALF).

Note: Was the overpayment by Treasury to Wall Street banks for nearly-worthless assets they created a mistake? Or was it the real, hidden purpose of TARP to pay the banks more for the assets than they are worth? For many revealing reports from reliable sources on the realities behind the Wall Street bailout, click here.

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit
2008-11-24, Bloomberg News
http://bloomberg.com/apps/news?pid=20601109&sid=arEE1iClqDrk

The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis. When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in. “Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

Note: How is it possible that trillions of taxpayer dollars are being thrown around, yet Congress is not being told where the money is going? For revealing information on how the Fed manipulates government, click here.

Bailout Expands to Insurers
2008-10-25, Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/24/AR20081024017...

The Treasury Department is dramatically expanding the scope of its bailout of the financial system with a plan to take ownership stakes in the nation's insurance companies, signaling new concerns about a sector of the economy whose troubles until now have been overshadowed by the banking industry, government and industry sources said. Insurers, including The Hartford, Prudential and MetLife, have pushed the Bush administration to include them in the plan. Many firms have taken losses from mortgage-related securities and other investments and are struggling to replenish their coffers. The new initiative underscores the growing range of problems that Treasury is scrambling to address with the $700 billion allocated by Congress this month. The shape of the plan has changed repeatedly since Treasury Secretary Henry M. Paulson Jr. introduced it last month as an effort to rescue banks by buying their troubled mortgage-related assets. That original mandate has now been pushed aside by a plan to take equity stakes in banks and insurance companies, and other businesses are lobbying to be included. The government has been forced to expand the plan partly because the federal guarantees previously given some institutions, such as banks, have put other companies and financial sectors at a disadvantage, making them less attractive to uneasy investors. The cost of saving the country's largest insurer continues to rise. Senior managers at troubled insurance giant American International Group warned the Federal Reserve yesterday that the company would probably need more taxpayer money than the $123 billion in rescue loans the government has provided.

Note: For lots more highly revealing reports on the Wall Street bailout, click here.

U.S. FDIC chief: 'too big to fail' must end for all
2009-10-04, International Business Times/Reuters News
http://www.ibtimes.com/articles/20091004/too-big-to-fail-must-end-for-all-fdi...

The head of the U.S. Federal Deposit Insurance Corp. said on Sunday that she wanted to end the "too big to fail" doctrine and shrink the shadow banking system that operates outside the reach of regulators. FDIC Chairman Sheila Bair ... said a U.S. proposal to create the authority to shut down failing systemically important financial firms may need to be extended to insurers and hedge funds. "We need to end 'too big to fail' and this needs to be an overarching policy that applies to everyone," Bair said. Bair said she believed that bank holding companies with subsidiaries that are shut down by regulators also should be made to pay the price of failure by being subject to the same wind-down process. "I believe that the new regime should apply to all bank holding companies that are more than just shells and their affiliates regardless or not whether they are considered to be systemic risks," she said, adding that including only systemically important firms in the shut-down regime could reinforce the 'too big to fail' doctrine. Financial firms subject to systemic risk shutdown authority should likely also be required to publish "living wills" -- details on how an orderly wind-down would play out -- on their websites to provide more clarity to shareholders and customers. And by applying the resolution authority more broadly outside of normal regulated bank holding companies, it would help shrink the shadow banking system by discouraging regulatory arbitrage under which financial firms shop for the most lenient supervisors. "If you tighten regulation of the banks even more without dealing with the shadow sector you could make the problem even worse," she said.

Note: For a comprehensive overview of the realities underlying the government's bailout of the biggest financial institutions, click here.

Wall Street Pursues Profit in Bundles of Life Insurance
2009-09-06, New York Times
http://www.nytimes.com/2009/09/06/business/06insurance.html

After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one. The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die. The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money. Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated. In the aftermath of the financial meltdown, exotic investments dreamed up by Wall Street got much of the blame. It was not just subprime mortgage securities but an array of products ... that proved far riskier than anticipated. The debacle gave financial wizardry a bad name generally, but not on Wall Street. Even as Washington debates increased financial regulation, bankers are scurrying to concoct new products. In addition to securitizing life settlements, for example, some banks are repackaging their money-losing securities into higher-rated ones.

Note: As this article reveals, Wall Street will make a killing on these new securitized investments if American life expectancy should drop. Can you think of any ways in which powerful corporations could bring this about? Say an increase in sugar content or genetically modified components in foods? Perhaps lower standards for chemical toxicity? More time watching TV, or other changes leading to increased obesity? Swine flu vaccinations? For lots more from reliable sources on the realities of the Wall Street crash and bailout, click here.

Only a Hint of Roosevelt in Financial Overhaul
2009-06-18, New York Times
http://www.nytimes.com/2009/06/18/business/18nocera.html

Three quarters of a century ago, President Franklin Roosevelt earned the undying enmity of Wall Street when he used his enormous popularity to push through a series of radical regulatory reforms that completely changed the norms of the financial industry. Wall Street hated the reforms, of course, but Roosevelt didn’t care. Wall Street and the financial industry had engaged in practices they shouldn’t have, and had helped lead the country into the Great Depression. Those practices had to be stopped. To the president, that’s all that mattered. On Wednesday, President Obama unveiled what he described as “a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.” In terms of the sheer number of proposals, outlined in an 88-page document the administration released on Tuesday, that is undoubtedly true. But in terms of the scope and breadth of the Obama plan — and more important, in terms of its overall effect on Wall Street’s modus operandi — it’s not even close to what Roosevelt accomplished during the Great Depression. Rather, the Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself. Everywhere you look in the plan, you see the same thing: additional regulation on the margin, but nothing that amounts to a true overhaul. The plan places enormous trust in the judgment of the Federal Reserve — trust that critics say has not really been borne out by its actions during the Internet and housing bubbles. Firms will have to put up a little more capital, and deal with a little more oversight, but once the financial crisis is over, it will, in all likelihood, be back to business as usual.

Note: To watch the Inspector General of the Federal Reserve testify to Congress that she knows pracitcally nothing of trillions of dollars that are unaccounted for, click here. For many revealing reports from reliable sources on the hidden realities of the continuing taxpayer bailout of the biggest financial corporations, click here.

Piggish capitalism endangers us all
2009-05-08, San Francisco Chronicle (San Francisco's leading newspaper)
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/07/ED1117GOT8.DTL

Even if you don't dig on swine, it has become impossible to avoid them. If you're not pummeled by television reports about Wall Street oinkers, you're bombarded by talk-radio rants about congressional pork and newspaper dispatches about swine flu. They are each part of what might be called piggish capitalism - an economic theory that mixes subsidization, consolidation and deregulation - and it endangers us all. In 1999 ... President Bill Clinton signed a landmark deregulation measure that "ushered in an era of aggressive bank mergers," as Reuters reports. The result was what critics like Rep. John Dingell, D-Mich., predicted at the time: Wall Street created "a group of institutions which are too big to fail" and that "taxpayers are going to be called upon to cure." Mass producing mortgage-backed securities that were quickly infected with subprime mutations, these financial factory farms became so enormous and unregulated that they spread toxic assets throughout the entire economy. And when losses mounted, the government made banks whole with trillion-dollar bailouts. Incredibly, our government hasn't learned from these crises. Regulation-wise ...new financial rules have yet to move in Congress. Additionally, the much-vaunted bank "stress tests" have been shrouded in secrecy, which experts say created the potential for rampant insider trading. Meanwhile, the White House seems loath to break up financial firms, preferring instead another bank bailout - even as analysts warn that such bailouts fuel merger mania. Pigs may, in fact, be the smartest domestic animal. But when charged with managing capitalism, they clearly have trouble comprehending the simplest lessons.

Note: For a clear example of the lack of concern about trillions of dollars unaccounted for by the Federal Reserve, listen to a five-minute video testimony of the inspector general of the Fed being question by a Congressman at this link. Then learn more about the major manipulations of the Fed on our highly banking and financial revealing summary available here.

Inquiry Asks Why A.I.G. Paid Banks
2009-03-27, New York Times
http://www.nytimes.com/2009/03/27/business/27cuomo.html?partner=rss&emc=rss&p...

Members of Congress and the New York State attorney general demanded detailed information Thursday on how tens of billions of taxpayer dollars flowed through the American International Group during its crisis last fall and ended up in the coffers of several dozen big banks, shielding them from losses. The new inquiries shine a spotlight on a question that is exponentially bigger, in dollars, than the $165 million in bonuses that A.I.G. paid out this month, but which has been overshadowed until now by the uproar over the bonuses. “We would like to know if the A.I.G. counterparty payments, as made, were in the best interests of the taxpayers who provided the funding,” said Representative Elijah E. Cummings, Democrat of Maryland, in a letter to Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program. The banks and investment firms that ended up with A.I.G.’s bailout money last fall were, in many cases, counterparties to derivatives contracts it had sold, known as credit-default swaps, which guaranteed the value of assets in their investment portfolios. They included Wall Street firms, like Goldman Sachs, JPMorgan Chase and Merrill Lynch, that have successfully resisted efforts to regulate credit derivatives in the past. In several hearings this month, members of Congress said they believed the derivatives had often been used to speculate, not to manage risk. They have expressed outrage that A.I.G.’s trading partners got 100 cents on the dollar for their money-losing trades when ordinary Americans paying for the bailout have suffered big losses in their 401(k) accounts and other investments.

Note: For many revealing reports on the realities behind the Wall Street bailouts, click here.

IRS defends drop in audits of millionaires
2009-03-22, MSNBC/Associated Press
http://www.msnbc.msn.com/id/29831158

The Internal Revenue Service is not living up to its pledge to crack down on wealthy tax cheats, an IRS watchdog group says, citing a drop in audits of millionaires last year. Those with incomes of $1 million and above had a 5.6 percent chance of getting audited in fiscal year 2008, which ended last September, down from 6.8 percent the previous year, according to IRS figures. The actual number of millionaires audited fell from 23,200 to 21,874; the number of millionaires filing tax returns grew from 339,138 to 392,776. "In the face of growing federal deficits and public calls to lower the tax gap — the amount of taxes due but not reported and paid — the drop in millionaire audits is surprising," said the Syracuse University-based Transactional Records Access Clearinghouse in a report Monday. It said the significant drop in audits of richer Americans contrasted with IRS statements last year that it was making strong progress in enforcement, especially of those with incomes of more than $1 million. The TRAC report said focus on high earner returns is critical because of the huge rewards. Among those millionaire audit cases where additional taxes were recommended, the average was $198,000 after face-to-face audits and $137,000 for audits done through correspondence. In total, the IRS collected $56.4 billion in enforcement revenues last year, down from $59.2 billion in 2007 and the first decline in collections in a decade.

Note: The highly important statistic only mentioned in passing here is "the number of millionaires filing tax returns grew from 339,138 to 392,776." That's an over-15% increase in the number of millionaires in one year, while most everyone else seems to be losing money. Hmmmm. Makes you wonder.

Bailout Oversight Lacking, GAO Says
2008-12-03, Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/02/AR20081202022...

The Bush administration has failed to adequately oversee its $700 billion bailout program and must move rapidly to guarantee that banks are complying with the plan's limits on conflicts of interest and lavish executive compensation, congressional investigators said yesterday. The new report by the Government Accountability Office, the nonpartisan investigative arm of Congress, said the Treasury Department has yet to impose necessary safeguards or decide how to determine whether the program is achieving its goals. The auditors said it was too soon for them to tell whether the bailout was working. "The rapid pace of implementation and evolving nature of the program have hampered efforts to put a comprehensive system of internal control in place," the report said. "Until such a system is fully developed and implemented, there is heightened risk that the interests of the government and taxpayers may not be adequately protected and that the program objectives may not be achieved in an efficient and effective manner." So far, the rescue package has provided at least $150 billion in capital infusions to 52 financial institutions, the auditors said. They added that no applications for funding were denied by the Treasury. The congressional auditors urged Treasury officials to determine how each bank receiving bailout money is using the money and whether they are using it in a way consistent with the intent of the law. Several congressional leaders have criticized financial firms for hoarding the money instead of using it to lend to borrowers.

Note: For many revealing reports on the Wall Street bailout from reliable sources, click here.

Treasury could bail out any industry
2008-10-30, San Francisco Chronicle/Associated Press
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/30/BU1D13QM6S.DTL

As the list of ailing companies seeking government help grows, it is anybody's guess where the Treasury Department's largesse will stop. The $700 billion bailout bill is so vague that virtually any U.S. company could be eligible for government help. While the capital infusions announced this month will be directed only to banks, Treasury spokeswoman Brookly McLaughlin confirmed that the law allows the department to create other rescue programs "open to a broader set of financial institutions." As the bill is written, "financial institutions" don't have to be banks or financial entities. In theory, any company could declare itself a financial institution and ask the Treasury Department to grant it temporary aid if its rescue is deemed "necessary to promote financial market stability." "Talk about the barn doors being left open - it's like they left off the walls and roof, too," said Bert Ely, an independent banking consultant. He suggested that under the bill, an airline could transfer future revenue streams into a subsidiary and ask the government to buy shares in that new "financial institution." Representatives of the auto, insurance and other industries are already seeking government help, indicating they think they qualify because of their financing units. Airlines and home builders are lobbying for government help to prop them up through the economic downturn - either under the bailout bill or some other legislation. And if insurance and auto lobbyists succeed in their efforts to tap the bailout money, experts said other industries will probably follow.

Note: For extensive coverage of continuing revelations about the Wall Street bailout, click here.

Waxman Seeks Bank Data On Use of Bailout Funds
2008-10-29, Washington Post
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/28/AR20081028034...

Congressional investigators yesterday demanded that the nation's nine largest banks prove they are not using an emergency infusion of $125 billion in taxpayer funds to lavish their executives with wealthy bonuses. "I question the appropriateness of depleting the capital that taxpayers just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry's worst years on record," [Rep. Henry A. Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform,] wrote in a letter to the banks. Lawmakers across the political spectrum want to ensure that the government's bailout program results in increased lending, not bigger paydays for executives. But a new study suggests that financiers are still bullish about their bonuses. More than two-thirds of Wall Street professionals are expecting a bonus this year, and 36 percent are anticipating a larger bonus than last year, according to a survey by eFinancialCareers, a career networking company. "Some experts have suggested that a significant percentage of this compensation could come in year-end bonuses and that the size of the bonuses will be significantly enhanced as a result of the infusion of taxpayer funds," Waxman said. In his letter to the banks, Waxman asked them to provide detailed data on compensation packages since 2006, as well as the projected salaries and bonuses for the rest of the year. The request was sent to Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Merrill Lynch, Morgan Stanley, State Street, and Wells Fargo.

Note: For extensive coverage of continuing revelations about the Wall Street bailout, click here.

U.S. May Enlist Small Investors in Bank Bailout
2009-04-09, New York Times
http://www.nytimes.com/2009/04/09/business/09fund.html?partner=rss&emc=rss&pa...

During World War I, Americans were exhorted to buy Liberty Bonds to help their soldiers on the front. Now, it seems, they will be asked to come to the aid of their banks — with the added inducement of possibly making some money for themselves. As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds. The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats. If, as some analysts suspect, the banks’ assets are worth even less than believed, the funds’ investors could suffer significant losses. Nonetheless, the administration and executives in the financial industry are pushing to establish the investment funds, in part to counter swelling hostility against the financial industry. The embrace of smaller investors underscores the concern in Washington and on Wall Street that Americans’ anger could imperil further efforts to stimulate the economy with vast amounts of government spending. Many Americans say they believe the bailout programs ... will benefit only a golden few, including some of the institutions that helped push the economy to the brink. Critics like Joseph E. Stiglitz, a Nobel Prize-winning economist, argue that the bailouts merely privatize profits and socialize losses.

Note: For a powerfully revealing archive of reports from reliable sources on the hidden realities of the financial bailout, click here.

previous

1234567

next

· entire list