Wall St. // Current

added
3 months ago

President Barack Obama's '5 Pillars' to Fixing our Economy

Source: http://linkbee.com/Obama5StepEcoFix President Barack Obama said the key to a bright, sustainable future for the U.S.... more

Viper7
added this

Using the Recession to Stimulate You

Conor Knighton takes a look at how more and more companies are using the rough economy in their ads to make us open our wallets... more

Conor_Knighton
added this

U.S Treasury is demanding reports the banks that received most gov. $700 billion

I hope they can bring back check and balances. Also, I am glad to see that the Treasury is at least trying, or I hope they are and this isnt just for the news. We need to know what the hell were the billions spent on, because all I was hearing is that we needed this to help the economy... well I dont see the economy getting better, so it looks like we needed this so the bonuses can get paid on time.
________________________________________________________________

The U.S. Treasury, under pressure to revive lending, is demanding monthly reports from the banks that received the most capital from the government’s $700 billion rescue program.

Neel Kashkari, the official who administers the Troubled Asset Relief Program, wrote to Citigroup Inc., Bank of America Corp. and 18 others on Jan. 16 seeking figures on business and consumer loans. Treasury also wanted details on purchases of mortgage-backed and asset-backed securities, according to documents obtained by Bloomberg News. Kashkari will stay for a few months after President-elect Barack Obama is sworn in today.

Obama’s aides criticize outgoing Treasury Secretary Henry Paulson’s approach to rescues as lacking transparency and not doing enough to get credit flowing though the economy. While Paulson has defended the cash injections as having averted a collapse of the financial system, Obama had to pledge changes before lawmakers approved the release of the second $350 billion.

“Banks are becoming the whipping boy for the Treasury’s failed policies,” said Joseph Mason, a Louisiana State University professor in Baton Rouge who previously worked at the Treasury’s Office of the Comptroller of the Currency. “They’re going to continue to face this pressure.”

Citigroup spokesman Michael Hanretta said the bank will meet all reporting requirements. Bank of America spokesman Scott Silvestri said the bank extended $115 billion in new credit in the fourth quarter of last year and plans to “do whatever we’re asked to do by Treasury.”

Obama Considers New Bailout

Obama’s advisers are considering options for dealing with troubled assets still clogging banks’ balance sheets, according to people familiar with the matter. Among alternatives: setting up a government-backed “bad” or “aggregator” bank to hold the securities, or leaving the assets on banks’ books and providing a government guarantee.

The Treasury also asked the banks for commentary on their lending activity, to provide “qualitative” updates on trends. In addition, the government wants information on secured lending and underwriting of debt and equities. The first report covers data for October, November and December and is due by Jan. 31. Results will be made public. Subsequent reports will be monthly.

20 Banks

The 20 banks receiving the Treasury’s monthly data request are: Citigroup, Bank of America, JPMorgan Chase & Co., Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley, PNC Financial Services Group Inc., U.S. Bancorp, SunTrust Banks Inc., Capital One Financial Corp., Regions Financial Corp., Fifth Third Bancorp., BB&T Corp., Bank of New York Mellon Corp., KeyCorp, CIT Group Inc., Comerica Inc., State Street Corp., Marshall & Ilsley Corp. and Northern Trust Corp.

More at the link...I hope they can bring back check and balances. Also, I am glad to see that the Treasury is at least trying, or I hope they are... more

Prijedor
added this

13 responses

added
9 months ago

Behind the Bailout...what we SHOULD have known in JUNE and need to know NOW.

Almost 4 months ago, the handwriting was on the wall. And throwing useless liquidity at the problem will only make it worse. To make matters worse, Morgan Stanley and Goldman Sachs have been speculating in commodities, driving the prices up.

Please read the whole article!

Excerpts from the article by Mike Whitney dated 6/17/2008:

The Fed is currently in panic-mode because it doesn't have the tools or resources to fix the problems its facing. Its already eaten through more than half of its $900 billion balance sheet and has traded away hundreds of billions in US Treasuries for worthless MBS and collateralized debt obligations (CDOs) which are steadily losing value every month. The Fed is trying to revive the moribund banking system which has lost its main sources of revenue (structured financial investments) and is teetering on the brink of insolvency from its steadily wilting assets, a collapse in commercial and residential real estate, and a rise in corporate defaults...

...Now the underlying collateral (housing) is quickly deteriorating causing a system-wide deleveraging and a flight to safety (US Treasuries, foreign bonds). The dollar is in free fall, credit is tightening, and the banks are only able to stay open due to the generosity of the Federal Reserve...

...The larger question is whether the investment banks---faced with a frozen bond market and ravaged balance sheets---are diverting the money they're getting from the Fed into commodities (via the hedge funds) driving the prices upward and triggering political turmoil around the world?...

...According to economist and author Henry Liu, the same thing happened just prior to the Great Depression:

"The problem in 1929 was, as it is in 2008, that asset prices buoyant by speculation had outstripped the purchasing power of stagnant income of consumers. Assets and commodities in the economy were valued at price levels that aggregate wage income could not sustain. The solution was not to inject more useless liquidity to sustain inoperative price levels, which will only make the problem worse, but to INTRODUCE DEMAND MANAGEMENT THROUGH FULL EMPLOYMENT AND LET WAGES QUICKLY RISE BACK UP TO THE LEVEL OF WAGE-PRICE EQUILIBRIUM. This was the policy objective of Roosevelt's New Deal Program, an objective not yet recognized by policymakers in 2008 even amid a revival of populist rhetoric....

...There is no way to escape the day of reckoning now facing the financial system; the hundreds of bank failures, the corporate defaults, the meltdown in real estate, the massive loss of jobs, the dreary contraction of credit, the tumbling stock market, and the blow to our national confidence. But there is a way to rebuild, to reassert control over our own currency; to "even the playing field" and recommit to a strong middle class; to smash the system that diverts the greatest portion of the nation's wealth to a handful of unelected oligarchs whose main objectives are to expand their own personal power and subvert the democratic process. The existing system cannot meet the challenges of the new century. It's gotta go.Almost 4 months ago, the handwriting was on the wall. And throwing useless liquidity at the problem will only make it worse. To... more