****Bank Bailout Consolidation Thread****

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A place to post links to threads and articles related to the bank bailouts.

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1. There's probably at least a dozen other things here that I would love to see

be put into a consolidation thread, but I know it will never happen.

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3. Me too...

I started with some other bills, but they all dropped. At one time I proposed including this forum as one that would be seen by everyone at the top of their screen, such as latest, greatest etc. but that got lost as well.

Thanks for the reply, would you give it a rec so maybe we can make better use of the forum in general...TIA.

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2. H.R. 1424: Emergency Economic Stabilization Act of 2008

http://www.govtrack.us/congress/bill.xpd?bill=h110-1424

"A bill to provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes.

This is the Senate's October 2008 Economic Stimulus Relief Bill. This bill was originally introduced in March 2007 and passed the House as the Genetic Information Nondiscrimination Act of 2008. In October 2008, it was co-opted as the so-called "vehicle" to pass the relief bill with an amendment that rewrites the whole bill. The House's initial vehicle was H.R. 3997, but they failed to pass their amendment co-opting the bill..."

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4. Fed Refuses Transparency, Lending Surpasses 2 Trillion

http://www.dailykos.com/story/2008/11/10/03436/696

"The Federal Reserve refuses transparency as lending surpasses 2 trillion according to a lawsuit recently filed November 7, 2008 by Bloomberg while their Freedom of Information Act request remains unanswered.

For those of us unaware of the who, what, where, when, why & how of all of this I will attempt to shed a little light and understanding in my common man stab at communicating the recent news regarding all of this..."

[chill_wind]

5. ...

ProPublica articles- running coverage of the bailout

http://www.propublica.org/tag/Bailout

"Show Me the TARP Money"-

Some figures and a map and a graph-
One journalist group's efforts to track the payouts.

http://www.propublica.org/special/show-me-the-tarp-money




What they're talking about:


Contracts online at The Treasury site.


http://www.treas.gov/initiatives/eesa/transactions.shtml



although missing crucial documents describing the guaranteed assets,
according Bloomberg following developments:


http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBxQJNvPTHq0



CEPR - Center for Economic and Policy Research

http://www.cepr.net/



Alternative ideas:

Time for Bank Rationalization ("Bad Bank, Bad Plan)

By Dean Baker

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/time-for-bank-rationalization/

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6. http://www.recovery.gov/

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7. Zero disclosure

http://lasvegascitylife.com/articles/2008/12/11/news/local_news/iq_25627850.txt

Why aren't Nevada lawmakers asking questions about the Fed's secret $2 trillion bailout?
by JASON WHITED

Last updated on Thursday, December 11, 2008 at 12:09 am

"SINCE Wall Street's implosion in September, the federal government has dropped $150 billion to rescue insurance giant American International Group, $200 billion to salvage Fannie Mae and Freddie Mac and about $350 billion to save at least 50 other banks hemorrhaging from bad mortgages and worse credit markets. President-elect Barack Obama says even more money is needed to stop the bleeding, including his proposed domestic public works stimulus package that could top $1 trillion.

Whatever the final price tag on America's economic recovery, taxpayers know it's gonna be huge -- and will take many years to pay off.

What most of them don't know -- and what most of Nevada's congressional delegation won't investigate -- is why the Federal Reserve has made as much as $2 trillion in additional secret loans to a variety of institutions in the past 15 months. Apparently, according to a federal lawsuit filed by Bloomberg News, the Fed has made these loans while refusing to identify either the recipients of this taxpayer-funded largesse or the assets the central bank accepted as collateral.

If proven accurate, these $2 trillion in secret Fed disbursements are nearly three times the size of the gargantuan $700 federal bailout signed into law in early October..."

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8. The Bad Bank v. Good Bank Option - Consortium News article

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4963071&mesg_id=4963071

http://consortiumnews.com/Print/2009/013009b.html

By Brian Barger
January 30, 2009

"So what's wrong with creating a "good bank" owned by the American people?

The current wishful thinking in the debate over what to do with the failed U.S. banking system is that once the troubled banks are righted, they will not only float, but lift the sinking economy with a surge of loans and investment money.

The latest salvage strategy making the rounds is to create a "bad bank" (as if we didn't have enough of them already). But this one would be different; think of it as mortgage-backed Viagra, unburdening the men of Wall Street of their nonperforming loans, freeing them to again arise to a climactic quarterly finish.

At its most basic level, the plan would buy up bad loans made by bad bankers, rewarding the most inept, incompetent and corrupt Wall Street peddlers with government largesse – leaving them with their refreshed "good banks" packed with profitable loans, while sticking taxpayers with a foul bag of bad loans and other "toxic assets" in what's deemed a "bad bank," government-owned..."

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9. Wall Street Manna (An irreverent look at Wall Street).

http://aaronandmoses.blogspot.com/

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10. So far up we're up to $8.5 trillion and they want another trillion?

Click on links for a breakdown of these numbers.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4934387&mesg_id=4934387


http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL

Kathleen Pender
Wednesday, November 26, 2008


"The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News.

-snip-

Most of the money, about $5.5 trillion, comes from the Federal Reserve, which as an independent entity does not need congressional approval to lend money to banks or, in "unusual and exigent circumstances," to other financial institutions.

To stimulate lending, the Fed said on Tuesday it will purchase up to $600 billion in mortgage debt issued or backed by Fannie Mae, Freddie Mac and government housing agencies. It also will lend up to $200 billion to holders of securities backed by consumer and small-business loans. All but $20 billion of that $800 billion represents new commitments, a Fed spokeswoman said..."

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11. $1T more for Banks? (Bad bank plan)

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4923414&mesg_id=4923414

http://www.cnbc.com/id/28879872

"The Obama administration is close to deciding on a plan to purchase bad—or non-performing and illiquid—assets from banks, according to industy sources. The plan could be announced early next week.

The so-called "bad bank" plan, would address the key problem of how to price the assets by using a model-pricing mechanism.

The model would take account of the government's ability to hold onto assets, even to maturity, and pay for the them with cheap funding. Result: the government might end up paying more than current market prices for the securities..."

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12. Does it gall anyone else?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4957772&mesg_id=4957772


"That our Democratic Party is leading the charge to bail out the Big Banks and financial institutions that got us into the mess in the first place? Normally, we would expect the Republican Party to be the major defenders of these criminals. That we gave them $350 billion dollars with nary a bit of oversight? That they passed out that taxpayer money with big bonuses,like it was Halloween treats or Christmas presents. At the same time, the same taxpayers were being laid off with little hope for the future?

Does it seem to anyone else that our Democratic Party was acting like Republicans? Defending the Big Banks and the wealthy over the average American? I heard no Democrats ask the Big Bankers for an accounting of the money. I heard no Democrats tell the big financiers that when we give you taxpayer money, we own your asses! They appear afraid to use the word "nationalized"?

Just as the GOP is no longer the Party of Lincoln, the Democratic Party is no longer the Party of FDR. "Well, what do you expect them to do, let them go under"?? Well, yes. Yes! Yes! Let the thieves go under and save our good banks. Not all of them were involved in these activities. I am embarrassed that our Party is spit-shining the shoes of the wealthy class, at the expense of the rest of us. Yes, it is we that will suffer the consequences. Then they will say, "Think of how bad it would have been...? Bullshit!! This is not my Democratic Party..."

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13. Related - Geithner Appoints Goldman Sachs Lobbyist As Top Aide

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4939466&mesg_id=4939466


"Newly installed Treasury Secretary Timothy Geithner issued new rules Tuesday restricting contacts with lobbyists – and then hired one to be his top aide.

Mark Patterson, a former advocate for Goldman Sachs, will serve as chief of staff to Geithner as the Treasury Department revamps the Wall Street bailout program that sent an infusion of cash to his former employer...."

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14. Stiglitz -- ‘Cash for Trash’

Stiglitz Criticizes Bad Bank Plan as Swapping ‘Cash for Trash’


By Simon Kennedy

Feb. 1 (Bloomberg) -- Nobel laureate Joseph Stiglitz said any decision by President Barack Obama to establish a so-called bad bank to rid financial companies of toxic assets risks swelling the national debt.

Obama’s administration is moving closer to buying the illiquid assets currently clogging bank’s balance sheets and preventing them from boosting lending, people familiar with the matter said this week.

That amounts to swapping taxpayers’ “cash for trash,” Stiglitz said yesterday in a panel discussion at the World Economic Forum in Davos, Switzerland. “You shouldn’t chase good money after bad. We’re talking about a national debt that’s very hard to manage.”

Stiglitz, a professor at Columbia University in New York and a former adviser to President Bill Clinton, says the plan would leave taxpayers paying for years of excess lending by banks. It would also deprive the government of money that would have been better spent shoring up Social Security, he said.

Whether a bad bank would accelerate an end to the financial crisis split delegates attending the Davos talks. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said such an operation would help if “executed well.” Billionaire investor George Soros said in an interview that “it’s not the measure that would turn the situation around and enable banks to lend.”

(...)

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKrRkAwxNhTw

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15. FDL - Bank Rescue Would Entail Triage for Troubled Assets

http://firedoglake.com/2009/02/04/welcome-america-to-your-sizzlin-larry-summers-shitburger/

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/03/AR2009020303782_pf.html


"...Instead of taking a single approach, the Obama administration plans to divide assets and other loans into three categories, each with its own solution, according to sources familiar with the discussions, speaking on condition of anonymity because the details are not finalized.

The government would buy and hold on to those assets whose falling prices are putting banks under the most pressure. Officials want to limit these purchases because of the vast expense.

The centerpiece of the plan would be a guarantee to limit losses on a second group of troubled assets that can be kept by the banks because they have more stable prices.

And it would allow banks to retain and profit from their healthiest assets.

Beyond these initiatives, the government also is likely to inject more capital into troubled institutions.

The triage approach is a response to accounting rules..."

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17. Obama to Hold Primetime Presser Monday

http://thepage.time.com/2009/02/05/obama-to-hold-primetime-presser-on-monday/

"WashPost: The president will use the 8 pm ET press conference to sell his stimulus plan.

Obama is also considering an Oval Office address on the topic, he reportedly tells the Senate Democratic retreat at the Newseum."


http://www.washingtonpost.com/wp-dyn/content/article/2009/02/03/AR2009020303782_pf.html

"The high-stakes approach would dramatically increase the investment of taxpayer money in the financial industry, and the potential losses. The plan, which Treasury Secretary Timothy F. Geithner is set to announce Monday, is being crafted under tremendous political pressure from people who say the government is risking too much as well as from those who say it is not doing enough to end the crisis..."

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18. The Bad Bank Assets Proposal: Even Worse Than You Imagined

http://www.nakedcapitalism.com/2009/02/bad-bank-assets-proposal-worse-than-you.html

"...So we the taxpayers are going to eat a ton of bank losses that should instead be borne first by stockholders and bondholders This program should be labeled the Pimco bailout plan, since the giant bond fund holds a lot of bank debt...


Now I do not labor under the delusion that there are cheap or easy ways out of our financial sinkhole. People are suffering, and we are only partway through the process of contraction and writeoffs. I heard of a suicide today, a jewelry dealer who was $400,000 in debt (also owed a lot of money but unable to collect) who threw himself off 10 West 47th Street (from someone else in the building, this is no urban legend). A tragedy, and a visible one, and there is plenty of less acute but no less real trauma afoot.

But Team Obama is taking the cowardly approach of distributing the costs among the most disenfranchised group in the process, namely the taxpayer, when there far more obvious and logical groups to take the hits. Shareholders and bondholders bought securities KNOWING there was the possibility of loss. A lot of big financial institutions have been on the ropes for over a year. A security holding is not a marriage. When conditions change, prudent investors reassess and adjust course accordingly. If anyone is long a lot of dodgy bank paper now, they have only themselves to blame. Any why are rank and file bankers still exempt from pay cuts when the workers in another failing US industry, autos, expected to take big hits?

This is the most roundabout and probably the most costly way to not solve this problem....


...As we discuss in a separate post, the one punitive element, executive comp restrictions, are mere window-dressing..."

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16. TARP 1 - Treasury overpaid $78 bn for toxic assets

http://www.swamppolitics.com/news/politics/blog/2009/02/treasury_overpaid_78_bn_for_to.html

"...Warren said:

"At the time of the first set of transactions, Treasury substantially overpaid. According to the data we've investigated, Treasury put in about $254 billion for which it received about $176 billion in value from the financial instituions. That's a shortfall of about $78 billion when measured as of the date of the transactions, not in terms of what happened to the markets since then . We want to emphasize there may be good policy reasons for overpaying. But without a clearly delineated reason, we can't know that. We return to a theme that we have spoken about repeatedly, and that is the need for clear goals, for a clear framework, for methods for how we're getting there and measurements to see if that is happening."


TARP Watchdog: Treasury Overpaid For TARP Investments

http://money.cnn.com/news/newsfeeds/articles/djf500/200902051023DOWJONESDJONLINE000447_FORTUNE5.htm

"The three government watchdogs overseeing the $700 billion financial rescue package continued to criticize the Treasury Department's implementation of the plan, suggesting a lack of a strategic vision and raising the concern that Treasury is overpaying for its investments in banks.

Representatives from the Government Accountability Office, a congressional oversight panel and a special investigator general said the Treasury continues to face challenges on both general and practical levels. The transparency and accountability surrounding the Troubled Asset Relief Program, or TARP, continue to fall short, leaving taxpayers and policymakers short of information on the program.

"Our money - and our economy - are on the line, and we all have a stake in the outcome," said Harvard Law School professor Elizabeth Warren in her prepared remarks for a Senate Banking Committee hearing.

Warren heads the five-member congressional oversight panel overseeing the TARP, and said that the group on Friday will issue a report suggesting Treasury has significantly overpaid for the assets it has purchased from financial institutions. She said an analysis of 10 of the TARP transactions, when extrapolated for all of the purchases made in 2008, suggests Treasury paid $254 billion for assets worth approximately $176 billion, a shortfall of $78 billion.

"Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value," Warren said..."

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19. Trial Balloons: Insuring The Bad Assets

http://baselinescenario.com/2009/01/30/trial-balloons-insuring-the-bad-assets/

"...The heart of this proposal is the insurance idea. This would be (much) larger than, but along the same lines as the Citigroup II deal in November and the Bank of America deal in January. The problems with this approach are threefold.

1. There is not enough potential upside for taxpayers. Throwing in relatively few warrants, as with Citi and BoA, does not make much of a difference - even if the strike price is more favorable than in TARP I.

2. There is not enough explicit recapitalization. Proponents hope that cleaning up the balance sheets in this way will bring in coinvestment from the private sector. But this seems likely to come slowly and in small amounts in the foreseeable future.

3. There will be nowhere near enough transparency in this structure. The insurance provided by the government will almost certainly be too cheap relative to the risks, but evaluating this properly will be impossible for outsiders. (To see what I mean, look at the details of the Bank of America deal.)

Putting limits on bank executive pay make us all feel better, but it will not address the fundamental issues. The government will ride in to save the banking system. Shouldn’t the taxpayer get a fair return on his/her investment in this venture - particularly as the whole banking system clean-up is likely to cost us over 10 percent of GDP, so “potential upside” really means “limiting our total losses” and “making sure not all the ensuing profits fall into the hands of already-rich private parties”?"

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20. There is No Substitute for Mortgage Debt Restructuring

http://www.hussmanfunds.com/wmc/wmc090209.htm

"On Tuesday, the Treasury will announce how it plans to use the remaining $350 billion in TARP funds. Last week's market advance was largely based on Wall Street's hope that current mark-to-market rules will be abandoned or modified. This is like someone taking huge losses in their investment portfolio, and believing that not looking at the brokerage statement will improve their financial situation. Look, if the underlying assets are likely to regain value over a reasonable amount of time, then it might be appropriate to modify the capital accounting rules so temporary fluctuations don't drive banks into failure. But if you've got securities that are marked down to 20 or 30 cents on the dollar, and the underlying borrowers are likely to default because you haven't changed their payment obligations, failing to mark the portfolio to market simply allows banks to go quietly insolvent without the knowledge of the public. Providing federal insurance for those securities would amount to an open-ended, unlegislated, future bailout. Let's hope that isn't part of the plan.

The heart of this problem continues to be the need to restructure the payment obligations of borrowers. For the better part of a year now, I have repeatedly (and increasingly urgently) advocated the restructuring of mortgage obligations by a variety of methods (collecting the pieces of securitized mortgages through “all or nothing” auctions, writing down principal in return for “property appreciation rights”, etc). Frankly, I had expected more progress on this from both Congress and the Treasury, considering the obvious urgency. But evidently, only perhaps $50 billion of TARP funds will be directed toward foreclosure abatement. On Tuesday, we'll find out to what extent they've got it right..."

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21. Recession? No, It's a D-process, and It Will Be Long

http://online.barrons.com/article/SB123396545910358867.html

"...Dalio: Let's call it a "D-process," which is different than a recession, and the only reason that people really don't understand this process is because it happens rarely. Everybody should, at this point, try to understand the depression process by reading about the Great Depression or the Latin American debt crisis or the Japanese experience so that it becomes part of their frame of reference. Most people didn't live through any of those experiences, and what they have gotten used to is the recession dynamic, and so they are quick to presume the recession dynamic. It is very clear to me that we are in a D-process.

Why are you hesitant to emphasize either the words depression or deflation? Why call it a D-process?

Both of those words have connotations associated with them that can confuse the fact that it is a process that people should try to understand.

You can describe a recession as an economic retraction which occurs when the Federal Reserve tightens monetary policy normally to fight inflation. The cycle continues until the economy weakens enough to bring down the inflation rate, at which time the Federal Reserve eases monetary policy and produces an expansion. We can make it more complicated, but that is a basic simple description of what recessions are and what we have experienced through the post-World War II period. What you also need is a comparable understanding of what a D-process is and why it is different..."

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22. Geithner Said to Have Prevailed on the Bailout

By STEPHEN LABATON and EDMUND L. ANDREWS
Published: February 9, 2009

http://www.nytimes.com/2009/02/10/business/economy/10bailout.html?_r=3&pagewanted=1


"WASHINGTON— The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands...

...On Monday evening, new details emerged after lawmakers were briefed on the plan.

It intends to call for the creation of a joint Treasury and Federal Reserve program, at an initial cost of $250 billion to $500 billion, to encourage investors to acquire soured mortgage-related assets from banks..."

[chill_wind]

23. Fed Refuses to Release Bank Lending Data, Insists on Secrecy (Updated)

March 5 (Bloomberg)

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x59312

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24. Scandal at Treasury: Official Quits Amidst Fraud Scandal

Source: ABC News

Darrel Dochow Allowed IndyMac Bank to Cook Its Books, Investigators Say

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3768664

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25. Geithner's New Toxic Asset Purchase Plan

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5345758&mesg_id=5345758

http://www.scoop.co.nz/stories/HL0903/S00336.htm

Comment By Carolyn Betts

"I'm an attorney who was working in Washington with RTC during the S&L crisis, so I know something about "toxic asset" sales.

I have been poking around the legal and contracting market to find out what work there is out there in reviewing, collecting data on and valuing the billions and billions (trillions?) of dollars of "toxic assets," including the mortgage backed securities, CDOs and other derivatives created and backed by mortgages that are now "toxic."