Commentaries
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from Rolfe Winkler:
Buffett lets public down…again
The public has always seen in Warren Buffett a different kind of capitalist, an honest observer providing sound financial advice regardless of his personal interests. But is he?
When it comes to his own holdings Buffett seems to use a carefully cultivated reputation for financial rectitude to feather his own nest.
On Wednesday he came out against Obama's proposed bank tax, but his comments were inconsistent. On one hand he's always maintained banks needed to be bailed out, yet he opposes ways to make them pay for it. At this point, financial giants in which Buffett has large stakes -- Wells Fargo, Goldman Sachs and General Electric -- all benefit from an implicit too-big-to-fail government insurance policy. How can Mr. Buffett, an insurance executive, argue that it's inappropriate to charge them for it?
This is just the latest example of Buffett talking his book.
Buffett also lobbied for and profited greatly from the bailouts. He invested in Goldman, he said, with the expectation that Congress would "do the right thing" by passing the Troubled Asset Relief Program. In other words, it was a bet on a bailout.
The PPIP let down
Details on the government’s PPIP program – the one designed to suck out the venomous assets still coursing through bank balance sheets – is out and the amount of money dedicated to the task looks underwhelming.
From the joint statement issued by Treasury, the Fed and the FDIC.
Under this program, Treasury will invest up to $30 billion of equity and debt in PPIFs established with private sector fund managers and private investors for the purpose of purchasing legacy securities.
PPIP is a pipsqueak
The Treasury Department is finally out with its final version of a plan for ridding the banks of toxic assets and you have wonder why the Obama administration even bothered.
Treasury will now fund the program with $30 billion in government money. Back in March, Treasury Secretary Tim Geithner was talking about kicking in between $75 billion and $100 billion into the program.
Still talking about those pesky legacy loans
For all the stabilization in the financial markets and talk about the ECB and Federal Reserve weighing exit strategies from the massive amount of stimulus they’ve pumped into the system, the U.S. still hasn’t come up with a viable solution for the toxic plague on bank balance sheets. Though markets don’t seem too bothered since the big banks have been able to raise tens of billions of dollars, it’s the fate of smaller banks that are exposed to construction and development loans that are a real worry.
WSJ reports that government’s grand plan to address the toxic legacy issue, the Public-Private Investment Program, PPIP, has stumbled and lost momentum, which could have implications for the economy’s revival. And since the program has been revamped, it’s small banks that are likely to suffer the most.
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The Wall
