Morning Links 1-22

Jan 22, 2010 15:19 UTC

Geithner has reservations on US banks (Wutkowski/Eder, Reuters) More evidence that Geithner is a goner. Will Volcker replace him? Sheila Bair could be a dark horse. She has lots of Democratic fans on the Hill despite being appointed by a Republican. In any case, Geithner was on PBS last night defending the plan.

A closer look at the Volcker rule (Felix) Capitol Hill may not be taking Obama’s rule very seriously. They think it was just a way to spin the news cycle away from the fact that healthcare will fail now that the Dems have lost their 60th vote in the Senate. Moreover, they don’t think Obama’s actually going to wage the fight against Wall Street that he claims he’s ready for.

Bernanke faces tougher vote in Senate (Reddy/Paletta, WSJ)

Fed secrecy claims bogus redacted AIG details already public (Adams, Naked Capitalism) More detail in a second post here.

FDIC and Bank of England to cooperate on resolution of troubled cross-border financials (FDIC) Next time a big financial blows itself up, Sheila Bair and Mervyn King want to make sure they’re prepared to deal with it in tandem.

NYC will move (a little bit) of its money (Traub, HuffPo) Bloomberg puts a little bit of support behind the Move Your Money campaign.

Chavez accuses U.S. of using weapon to cause Haiti quake (Moran, Digital Journal) “Venezuelan President Hugo Chavez has accused the United States of causing the devastating 7.0 magnitude earthquake in Haiti, which killed possibly 200,000 people. Chavez believes the U.S. was testing a tectonic weapon to produce eco-type devastations.”

National Enquirer eyes Pulitzer (Kurtz, WaPo) …for breaking the John Edwards affair/love child story. Incidentally, he admitted paternity in a press release yesterday. Where was he when the release went out? Haiti, helping earthquake victims. I’m not going to criticize anyone for going to help Haitians, but it’s not hard to see that Edwards isn’t doing this because he’s the charitable type….

Quote of the Day, from Behind the Numbers:

A trend we are noticing is that many companies are reporting their results and comparing them to last year, or the last two years, and claiming that they have returned to margin and revenue growth. However, when compared to two or three years ago (i.e. pre-meltdown), the companies are reporting lower margins and lower growth rates (revenue, stores, etc.). Yet, these companies have now returned to pre-meltdown valuations. In other words, the companies are trading at “historic” valuations, but with lower margins and much lower prospects for future revenue growth than was true when those historic valuations were set.

Smart Bottlenose Dolphins….

COMMENT

Dolphins – so smart. It’s easy to imagine that given a million years or so (if we weren’t around to mess things up for them) they might well advance to the point of, who knows, NOT having a fractional reserve banking system!

There, fixed it for ya!

Posted by fresno dan | Report as abusive

Geithner: Some rescue programs will end, others won’t

Sep 10, 2009 20:01 UTC

Tim Geithner testified before the Congressional Oversight Panel for TARP this afternoon. A few interesting comments with respect to Treasury’s bailout initiatives:

On PPIP (Public Private Investor Program):

The Treasury will continue … its plans to buy small-business loans and to remove toxic assets from bank balance sheets through the Public-Private Investment Program, a Treasury official told reporters earlier today on condition of anonymity. The first PPIP funds are expected to begin operating later this month or in October, the official said.

This is bad news. PPIP was a terrible idea to begin with. It provides cheap, non-recourse government financing to encourage investors to buy toxic assets from the banks. This takes banks off the hook and puts taxpayers on it.

Other, unused programs will be allowed to expire, including a program guaranteeing money-market mutual funds and the Capital Assistance Program, which was established earlier this year to provide extra money to banks that needed it and couldn’t access private markets.

“Unused” doesn’t seem a fair modifier to me. No, there weren’t any money market funds that broke the buck and required a taxpayer bailout, but the industry as a whole has benefited tremendously from the Treasury guarantee they’ve been able to market to investors.

On TARP:

Geithner refused to rule out extending the bailout program when it expires at the end of this year. The law, passed last October, allows the Treasury secretary to keep it running for another nine months if it is “necessary to assist American families and stabilize financial markets.”

The Obama administration “is going to think that through very carefully,” Geithner said, adding that some of the efforts, such as mortgage relief, are likely to continue past Dec. 31.

No doubt Geithner likes having a $700 billion cookie jar to dip into if markets hiccup.

COMMENT

Toxic assets seems like a very vague term to me. Residential mortgage loans (REOs)? Commercial real estate loans? Credit cards, auto loans, etc? That’s a broad phrase.

I’m a forensic loan auditor and, according to the Truth in Lending Act & UCC, these laws apply to all of the assigns. Translation: A portion of these loans could be able to be rescinded, setoff or would be able to recoup monies paid into a bad loan. The upshot? Someone could buy these loans and have them blow up in their faces.

That will only happen a few times before people get wise and figure out that these assets are not only toxic; they’re radioactive!

Talking warrants on TV

Jul 24, 2009 04:25 UTC

Recorded a segment for Reuters Insider today, the TV product in Beta here at 3 Times Square.

One big correction: I say the DIF never charged banks for the insurance it provided.  What I meant to say was that they hadn’t charged banks anything over the last ten years.  What I should have said is that, in effect, they haven’t really charged anything because the DIF is negligible relative to the deposits it insures.

Enjoy!

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