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08 Dec 09
Administration to slash TARP cost $200 billion
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However, the American public is still expected to incur a massive loss in the end -- the question is just how much it will be. A separate estimate issued earlier this year by the Congressional Budget Office warned that TARP will ultimately cost taxpayers approximately $159 billion.
05 Dec 09
A Financial Mirage in the Desert
Dubai begins to implode. No one changes their behavior, because they expect bailouts.
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It’s a pretty good bet that a city with an average temperature of 90 degrees and an indoor ski slope is probably living a little too large.
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Willem Buiter, a former Bank of England official who was hired as chief economist of Citigroup on Monday, says that Dubai’s credit crisis is just the natural progression of “the massive build-up of sovereign debt as a result of the financial crisis.” He wrote on his blog on The Financial Times’s Web site that the contraction of credit “makes it all but inevitable that the final chapter of the crisis and its aftermath will involve sovereign default, perhaps dressed up as sovereign debt restructuring or even debt deferral.”
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02 Dec 09
Report Cites Big Shortfall in Reserves at A.I.G.
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An independent analysis of whether the insurance industry has been setting aside enough money to pay its claims estimates that the American International Group has a shortfall of $11.9 billion in its property and casualty business.
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Other researchers have raised doubts about A.I.G.’s total worth since it was bailed out last year, and even the federal government has acknowledged that the company might have difficulty repaying all the money it owed taxpayers, currently about $120 billion.
24 Nov 09
How Little We Know
Russell Roberts argues against giving more power to regulators for the purpose of reforming capitalism. Regulators were part of the problem, and there is no reason to believe they will be wiser in the future.
18 Nov 09
Corruption, Panic and Incompetence Fueled Geithner's Backstairs Intrigue
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Neil Barofsky, special inspector general for
the federal Troubled Asset Relief Program, has now
issued a harshly critical report on Geithner's handling of
the AIG bailout. -
Barofsky's report [pdf]
details how the bailout vehicle "Maiden Lane III" was created,
and why Geithner quickly decided to pay 100 cents on the dollar
to AIG counterparties -- including Goldman Sachs, Deutsche Bank,
and others. (Go to page 23 for the full list.) The deal ended up
costing taxpayers at least $13 billion. - 1 more annotations...
12 Nov 09
Chrysler drops three electric vehicles despite having touted them to get billions in government bailout cash
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Chrysler has disbanded the engineering team that was trying to bring three electric models to market as a rush job, Automotive News reports today. Chrysler cited its devotion to electric vehicles as one of the key reasons why the Obama administration and Congress needed to give it $12.5 billion in bailout money, the News points out.
21 Oct 09
TARP watchdog: Full repayment 'unlikely'
I'm shocked.
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The auto industry, AIG and other struggling recipients of the government's $700 billion Wall Street bailout will make it "extremely unlikely" that taxpayers will receive a full return on their investments, says a new report by the Treasury Department's independent watchdog.
20 Oct 09
Yet another housing bailout on the way
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Administration officials unveiled a plan to aid state and local housing finance agencies, which provide mortgages to first-time and lower-income homebuyers and enable the development or rehabilitation of rental properties. Officials declined to put a pricetag on the program, but said there would be no cost to taxpayers.
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Under the initiative, the Treasury Department, along with Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), will purchase housing bonds issued by the finance agencies. This will give the groups the funding needed to make new loans. Also, the government will provide a temporary credit program to allow the agencies to refinance their existing bonds to more favorable terms.
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15 Oct 09
Mortgage Madness, Again
The government's idea of responding to a bubble: reinflate it.
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Given the collapse in real estate prices, the
weak economy, and the epidemic of foreclosures, banks are acting
with more caution than before. They now commonly require home
buyers to make down payments of 20 percent to qualify for a loan.
But the FHA often requires only 3.5 percent. -
the agency is
insuring about four times as many home loans as it did just three
years ago. The other is that the number of FHA-approved borrowers
who are not repaying their loans is climbing. Since last year,
the default rate has jumped by 76 percent.Another likely consequence looms: you and I eating the losses.
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12 Oct 09
A Policy: Supporting House Prices
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“I don’t think it’s a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That’s a policy.”
Barney Frank, chairman of the House Financial Services Committee on recent FHA lending, quoted Oct 9th, 2009 in the NY Times.
02 Oct 09
GM, Toyota, Ford U.S. Sales Fell as ‘Clunkers’ Ended
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Oct. 1 (Bloomberg) -- General Motors Co., Toyota Motor
Corp. and Ford Motor Co. said sales fell in September as waning
demand after the “cash for clunkers” rebates cut industry
deliveries to the second-slowest rate this year. -
U.S. auto sales plunged 23 percent
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29 Sep 09
$35 Billion Slated for Local Housing
The federal government shows no sign that it has learned from its past mistakes.
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The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials.
The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt.
04 Sep 09
TARP Tall Tales: Phase 1: Spend $700 billion, Phase 2: ??, Phase 3: Profit?
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The TARP version of the joke is more like this:
Q: How do you make $4 billion in the banking industry?
A: Start with $700 billion in taxpayer money. Round up a bunch of banks. Some of these banks should be on the brink of ruin. Others should be reeling from the shock of the market crash, but otherwise pretty much OK. Force all of the banks to accept hundreds of millions of dollars from the government. -
The banks that never wanted the money in the first place will ask to pay back the loans ASAP. Lollygag around, musing aloud about possible terms and refusing to accept immediate payment.
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03 Sep 09
TARP Profit: The Lies Get Bigger and Bigger
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If you believe The New York Times, the eight strongest banks covered in the Troubled Asset Relief Program (that's the $700 billion bailout approved last October) have paid back taxpayer money with interest.
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In Matt Taibbi's description, this figure is "sort of like calculating the returns on a mutual fund by only counting the stocks in the fund that have gone up."
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