Breaking news today -
http://www.ft.com/...
The Obama administration is gearing up for a "big bang" announcement within the next two weeks that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.
All well and good, except this includes a plan to buy toxic assets
from the banks, yet again.
So far with Fed loans and the TARP program all the government has been doing is keeping the problem from getting worse.
The "big bang" approach reflects the belief of Tim Geithner, Treasury secretary, and Lawrence Summers, National Economic Council director, that the Bush administration was wrong to dribble out policy initiatives. Mr Geithner intends to present a "comprehensive" plan that policymakers hope will command market confidence.
Details of the financial overhaul are being finalised and have yet to be approved by President Barack Obama, but it may include both the purchase of toxic assets by a "bad bank" and insurance-style guarantees for problem assets remaining on bank balance sheets.
So lets see, there is 350 Billion of TARP money left, and Timmy G. is gonna fix them all with that?
I agree about the foreclosures and bonuses, but buying toxic assets from the banks is just selling out the future of our children, period.
But I think Timmy and his assistants are living in a dream world.
Here are the REAL numbers of just the top three banks.
They are choking on bad paper, commercial and residential bad loans
stuck in tranches, Credit Swaps and options that are wortless or nearly so.
From the Treasury -
http://www.occ.treas.gov/...
(TABLE 1)
ALL NUMBERS BELOW IN BILLIONS!!!!
Name of bank_______________assets____________derivatives
J P Morgan ________________ 2,251___________ 91,339
Citibank __________________ 2,050___________ 39,979
Bank of America ____________ 1.831___________ 38,186
The top twenty five banks in the US ALONE, hold 175 TRILLION dollars in derivatives, (mostly swaps and options).
All the money already given to these companies in loans and TARP funds is not even a drop in the bucket of the debt they are sitting on.
Of course Timmy G. is advocating buying these lovely assets at a high price, probably 70 cents on the dollar, because Wall street will balk if
they are not.
Much of the money already given to the banks will never be recouped by the US, indeed with the amount and size of the bad paper out there,
giving them MORE money (borrowed money which we all will pay the interest on) is nothing more than setting up future generations of Americans to be even more in debt than we are now.
It's one thing to give away free money, it's quite another to assume
debts that the next two or three generations will have to worry about and pay.
Many people believe that most banks and financial institutions in the US
(And world) are completely devoid of value right now, their model of business is toxic to everyone except them.
I am glad we have a smart adult in the whitehouse and administration,
I truly HOPE that they will look very hard at the choices being made
to overcome this crisis, but I truly fear that wall streets influence is so pervasive and vast in Washington, that the decisions that will be made
will be in their best interest and not in ours, nor our children's.
NO MORE BAILOUTS! NO BAD BANKS!
Stop selling out our children!!!
Other great diaries on this subject -
http://www.dailykos.com/...
http://www.dailykos.com/...