Bailout

Looming Meltdown of Mortgage-Backed Securities Foreseen by Bear Stearns Own Analysts

Posted on June 22, 2009
Long before their respective employers ceased to exist as independent companies, former Merrill Lynch Top North American Economist David A. Rosenberg and former Bear Stearns Chief Equities Investment Strategist Francois Trahan published research reports with explicit warnings about asset and credit bubbles in the U...

Fed Issues First Monthly Transparency Report

Posted on June 12, 2009
In an effort to increase transparency about the $1 Trillion (of $2.1 Trillion) it has added to it’s balance sheet since last September, the Fed committed to issuing a balance sheet performance report on the second Wednesday of each month. In the first reports, the Fed indicated it netted $2...

RecessionWire: Severance Advice

Posted on May 15, 2009
RECESSIONWIRE May 14, 2009: ?So? how big is your package?? It?s a question that used to be taboo, something only discussed between intimates. But these days, virtually no one is too shy to ask about the dimensions of someone else?s severance deal. In fact many people can?t help but compare what they received against the packages [...

Remembering Bear Stearns 13 Months Later: Has CEO James Cayne Taken Blame?

Posted on April 30, 2009
In August 2007, Bear Stearns CEO Jimmy Cayne wrote to Bear investors.  Cayne’s mission that August was critically important, and he knew it.  In the wake of the shocking failure of two huge Bear Stearns hedge funds with heavy ties to the subprime mortgage market, the CEO needed to convey his confidence in the future [...

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Is Treasury Acting like a Chicken with it?s Head Cut-off?

Posted on April 14, 2009
Are federal bailout programs like a roulette wheel? From the makers of South Park.

Insider Loans Dwarf Bank Bonuses

Posted on March 22, 2009
Add to the list of questionable obligations assumed by the nation’s banks in the routine course of business, $41 Billion worth of loans to directors, top executives, employees, and other insiders.  These insider loans, generally made to high net worth individuals, most of whom have suffered significant declines in their net worth due to investment portfolio losses, could [...

Are AIG Bonuses a Smokescreen?

Posted on March 18, 2009
Is the furor over AIG bonuses justified or political grandstanding?  Does a 0.01% investment in salaries for the staff overseeing the wind-down of a $1.6 Trillion portfolio justify harikari as Senator Grassley suggested? Does it take 73 millionaires to wind-down a toxic investment portfolio? What about the bonuses paid to other Wall Street firms?  Last week [...

Nationalized Citibank Television Commercial Parody

Posted on March 09, 2009
More on this topic (What's this?) An Amazingly Disingenuous Piece by Alan Blinder on Bank Nationalization (naked capitalism, 3/7/09) Deep Thoughts From Vikram Pandit (Zero Hedge, 3/6/09) US to Convert Preferred Shares in Citi to Common at 32% Premium to Market Price (naked capitalism, 2/27/09) Read more on Nationalization, Citigroup at Wikinvest

February TARP Recipients

Posted on March 08, 2009
The US Treasury Department provided $1,415,882,000 ($1.4 Billion) to banking institutions under the Troubled Asset Relief Program’s (TARP) Capital Infusion Program during the month of February in the form of preferred stock with warrants.  Banks receiving TARP funds in February, 2009 are: Bank Amount ($) Date 1st Enterprise Bank Los Angeles CA $4,400,000 02/13/2009 Alaska Pacific Bancshares, Inc...

Geithner Lays out AIG?s Feed Plan to Bernanke

Posted on March 05, 2009
On the same day the federal government announced an additional $30 Billion of aid for insurance giant AIG, the Fed Chariman and Treasury Secretary had this to say about the company in seperate Congressional hearings: “AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a [...

Obama Close to Buying Citibank to Preserve Great American Pastime

Posted on February 24, 2009
Rumors continue to circulate that Citibank Chairman Dick Parsons is huddling with Treasury officials at the White House complex to negotiate a significant increase in the government’s ownership of Citibank equity in otder to forestall the takeover that many feel will ultimately be necessary...

Bank of United States: Calls for Nationalization of US Banks Increase

Posted on February 21, 2009
What does “bank nationalization” mean?  What would it mean for the US government to nationalize banks? Though anathema to classic capitalist principals and our national psyche, it may become impossible to continue hiding the negative balance sheets of US banks much longer, requiring a more assertive intervention by the government than has been contemplated to date...

All Money can be Created Equally: Lincoln?s Birthday Address

Posted on February 16, 2009
Flags of the Confederacy displayed at movie house playing Gone with the Wind! on Lincoln’s birthday in 1940 Winchester, Virginia.  (Depression Era photographs made current by humorist and financial professional Cathleen Rittereiser.)

Can 1,073 Pages Save One?

Posted on February 13, 2009
The final draft of the $789 Billion economic stimulus bill passed a one-sided 246 to 183 House vote at 1,073 unread pages. Without a single House Republican and only three Republican Senators, the President and Democrat party are pinning their hopes for an economic recovery on 496 pages of appropriations and 577 pages of [...

Hard Lesson for Wall Street on Executive Compensation

Posted on February 09, 2009
As the stimulus debate has picked up speed, Tom Friedman has aptly summed up the challenge we face in responding to the multifront economic crisis by saying, “We’re going to need a bigger boat,” paraphrasing a favorite line of mine from the movie jaws...

Bernie Madoff Thinks his Adding Machine Lies Too

Posted on February 07, 2009
Enjoy this new Bailout Report feature.  Depression Era WPA photographs made current by humorist and financial professional Cathleen Rittereiser.

American Recovery and Reinvestment Plan

Posted on January 25, 2009
President Obama shared even more details of the American Recovery and Reinvestment Plan he is urging Congress to pass into law. The Plan aims to fill the employment gap created by the anticipated loss in demand for $1 Trillion dollars of the economy’s productive potential...

FDR?s Inaugural Advice for President Obama

Posted on January 20, 2009
Remember the good old days when we had nothing to fear by fear itself? Captions by Cathleen Rittereiser.

Roads and Bridges aren?t the most Pressing Need for Stimulus

Posted on January 16, 2009

American Recovery and Reinvestment Plan

Posted on January 04, 2009
President-in-waiting Barack Obama has revised upward the goals of the stimulus plan he has committed to have Congress send for his signature as the first act of his presidency.  While as recently as a few weeks ago he was promsing two million new jobs, in his last Saturday radio address (sic YouTube broadcast) from his Chicago transition [...

IOUSA: Indebted Film Illustrates Bailout?s Effect on National Debt

Posted on December 15, 2008
MTV takes on the national debt.

Mayors and Highway Geeks Get on Line

Posted on December 08, 2008
Once the automobile manufacturers can continue making cars, the country will need improved roads to drive them on. In the past two days, two municipal advocacy groups started making their case for federal bail out dollars. American Association of State Highway and Transportation Officials (AASHTO) The directors of state transportation departments promoted over 5,000 shovel-ready highway projects [...

States Hurting

Posted on December 05, 2008
US States currently expect budget gaps of $32 Billion for the remainder of this fiscal year and an additional $65 Billion for the following year. These estimates, of course, are likely to get worse if trends in other economi statistics are any indicator...

Daily Bailout Report

Posted on December 02, 2008
Bailout Monitor Sees Lack of a Coherent Plan The head of a new Congressional panel set up to monitor the federal bailout says the government still does not seem to have a coherent strategy for easing the crisis. History of U.S. Gov’t Bailouts Fourteen government bailouts and the results...

US Banks Need a Bigger Lifeboat

Posted on November 26, 2008
Ben Bernacke’s must have been to Blockbuster this weekend to catch up on his classic American cinema. First AIG received $85 Billion in September. That later swelled to more than $150 billion earlier this month. Then Citigroup received $25 Billion in cash from the TARP last month...

Could the Economic Crisis Be Sowing Seeds of Discontent?

Posted on November 25, 2008
First, the National Intelligence Council releases a report describing how US influence is declining. Now the Russian propagandists are piling on the US’s own critical self-reflection by predicting the collapse and breakup of the United States into as many as six parts...

Market Bottom or are we being Charlie Browned?

Posted on November 24, 2008
Is the Bear Market like Lucy? Inspired by a the Economist.

Is Another $300+ Billion Enough to Save Citi?

Posted on November 24, 2008
Staying true to the commitment Secretary Paulson and Fed Chairman Bernanke have reiterated over the last two months, they committed over $300 Billion during private talks over the weekend to save Citigroup, more money than was publicly and gut-wrenchingly extracted from Congress during the several week battle over the bailout bill in September...

Our Favorite Gold Bear Speaks: Peter Schiff Continues his Warning Ways

Posted on November 20, 2008
Peter Schiff, among the few economic commentators who publicly called the collapse of the housing bubble well before the subprime crisis emerged, is making the rounds to taut gold. On Bloomberg Television Part two of Bloomberg Interview. On Thestreet...

How Does this Bear Market Compare to Others?

Posted on November 20, 2008
Stock market prices have declined more rapidly in this bear market than the previous two major bear markets.  In fact, if you believe this bear should be  no more severe than all but the Great Depression’s in terms of extent of equity price declines, you may  come to the conclusion stocks have achieved a market [...

Live Blogging President-Elect Obama?s Economic Agenda (Press Conference and Sxity Minutes)

Posted on November 17, 2008
Speaking at first post-election press conference on November 7th: Stimulus Spending Plan [Need] rescue plan for middle class that invests in immediate efforts to recreate jobs… a fiscal stimulus plan that will jump start economic growth is long overdue… we should get it done...

Did Obama really refer to federal operations as a ?fiscal mess??

Posted on November 17, 2008
The Washington Post reported on campaign letters President-elect Obama sent to federal workers prior to the election in a story by Carol D. Leonnig (”Obama Wrote Federal Staffers About His Goals“, November 17, 2008). The story represents the following are quotes from such letters sent to Housing and Urban Development workers signed by Barack Obama: “Because of [...

Get your Piece of the American Dream: Application for TARP Capital Purchase Program

Posted on November 15, 2008
Now that insurance companies figured out they can purchase the smallest of regulated bank holding companies to qualify for TARP funds, it’s time for everyone to grab an application to participate in TARP’s Capital Purchase Program. (Of course, the original deadline was 5:00 PM yesterday...

Is Kashkari a Chump?

Posted on November 14, 2008
View the entire hearing Peeved that Treasury Secretary Henry Paulson announced a major change in the use of TARP funds in a press conference instead of in front of Congress, Dennis Kucinich and his Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform ripped into Assistant Secretary of the Treasury for Financial [...

House Committee Grills Hedge Fund Billionaires

Posted on November 13, 2008
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Recovery and Repair at the Tipping Point: Liveblogging Paulson Press Conference

Posted on November 12, 2008
Q&A 1. Tarp not for state and local governments. 2. How to subsidize mortgage modifications, through copays? 3. Automakers: supportive of manufacturing, but any solution must lead to long-term viablity. Amend 136. 4. Not timetaable on second Tarp tranche...

Streamlined Modification Program (SMP)

Posted on November 11, 2008
The Federal Home Loan Agency– regulators of Fannie Mae, Freddie Mac, and federal home loan banks– announced a streamlined loan modification program designed to prevent “preventable foreclosures”.  Details of the program which will start December 15th: Goal is to reduce monthly housing payments, including homeowner association fees and taxes, to no more than 38% of gross [...

A Super Subprimse Crisis Around the Corner?

Posted on November 03, 2008
If you think the $700 Million Emergency Economic Stabilization Act’s TARP bill is high, former US Comptroller General, David Walker warns we haven’t seen anything yet.  For years Walker has been talking of the impending bankruptcy of Social Security, Medicaid, and Medicare to anyone that would listen...

A Bear Case Courtesy of Graham & Dodd

Posted on October 29, 2008
The New York Times’ David Leonhard presents the case that the stock market, at current levels, is fairly valued when viewed from the perspective of Graham and Dodd’s classic “security analysis”. Based on a price-to-earnings ratio that uses the last ten years of corporate profits, the S&P index is currently valued at approximately [...

Black Monday: Markets Crash

Posted on October 27, 2008
World Markets down more than 5% each of the lst two trading days. Last week of October. US election one week away. The ground is set for a market drop.

Capital Flows and the List Grows

Posted on October 27, 2008
Capital Flows: The first $125 Billion round of US taxpayer capital will be transferred to the first nine banking holding companies this week. List Grows: And fifteen regional banks have revealed themselves as recipients of $32.18 Billion from the second round of TARP’s Capital Purchase Program, with another $3...

IMF Expands Loan Limits

Posted on October 26, 2008
Stepping in to the bailout action, the International Monetary Fund agreed to lend Iceland $2.1 Billion to help it contend with the collapse of it’s banking system.  This is the first time since 1976 that a western country has received assistance and came in response to the collapse of the krona and the government’s need [...

PNC and Valley National Get on the Dole

Posted on October 25, 2008
PNC Finacial Services Group and Valley National Bancorp became the tenth and eleventh banks to sell preferred equity to the US Treasury, the first to volunteer after the original nine major banks were conscripted into the capital infusion program by Secretary Paulson earlier this month...

Corporate Earnings

Posted on October 24, 2008
.bigtable { font-size: 10pt; } With nearly half of the companies comprising the S&P Index reporting earnings for the third quarter, we have the first concise snapshot of how the real economy has been effected by the events leading to Paulson’s September 18th whistle call: Actual Earnings -20% Blended -11% Ex-Financials 10% Ex-Energy -22% (With 41% of companies reported...

Not Quite Half a George: Washington Mutual CDS Settlement

Posted on October 23, 2008
Buyers of Washington Mutual Credit Default Swaps to receive $0.43 for each dollar of ‘protection’ purchased from sellers (more than the $0.36 indicated in the initial auction). This compares to the $0.08625 paid on the dollar for Lehman Brothers CDS’s of which $5...

Hedge Fund Losses, Layoffs, Closures, and Fee Cuts

Posted on October 23, 2008
Hedge funds, like other market participants, are both victim and, to some, creators, of the current market crisis. In September, hedge fund investors redeemed an estimated $43 billion of approximately $1.5 trillion of assets under management (TrimTabs Investment Research)...

Greenspan: I Found a Flaw

Posted on October 23, 2008
Did Alan Greenspan let the nation’s economy slip through his legs? Or legacy? Speaking to the House Committee on Oversight and Government Reform, former Fed Chairman Alan Greenspan admitted “I made a mistake” and “found a flaw” in the complex of assumptions with which he governed the nation’s monetary system for 18 and a half years...

Money Market Investor Funding Facility

Posted on October 22, 2008
Hoping the third time is a charm, the Fed announced it’s latest assistance program to aid money market funds and add liquidity to short-term funding instruments. JPMorgan Chase will run five special-purpose investment vehicles (”units”) to buy up to $600 billion of certificates of deposit, bank notes and commercial paper with remaining maturities of 90 days [...

Hank ?Butch Cassidy and the Sundance Kid? Paulson Debriefs

Posted on October 22, 2008
After two months without a day off, Treasury Secretary Hank Paulson sat for several press interviews this week.  Notably with the New York Times and Charlie Rose, both of which focused on whether letting Lehman Brothers fail was a mistake and whether the direct investments in banks was a late response to Europe’s first move [...

Treasury?s Actions: Pros and Cons

Posted on October 15, 2008
Tax attorney and former bond trader Hale “Bonddad” Stewart provides a concise explanation of the initiatives Treasury announced this week– the Capital Purchase Program, debt purchases, and load guarantees: Troubled Asset Relief Program (Buying Debt/Loan/Mortgages) Pros It gets the assets off the books...

?Voluntary? Capital Purchase Program: The Small Print

Posted on October 14, 2008
Treasury’s preferred equity investments are referred to as the Capital Purchase Program. The standardized terms on which $250 billion will be invested as senior preferred equity in “qualifying U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged only in financial activities”: Minimum subscription amount available to a participating institution [...

Margin Call Monitor: Buy Signals

Posted on October 14, 2008
Insider buying has historically been one of the best buy signals. Well, the dark side of exuberant executive enthusiasm is forced insider selling when shares bought on margin plummet. That’s when insider selling could become a buy signal as share prices artificially beaten down by one or several large block trades offer an [...

Eurozone Pitches In

Posted on October 13, 2008
Germany: ?100 Billion financial market stabilization fund and authority to guarantee up to ?400 Billion in bank debt. Spain: Up to ?100 Billion of guarantees for new debt issued by commercial banks this year and an unspecified further amount next year...

Treasury "Moving Quickly but Methodically"

Posted on October 13, 2008
Chicago-based Investment Consulting Firm Ennis Knupp and Associates becomes the first private sector company to receive part of the $750 Billion Emergency Stabilization Fund in the form of a $2.5 Million one year advisory contract. Ennis Knupp was hired to assist the US Treasury Department evaluate potential asset managers and other vendors as [...

The Czar Speaks: Kashkari's First Press Conference

Posted on October 13, 2008
Young Bailout Czar Neel Kashkari held his first press conference this morning. He described Treasury strategy to develop the multiple tools necessary to accomplish it’s mission of restoring capital flows to the US economy, reviewed actions taken to date, and announced next steps...

The Heavy Hand of Government: Hank Forces Himself on Wall Street

Posted on October 13, 2008
The Treasury is using 1/3 of it’s new authority to purchase preferred equity in the nation’s largest bank holding companies: Goldman Sachs, Morgan Stanley, JP Morgan Chase, Bank of America, Citigroup (C: 15.75 +11.62%), Wells Fargo, Bank of New York Mellon, and State Street...

Treasury ?Moving Quickly but Methodically?

Posted on October 13, 2008
Chicago-based Investment Consulting Firm Ennis Knupp and Associates becomes the first private sector company to receive part of the $750 Billion Emergency Stabilization Fund in the form of a $2.5 Million one year advisory contract. Ennis Knupp was hired to assist the US Treasury Department evaluate potential asset managers and other vendors as [...

The Czar Speaks: Kashkari?s First Press Conference

Posted on October 13, 2008
Young Bailout Czar Neel Kashkari held his first press conference this morning. He described Treasury strategy to develop the multiple tools necessary to accomplish it’s mission of restoring capital flows to the US economy, reviewed actions taken to date, and announced next steps...

Soros: This is how Tarp ought to work

Posted on October 12, 2008
Writing in the Financial Times, George Soros offers the following on “how to capitalise the banks and save finance”. Use Paulson’s new spending authorities to purchase preferred equity in US banks in a manner that provides tag along rights to existing shareholders...

Will US buy a slice of Morgan Stanely?

Posted on October 10, 2008
Paulson took the microphone at 6:15 PM on Friday. The optimists hoped he was going to announce a coordinated rescue plan among the G7 Finance Ministers, though they had at that point only met for a few hours. Instead, those who like to read between the lines, believe the greater significance of his [...

Naysayer Report: Surveying the Saviors

Posted on October 10, 2008
Anyone who is anyone in finance has their own version of what steps the government should take to rescue the financial markets and the economy. A quick survey of the most vocal among them: Philippe Lacoude (president of consulting firm Algokian) and Veronique de Rugy (Mercatus Center economist) [Take the $700 billion Congress plans to give] [...

Naysayer Report: Weiss Research says it?s Too Little, Too Late

Posted on October 10, 2008
The latest in the Bailout Report’s rolling log of economists not in favor of the Federal Baiilout plan as enacted by Congress. Martin D. Weiss and Michael D. Larson of Weiss Research, an investment research firm focused on “safe investments” and publsher of daily investment e-letter “Money and Markets”: New data and analysis demonstrate that the proposal [...

Naysayer Round-up

Posted on October 09, 2008
Hans Bader, Competitive Enterprise Institute’s Counsel for Special Projects argues Trillion Dollar Bailout Will Lead to Future Bubbles. During bubbles, government regulators share the same herd instinct as people in the private sector, the difference being that they know even less than the private sector does about how markets work.

What the Bailout Costs

Posted on October 06, 2008
With the passage of the “Emergency Economic Stabilization Act of 2008″, the government led bailout is currently on track to cost over $1.8 Trillion, more than $17,000 per US household. table { font-size: 8pt; } BAILOUT MEASURE TAXPAYER COST Financial bailout package approved this week up to or over $700 billion Bear Stearns financing $29 billion Fannie Mae and Freddie Mac nationalization $200 billion AIG loan and [...