Watchdog: Feds overpaid for bank stocks BY JIM KUHNHENN The Associated Press
WASHINGTON — A government watchdog has concluded that the federal government gave financial institutions a $78 billion subsidy last year by overpaying for stocks and other assets as part of its massive Wall Street rescue program. In a report scheduled for release today, the Congressional Oversight Panel for the bailout funds found that in some cases the government paid dramatically more than the actual value of the stocks at the time of the transactions. Financially ailing insurance giant American International Group, deemed by the Treasury Department to be too big to be allowed to fail, received $40 billion from the Treasury for assets valued at $14.8 billion, the oversight panel found. The findings added to the frustrations of lawmakers already wary of the $700 billion rescue plan, known as the Troubled Asset Relief Program. Congress approved the plan last fall, but members of both parties criticized spending decisions by the Bush administration and former Treasury Secretary Henry Paulson. The misgivings come as new Treasury Secretary Timothy Geithner is preparing to place the Obama administration’s imprint on the program with a sweeping new framework for helping banks, loosening credit and helping reduce foreclosures. Geithner plans to unveil the changes Monday. In a bright spot for the rescue program, the same banks that received capital infusions from Treasury have already paid $271 million in dividends to the federal government and are expected to pay $1.5 billion more in dividends by the end of this month. Wells Fargo, which received a $25 billion infusion, has already announced it would pay Treasury $371 million in dividends this month. The oversight panel examined 10 transactions, including eight made under a capital purchase program designed to put liquidity into the banks in hopes of easing credit. That money went to banks considered “healthy” fi - nancially but in need of capital to make loans. Two other transactions went to AIG and to Citigroup Inc. under programs designed to help companies that were facing serious fi - nancial difficulties. Overall, the panel and the analysts it retained to conduct the valuation study found that the Treasury used taxpayers’ money to pay $62.5 billion more than the value of assets in the 10 transactions it examined. By extrapolating to the more than 300 institutions that received money, it concluded that the government in effect paid $78 billion more than the actual value of the asset at the time. “Treasury chose to...................http://www.dailygazette.net/De.....amp;EntityId=Ar00501
WASHINGTON (AP) - Amid stunning new job losses and yet another bank failure, key senators and the White House reached tentative agreement Friday night on an economic stimulus measure at the heart of President Barack Obama's recovery plan. Two officials said the emerging agreement was for a bill with a $780 billion price tag, but there was no immediate confirmation.
The tentative agreement capped a tense day of back room negotiations in which Senate Majority Leader Harry Reid, joined by White House chief of staff Rahm Emanuel, sought to attract the support of enough Republicans to give the measure the needed 60-vote majority.
Officials strongly suggested that Sen. Edward M. Kennedy's vote would be needed to assure passage. The Massachusetts Democrat, battling a brain tumor, has been in Florida in recent days and has not been in the Capitol since suffering a seizure on Inauguration Day more than two weeks ago. The senator's office did not comment.
Reid met privately in the Capitol with members of his rank-and-file to present the proposed deal.
At $780 billion, the legislation would be smaller than the measure that cleared the House on a party-line vote last week. It also would mean a sharp cut from the bill that has been the subject of Senate debate for a week. That measure stood at $937 billion.
Beyond the numbers, though, any agreement would mark a victory for the new president and would keep Democratic leaders on track to fulfill their promise of delivering him a bill to sign by the end of next week.
Earlier Friday, Obama said further delay would be "inexcusable and irresponsible" given the worst monthly jobs report in a generation—598,000 positions lost in January and the national unemployment rate rising to 7.6 percent. Late in the day federal regulators announced the closure of First Bank Financial Services in Georgia, the seventh failure this year of a federally insured bank.
Tab could reach $3 trillion Senators: Stimulus would help region BY TATIANA ZARNOWSKI Gazette Reporter
Funds in the federal economic stimulus package that passed in the U.S. Senate Tuesday would help families, schools and municipalities in the Capital Region, Sen. Charles Schumer, D-N.Y., said soon after the vote took place. One of Schumer’s highest priorities — $10 billion in federal aid to counties paying Medicaid costs — made the final cut. The stimulus package would give a $42 million shot in the arm to Capital Region counties for Medicaid payments, easing the burden on other county programs. “This was my number one goal in the bill,” he said. “It means that we won’t have to have massive tax increases or massive layoffs at the local level.” The economic stimulus package also brings money upstate for education and infrastructure, said Schumer and Sen. Kirsten Gillibrand, D-N.Y. Differences between the House and Senate bills now need to be hammered out in conference before the bill can go to President Barack Obama’s desk for a signature. That may happen by week’s end. Speaking in a conference call after the economic recovery bill cleared the Senate, Schumer said the funds will bring thousands of new jobs to upstate New York. “Everywhere you go, you hear of layoffs from people who were making high incomes, middle incomes and low incomes. We have to do something, and this package should help dramatically.” Schumer said that compared to the House’s $819 billion bill, the Senate’s version cuts “pork” like furniture for federal office buildings while creating hundreds of thousands of jobs in New York state. Gillibrand also voted for the stimulus package and afterward touted the $13 billion it provides for infrastructure improvements — road, bridge, water and sewer facilities — in the state. The new senator serves on........................http://www.dailygazette.net/De.....amp;EntityId=Ar00102
It appears to me that all they are doing is lightening the inflated tax load we already carry....with yet more of our tax dollars!!!! Just a bandaid folks. The sh*t WILL hit the fan eventually.
We have NOTHING left here in this country. We have no industry. The countries that have the industry will survive and are now considered the richest. So now our government will put the perverbial bandaid on this economic crisis by creating temporary infustructure jobs. What will happen after that?
Sure we are probably the consumers of the world. And 8 year old can consume too. No big whoop! China can probably take over where we left off.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
They are just avoiding the purple elephant in the room......they dont want to say the 'word'......however, trade will always happen....lets just hope that our foundation and civilities will prevail over instincts......
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
It is becoming more and more evident that corporate executives have separated doing from trying. The corporate board's responsibility is to make a business profitable. I have little issue with their sky-high salaries, bonuses and other perks when all the bills are paid and there's money in the till. When they fail at that, for reasons in or out of their control, they fail at their jobs — and surely do not deserve those performance bonuses and perks. Case in point: Northern Trust Corp. received $1.6 billion in government funds, then hosted lavish parties and other events connected to its sponsorship of a professional golf tournament, with dinners, rich gifts and bands such as Chicago, Earth, Wind and Fire and Sheryl Crow. Douglas Holt, a company spokesman, spins the story by saying that “no government funds are allocated to operating expenses, including marketing, advertising, corporate sponsorships." This may be technically true, but that money came from somewhere within the corporation. Consequently, the House financial services panel, led by Barney Frank, D-Mass., wants Northern Trust to return the equivalent of what it “frittered away on these lavish events.” OK, so they end up with $1 billion instead of $1.6 billion, and continue to run a company in a manner that drives it to a less-than-desirable financial status, while the top executives live a life of royalty. Ask yourself this simple question: If you did your job such that it put your employer in financial risk, would you be allowed to throw a lavish party (even if the funds came out of office supplies or some other pocket)?
The situation we are currently in was brought about by people who borrowed money they cannot pay back for houses they could not afford in the first place — and bankers taking money we entrusted to them in the form of savings, and lending it to people who cannot afford to pay it back. The bankers [paid] themselves obscenely high salaries and bonuses, and threw big parties in exotic places in the South Seas, all the time using money we entrusted to them! We seem to have put the guys who should have been in charge of the gambling casinos in Nevada and Atlantic City in charge of the banks! They don’t work, in the sense of creating useful goods and services; they just play games with money the rest of us don’t understand. What I want to know is why should I have to pay taxes to bail out people foolish enough to borrow money to build or buy five-bedroom houses when they could really afford only three-bedroom houses? Sustain bankers in their already obscenely high-paying jobs when they have clearly demonstrated their incompetence and lack of trustworthiness? A long time ago, Cain asked the basic question about our relationships with one another (after he killed his brother, Abel!)” “Am I my brother’s keeper?” Many of us know the answer to that question, and are certainly willing to help. The question is not, do we let our brothers starve? — we certainly do not. The question is, do we sustain them in their extravagance and their foolishness, so we wind up starving ourselves?
TARP repayments may hurt taxpayers BY STEVENSON JACOBS AND DANIEL WAGNER The Associated Press
NEW YORK — The race to repay federal bailout money could end up reducing the amount that taxpayers eventually get back. Some banks that want out of the Troubled Asset Relief Program may be allowed to buy back the government’s investments at belowmarket prices. That could cut into taxpayers’ potential profits by billions of dollars. Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co. have notified federal regulators of their interest in returning their share of the $700 billion bailout. Returning the money would let banks avoid restrictions on executive pay and hiring. Approval for big banks to repay TARP funds could start in early June, a Federal Reserve official said on condition of anonymity because the applications are still being reviewed. But before big banks can repay a penny and quit the bailout, they must agree to a price for the warrants the government received in return for the original loan. Those warrants gave the government the option to buy stock at a set price over 10 years. Since the start, a key selling point for the bailout has been that as the financial crisis eased and banks regained their health, taxpayers would get to go along for the ride and benefit from the stock gains. So far, only one publicly traded bank, Old National in Evansville, Ind., has bought back its warrants after repaying TARP funds in March. Old National paid $1.2 million to the government, just more than 1 percent of its $100 million capital injection. That deal was a bargain for Old National, according to Linus Wilson, a finance professor at the University of Louisiana at Lafayette. His calculations put a market value on the warrants at $1.5 million to $6.9 million. In all, Wilson estimates that the warrants in the roughly 570 banks that have received about $198 billion in bailout money would be worth between $2.4 billion and $10.9 billion. If the government sells for less, “that’s definitely bad news for taxpayers,” Wilson said. “We’d be better-served if the Treasury would hold out for a very good negotiated settlement or market the investments to third-party investors.” .......................>>>>...............>>>>........http://www.dailygazette.net/De.....amp;EntityId=Ar00400
Federal bailout tab estimated at $4.7 trillion BY JIM KUHNHENN The Associated Press
WASHINGTON — The federal government has devoted $4.7 trillion to help the financial sector through its crisis, a level of assistance equal to about one-third of the overall U.S. economy, a watchdog report said Monday. Under the worst of circumstances, the report said, the government’s maximum exposure could total nearly $24 trillion, or $80,000 for every American. The figures are part of a tough new quarterly report to Congress from special inspector general Neil Barofsky, who accuses the Treasury Department of repeatedly failing to adopt recommendations aimed at making one component of the government financial rescue effort more accountable and transparent. The $4.7 trillion commitment to the industry takes into account about 50 initiatives and programs set up since 2007 by the Bush and Obama administrations as well as by the Federal Reserve. Barofsky oversees one of the initiatives — the $700 billion Troubled Asset Relief Program. Much of the government assistance is backed by collateral, and Barofsky’s $23.7 trillion estimate represents the gross, not net, exposure that the government could face. Because of declining participation in short-term loan programs and because some infusions of money have been repaid, the maximum amount actually spent has declined to a current outstanding balance of $3 trillion, Barofsky said. Treasury spokesman Andrew Williams said the actual cash outlay to date of all the programs cited by Barofsky is actually less than $2 trillion and said the maximum exposure estimate “is inflated in a number of ways.” The agencies and the programs assisting the financial sector include a newly created Federal Housing Finance Agency, increased deposit insurance initiated by the Federal Deposit Insurance Corp., and 18 support programs created by the Fed under the special powers it can deploy to address a system-wide financial crisis. Banks have cut back on their use of the Fed’s emergency lending program as well as other programs to ease credit stresses. Given that, the Fed has reduced the amount it will lend to financial institutions under two programs, and it has decided to let a program to support money market mutual funds to expire as currently scheduled at the end of October. Barofsky’s $23.7 trillion estimate represents the maximum exposure that the government would face if all eligible applicants requested the maximum assistance at the same time. It does not account for the fees and other costs that some of these programs charge and for the collateral that many of the programs require that participants provide. For instance, Barofsky assigns $6.8 trillion in potential exposure to the Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae, Freddie Mac and the 12 federal home loan banks. However, losses of that magnitude would require every homeowner with a Fannie or Freddie guaranteed mortgage to default and the value of the homes to drop to zero. And Barofsky concedes that the finance agency and Treasury are not entirely liable for Fannie and Freddie losses. ..........>>>>...........>>>>............http://www.dailygazette.net/De.....amp;EntityId=Ar00301
Bernanke: Bailouts disgusted him In town-hall meeting, Fed chief also admits failure to stop subprime crisis
By JEANNINE AVERSA, Associated Press First published in print: Monday, July 27, 2009
WASHINGTON -- Federal Reserve Chairman Ben Bernanke said Sunday that he had to "hold his nose" over last year's taxpayer-financed bailouts of big financial companies but argued that the action had to be taken to avoid a major meltdown of the U.S. financial system and the broader economy.
Bernanke's comments came during a town-hall style meeting in Kansas City, Mo., where he was peppered with several questions about government decisions last year to rescue so-called "too big to fail companies" like insurance giant American International Group, whose collapse would have wreaked havoc on the global economy.
A small-business owner complained to Bernanke that such actions were "hard to swallow," saying he felt like small businesses -- also struggling to survive the recession and all the financial fallout -- were being shortchanged.
"Nothing made me more frustrated, more angry, than having to intervene" when companies were "taking wild bets," Bernanke said. But not acting would have had grave consequences for the economy, he added.
"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," he said. "I had to hold my nose ... I'm as disgusted as you are.... I absolutely understand your frustration.".........................>>>>.........................>>>>............http://www.timesunion.com/AspStories/story.asp?storyID=824658&category=BUSINESS
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