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  • 9:43 PM » Industry Remade in Wave of Mergers
    Published Mon, Sep 29 2008 9:43 PM by WSJ
    The U.S. banking system is going through a decade's worth of consolidation in a matter of weeks, with the government often acting as matchmaker.
  • 9:42 PM » Dow sets record point drop as House rejects bailout
    Published Mon, Sep 29 2008 9:42 PM by Reuters
    NEW YORK (Reuters) - The Dow industrials plunged on Monday in their biggest decline ever after U.S. lawmakers unexpectedly rejected a $700 billion financial bailout, spooking investors who fear for the future of global markets and the U.S. economy.
  • 9:41 PM » The Bailout’s Collapse: A Bank Lobbyist’s View
    Published Mon, Sep 29 2008 9:41 PM by dealbook.blogs.nytimes.com
    From Leslie Wayne, a DealBook colleague: Edward L. Yingling, chief executive of the American Bankers Association, has been in the thick of the action on the $700 billion bailout bill. So what went wrong? “It got into partisan politics real fast,” said Mr. Yingling, a skilled Washington hand who has lobbied on financial services matters in [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 9:40 PM » Citi-Wachovia: a Banking Behemoth Is Born
    Published Mon, Sep 29 2008 9:40 PM by dealbook.blogs.nytimes.com
    Consolidation of the banking industry continues. Citigroup’s agreement Monday to buy Charlotte, N.C.-based Wachovia gives it Wachovia’s retail and investment banking operations for a price of $2.1 billion, which equates to just $1 a Wachovia share. As with JPMorgan Chase’s acquisition of Washington Mutual’s operations last week, the Wachovia deal turns Citigroup into a truly nationwide retail [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 9:39 PM » Savings and Loan Crisis May Be Guide for Bank Bailout
    Published Mon, Sep 29 2008 9:39 PM by dealbook.blogs.nytimes.com
    Getting Congress to agree on a $700 billion financial bailout package might have seemed difficult, but the really hard work is only about to start, The New York Times’s Barry Meier writes. The federal government will now have to oversee and manage a bailout of enormous magnitude involving complex mortgage-backed securities so byzantine in their [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 9:38 PM » Fast Money: Without Bailout, Is Recession Inevitable?
    Published Mon, Sep 29 2008 9:38 PM by CNBC
  • 9:37 PM » Hedge funds face loss of investors
    Published Mon, Sep 29 2008 9:37 PM by www.ft.com
    Hedge funds are braced for massive withdrawals by wealthy clients as the sector's worst year prompts a flight to the safety of cash, according to investors and managers
  • 9:36 PM » Paulson to Try Again
    Published Mon, Sep 29 2008 9:36 PM by Calculated Risk Blog
    From Bloomberg: Paulson to Work Quickly With Congress to Revive Plan (hat tip Ministry of Truth)U.S. Treasury Secretary Henry Paulson said he will work with Congress to salvage a $700 billion rescue plan ... ``We need to work as quickly as possible; we need to get something done,'' Paulson told reporters at the White House after meeting with President George W. Bush. ``We believe that our plan,
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:35 PM » Why the bailout bombed
    Published Mon, Sep 29 2008 9:35 PM by CNN
    Barely containing his temper, Virginia's Eric Cantor, deputy whip for the House Republicans, stepped to the microphone this afternoon to blame the bailout defeat on House Speaker Nancy Pelosi's "failure to listen" and her charged partisan rhetoric in condemning President George Bush's "budgetary recklessness" and "anything-goes mentality."
  • 9:34 PM » Run ends on money market funds
    Published Mon, Sep 29 2008 9:34 PM by CNN
    Investors have stopped fleeing money-market funds, a week after the federal government said it would insure fund shares don't lose their value.
  • 9:33 PM » Credit Stress: Repos Behaving Badly
    Published Mon, Sep 29 2008 9:33 PM by feeds.feedburner.com
    This report from : Rates in the $7 trillion-a-day market for borrowing and lending securities show that the logjam in credit markets is approaching the level seen after the March collapse of Bears Stearns Cos. Securities that can be borrowed at interest rates close to the Federal Reserve's target rate for overnight loans between banks are called general collateral. Notes and bonds that are in the highest demand in the repurchase, or repo, agreement market are called ``special'' by traders because rates on loans secured by these securities are lower than the general collateral rate. The CHART OF THE DAY shows the spread of the general collateral repo rate below the Fed's target rate of 2 percent. The gap, which averaged 0.06 percentage point in the 10 years prior to August 2007, when subprime mortgage losses spread, is now 1.25 percentage points. A wider spread indicates a greater scarcity of Treasuries. The spread reached 2.05 percentage points on March 19 after the central bank engineered the takeover of Bear Stearns by JPMorgan Chase & Co. ``Clearly we are in a high-risk premium mode, just as we were in March,'' said Piyush Goyal, an interest-rate derivatives strategist at Barclays Capital Inc. in New York. ``Lack of investor confidence, exacerbated by quarter-end concerns, has tilted the repo markets in favor of the collateral owners.'' Aha, the , the next isn't for a week plus. Unless the Fed staggers the dates of the increase in the facility, we won't see relief from it for a bit. I see no press release on the Fed's website, despite the report on Bloomberg. Weird.
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:32 PM » Fed Adds $300 Billion to Term Auction Facility
    Published Mon, Sep 29 2008 9:32 PM by feeds.feedburner.com
    This is on top of the $330 billion increase in dollar swap lines we mentioned this morning. From : The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression. The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.... ``Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, ``the Fed's balance sheet is about to explode.''
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:31 PM » All the Kings Horses and All the Kings Men . . .
    Published Mon, Sep 29 2008 9:31 PM by The Big Picture
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:31 PM » Ron Paul on the Bailout
    Published Mon, Sep 29 2008 9:31 PM by The Big Picture
    Ron Paul schools the rest of the House on the Bailout bill September 29, 2008 C-SPAN via
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:31 PM » Republican news conference: It was Pelosi's partisan speech that lost the vote
    Published Mon, Sep 29 2008 9:31 PM by wallstfolly.typepad.com
    We heard Nancy Pelosi's speech just prior to the vote and couldn't believe how she was sticking it to the Republicans. It's no wonder the vote failed. And that's what Republican Minority Leader John Boehner and Eric Cantor are both...
    Click Here to Read the Full Article

    Source: wallstfolly.typepad.com
  • 3:55 PM » The U.S. Banking System is Effectively Insolvent
    Published Mon, Sep 29 2008 3:55 PM by Seeking Alpha
    submits: I have said before that a systemic response is necessary to deal with the present banking crisis in the United States. This crisis has nothing to do with subprime assets and little to do with things like predatory lending. Those are issues that populists will use to prosecute the scapegoats we are likely to see down the line. The crisis has everything to do with low interest rates, zero regulation and a credit bubble of monumental proportions. The banking system of the United States is effectively insolvent. Buying up $700 billion in assets is not going to solve this basic fact. A systemic response is needed. If we do not address these issues, we may see significant dead-weight loss as many institutions fail.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 3:54 PM » National City's line in the sand
    Published Mon, Sep 29 2008 3:54 PM by CNN
    National City insists it isn't about to follow in the footsteps of Wachovia and Washington Mutual. But the events of the past week suggest the bank's depositors are the ones who will make that decision.
  • 3:54 PM » Bailout rejection hurts McCain, House Democrats, analysts say
    Published Mon, Sep 29 2008 3:54 PM by Market Watch
    The House’s rejection of a $700 billion bailout plan isn’t good news for either Republican presidential candidate John McCain or the chamber’s Democratic leadership, analysts say.
  • 3:54 PM » Sheila Bair "commercial banking system in the US remains well capitalized"
    Published Mon, Sep 29 2008 3:54 PM by feeds.feedburner.com
    Today the FDIC announced . Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC. "For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chairman Sheila C. Bair. "There will be no interruption in services and bank customers should expect business as usual." Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own AG Edwards and Evergreen. The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk. In consultation with the President, the Secretary of the Treasury on the recommendation of the Federal Reserve and FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability. "On the whole, the commercial banking system in the United States remains well capitalized. This morning's decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury," Bair said. "This action was necessary...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 2:48 PM » Mark to Market Accounting: Kill It Before It Eats Us Alive
    Published Mon, Sep 29 2008 2:48 PM by Seeking Alpha
    submits: We need to kill mark to market accounting before it eats us alive. These accounting rules are like The Blob, an alien life form that consumes everything in its path as it grows and grows. Both the Blob and mark to market accounting crawl, creep and eat everything dead or alive in their path. We need to save ourselves by putting mark to market accounting into deep freeze while there is something left to save. Before I proceed (and get flamed by angry commenters), I want to set the record straight. I believe financial statements should present a conservative, consistent and realistic report of results of operations, financial condition, cash flow and contingent liabilities and assets. Bad assets and poor management decisions should not be hidden behind accounting manipulations. Loan loss and other reserves should be conservatively determined and uncollectable assets should be promptly written off. Accounting rules shouldn’t drive business decisions, they should reflect them.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 2:48 PM » The Lowdown on Citi / Wachovia
    Published Mon, Sep 29 2008 2:48 PM by Seeking Alpha
    As a Wachovia (WB) investor, I was shocked by this morning's news - it was just too much, too fast. Anyway, based on the news this morning, here is the lowdown on the deal. Citi (C) takes over Wachovia's banking/mortgage business: Citi pays Wachovia $2.1 billion in stock in exchange for Wachovia’s banking and mortgage assets (over $700 billion in deposits+assets). Citi also assumes about $53 billion in debt. Citi needs to cover losses up to $42 billion on mortgage related losses. Anything beyond that is guaranteed by the Federal government. In exchange for that guarantee, the Feds get $12 billion in preferred Citi stock, which pays 6% interest - possibly a sweet deal for the Feds. Wachovia's over $300 billion mortgage portfolio had about $120 billion in option-ARM mortgages and expected losses on about 14% of those loans, but really, is the deal justified?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 1:27 PM » Are Banks Too Big to Save?
    Published Mon, Sep 29 2008 1:27 PM by feeds.feedburner.com
    An excellent comment in the Financial Times by Wolfgang Munchau discusses how the gold standard for handling banking crises, the Swedish model, would take even more discipline to implement in the US and how we are dong the reverse of what is needed.It is a levelheaded analysis which stands in stunning contrast with a from Larry Summers in the same section of the FT today. But in the course of his discussion, Munchau makes the observation that none have dared face up to: the financial system is too big for governments to rescue. We've given the weaker form of that argument: the US, or even the US plus all the world's central banks, cannot keep a massive, multi-market asset bubble from deflating. But not only can the current financial system not be saved, it shouldn't be saved. The debt binge means it is at an unsupportable, bloated scale. It needs to be trimmed down to a more viable size, and only that level should get government support. From : Last week’s dramatic events hold two transatlantic lessons in opposite directions, one from Europe to the US and one the other way. The first comes from Sweden, which suffered its own financial crisis during the early 1990s. The Swedish lesson is that bank bail-outs should be handled conservatively and should come in the form of direct capital injections. As in the US, the Swedish financial crisis was also preceded by a property bubble, which was pricked by a rise in real interest rates. Severe stress in the financial system and the economy were to follow. In each of the three years 1991, 1992 and 1993 Swedish gross domestic product fell in real terms, at an accumulated rate of about 5 per cent. In response, the Swedish government set up an agency to recapitalise the financial sector. Bank shareholders were not compensated. But the Swedish government did not bail out all banks, only a subset. They used a microeconomic model to determine which of the banks had a chance to survive, and which did not. Those that did not...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 1:26 PM » Roubini: It didn't have to be this way
    Published Mon, Sep 29 2008 1:26 PM by ml-implode.com
    ``the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money... ....via public injections of preferred shares into these firms; via required matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; via suspension of dividends payments; via a conversion of some of the unsecured debt into equity (a debt for equity swap). All these actions would have implied a much lower fiscal costs for the government as they would have forced the shareholders and creditors of the banks to contribute to the recapitalization of the banks.....''
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 1:25 PM » Is National City Next to Go?
    Published Mon, Sep 29 2008 1:25 PM by www.thetruthaboutmortgage.com
    Shares of Cleveland, Ohio-based bank and mortgage lender National City plummeted in early trading Monday as investors pondered the next great collapse. With the company now trading at all-time lows, interim National City CFO Thomas Richlovsky was prompted to speak up about the bank’s current situation. He told Cleveland.com that the bank was a different beast than [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 1:25 PM » Key Flaws in the Bailout Legislation
    Published Mon, Sep 29 2008 1:25 PM by Seeking Alpha
    submits: On compensation, which is central to reforming the banks, and equity participation and essential for insulating the taxpayers from loss, the legislation is not what is being advertised by the Administration and the Speaker. The bailout hardly restricts executive compensation. Those provisions are vague, except for golden parachutes, and really only apply to banks the government would take over.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 1:25 PM » Mr. Mortgage: CA Association of Realtors Needs a Math Class…Perhaps Ethics as Well
    Published Mon, Sep 29 2008 1:25 PM by ml-implode.com
    ``Yes, there was an increase year over year from August 2007 to 2008, which could be viewed as encouraging. However, the number of ‘organic’ sales in August 2008 were only 21,172, as foreclosure-related sales made up 46.9% of the total sales. In August 2007, foreclosure-related sales were negligible. Therefore, in my book real home sales fell sharply from August 2007 to August 2008, less inventory was absorbed, prices tubmled, which is the most destructive and the foreclosure market remains the real estate market at least for now. Nice try guys.''
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 1:09 PM » Fed Increases Dollar Swap Facilities by $330 Billion, More than Double
    Published Mon, Sep 29 2008 1:09 PM by feeds.feedburner.com
    The numbers attached to various emergency interventions just keep getting bigger and bigger. From : The Federal Reserve increased the size of previously arranged currency swaps with foreign central banks to $620 billion from $290 billion to make more dollars available to banks worldwide. Banks and brokers have slowed lending as they struggle to restore their capital after $554 billion in credit losses and writedowns since the mortgage crisis began a year ago. The bankruptcy of Lehman Brothers Holdings Inc. also sparked fears among banks they wouldn't be repaid by counterparties, driving up the cost of short-term loans between banks. ``These steps are being undertaken to mitigate pressures evident in the term funding markets both in the United States and abroad,'' the Federal Reserve said in a statement released on the Board of Governors website. ``By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk,'' the central bank said.
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 1:09 PM » Treasury Money Market Guarantee Finally Launched
    Published Mon, Sep 29 2008 1:09 PM by feeds.feedburner.com
    We had grumbled last week that the Treasury had left its money market guarnatee program in the never-never land of "we'll get back to you with details. The program is now in effect on a short-term basis. One hang up with any program of this sort is that the powers that be do not want the money market backstop to be superior to that on insured deposits; that risks a run on banks. It also isn't clear what the level of uptake by money market funds will be, since the program charges a premium to participating fund and the money market fund business is notoriously low margin. If funds feel they have to participate, the casualty is likely to be fund yields. However, on the surface, the charge of one basis point per share for ninety days of coverage does not appear onerous. From : The U.S. Treasury Department said on Monday its temporary guarantee program for money market mutual funds for assets held as of Sept. 19 was now in effect for at least three months. The Treasury said each fund regulated by the Securities and Exchange Commission under rule 2a-7 that maintains a stable share price of $1 can now decide whether to participate in the program. Money market mutual fund shares acquired after Sept. 19, when the Treasury announced the plan, will not be guaranteed under the program. To receive the government guarantee, participating money market mutual funds that had a net asset value of at least $0.9975 per share on Sept. 19 must pay a fee of 1 basis point per share to the Treasury. Those with a net asset value below $0.995 on Sept. 19 are not eligible for the program, and those between $0.995 and $0.9975 on that date must pay a 1.5 basis-point fee. The Treasury created the program to try to stem a massive run on some $3.4 trillion in money market mutual fund assets after one major fund fell below $1 per share -- a phenomenon known as "breaking the buck". The Treasury program guarantees a participating fund that funds held on Sept. 19 will remain valued...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 8:37 AM » Citigroup aquiring Wachovia banking assets
    Published Mon, Sep 29 2008 8:37 AM by www.charlotteobserver.com
    The Federal Deposit Insurance Corp. this morning said Citigroup Inc. will acquire the banking operations of Wachovia Corp. in a transaction facilitated by the FDIC.
    Click Here to Read the Full Article

    Source: www.charlotteobserver.com
  • 8:29 AM » Final Push To Kill The Bailout Monstrosity
    Published Mon, Sep 29 2008 8:29 AM by feeds.feedburner.com
    House Speaker Nancy Pelosi and Financial Services Committee Chairman Barney Frank are the biggest cheerleaders for a Republican administration sponsored $700 billion giveaway. Both have caved in to administration whims so disgusting that most Republicans will not vote for this bill. Please consider the New York Times article, The House braced for a difficult vote set for Monday on a $700 billion rescue of the financial industry after a weekend of tense negotiations produced a plan that Congressional leaders portrayed as greatly strengthened by new taxpayer safeguards. My Comment: The reality is there are virtually no safeguards. The measure still faced stiff resistance from Republican and Democratic lawmakers who portrayed it as a rush to economic judgment and an undeserved aid package for high-flying financiers who chased big profits through reckless investments. My Comment: This was a rush to judgment and it does give aid to high-flying financiers who chased big profits through reckless investments. It is a complete waste of $700 billion dollars. All sides had to surrender something. The administration had to accept limits on executive pay and tougher oversight; Democrats had to sacrifice a push to allow bankruptcy judges to rewrite mortgages; and Republicans fell short in their effort to require that the federal government insure, rather than buy, the bad debt. My Comment: The closer one looks the more one can see that Nancy Pelosi and Barney Frank gave in to every wish of the Treasury. “This is a major, major change,” Speaker Nancy Pelosi said on Sunday evening as she declared that negotiations were over and that a House vote was planned for Monday, with Senate action to follow. My Comment: Nancy Pelosi is a shill for President Bush. It is virtually impossible to know the ultimate cost of the rescue plan to taxpayers, but Congressional leaders stressed that it would likely be far less than $700 billion. Because the Treasury will buy assets with the potential to resell...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 8:28 AM » The Biggest Money Grab in History
    Published Mon, Sep 29 2008 8:28 AM by Seeking Alpha
    submits: Jaws must be rolling over in his watery grave. Congress is about to work out a "deal" with the Great Whites of Wall Street's Sea of Dreams - and hand our toothy marauders their biggest "rags to riches" gift ever. Just a week ago they were on the ropes, choking on bad mortgage debt, wrapped tight with de-leveraging and sinking share prices. Today: bonanza is on the way. Here's how the deal's shaping up. On Thursday morning some recalcitrant Republican congressmen balked at Treasury Secretary Paulson's plan and embarrassed the president in the process. So that night the Feds put a gun to their head. They seized the largest savings and loan in the U.S. and handed its $220BL in deposits to JP Morgan Chase (JPM) for a penny on the dollar. The congressmen then decided to reconsider. Who's next?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:28 AM » Fed & Treasury Needs to Stop Targetting Asset Prices
    Published Mon, Sep 29 2008 8:28 AM by The Big Picture
    The 110-page has been written, and is going to Congress today. Market reaction has not been favorable. As of 5:53am, Dow Futures are off 200, and Europe is trading 3% lower. All of this points to an issue that I have yet to hear addressed directly: Targeting of asset prices, such as houses and stocks, rather than credit markets and systemic risks. It began under Greenspan (recall the "Put"), but under Fed Chair Bernanke started in . Throughout this crisis, there has been chatter and attempts to stop the freefall in Housing prices -- something that is counter-productive. Unless we want a Japan like decade of recession, we need to allow the various bad assets to seek their own levels via the open market. Over the past few years, all the Fed has accomplished with this asset price targeting has been to prevent any capitulatory washout from taking place. A classic example of this misguided asset price focus is in the Bailout's suspension of mark-to-market pricing: SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING. (a) AUTHORITY.—The Securities and Exchange Commission shall have the authority under the securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, by rule, regulation, or order, the application of Statement Number 157 of the Financial Accounting Standards Board for any issuer (as such term is defined in section 3(a)(8) of such Act) or with respect to any class or category of transaction if the Commission determines that is necessary or appropriate in the public interest and is consistent with the protection of investors.* That seems to be pulled straight from the Bank of Japan's playbook: Take the right downs later rather than sooner, once the market returns to normalcy. That's a deeply flawed philosophy. Former SEC Chair Arthur Levitt lectures the Congress on why mark-to-market is so important. "That's why it's both dismaying and puzzling that...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:28 AM » Nouriel Roubini Really, Really Hates the Bailout Plan
    Published Mon, Sep 29 2008 8:28 AM by feeds.feedburner.com
    Did we say really? Even by the normal standards of Roubini's tendency to hyperventilate state his case forcefully, the good professor rises to levels of choler heretofore unseen. Roubini focuses on many of the issues we have discussed in our earlier posts (most notably this one) but he teases out some of the issues in more detail. And he really hates it, whoops, I think we covered that already. His big bones of contention are, like ours: 1. The plan is inefficient (ie, it doesn't discriminate between who ought to be saved or not, and in fact rewards those who created dud assets) 2. It runs counter to the best models of how to deal with this sort of problem 3. It does not punish current shareholders or management But he uses words we haven't dared to, like "rip-off", "pathetic" and "disgrace". Go Roubini! From : Whenever there is a systemic banking crisis there is a need to recapitalize the banking/financial system to avoid an excessive and destructive credit contraction. But purchasing toxic/illiquid assets of the financial system is not the most effective and efficient way to recapitalize the banking system..... In the Scandinavian banking crises (Sweden, Norway, Finland) that are a model of how a banking crisis should be resolved there was not government purchase of bad assets; most of the recapitalization occurred through various injections of public capital in the banking system. Purchase of toxic assets instead – in most cases in which it was used – made the fiscal cost of the crisis much higher and expensive (as in Japan and Mexico). Thus the claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit – at a huge expense for the US taxpayer - the common and preferred shareholders and even unsecured creditors of the banks. Even the...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 7:45 AM » Economy worsening, small business survey says
    Published Mon, Sep 29 2008 7:45 AM by Reuters
    CHICAGO (Reuters) - Three out of four owners of small businesses say the U.S. economy is getting worse, that it is harder to get loans and that the economic environment had reduced the amount of money they take home, according to a survey released on Monday.
  • 4:54 AM » Asian Markets Retreat Despite Bailout Agreement
    Published Mon, Sep 29 2008 4:54 AM by www.nytimes.com
    Stock markets in Asia fell Monday afternoon on renewed fears of a global credit crunch.
    Click Here to Read the Full Article

    Source: www.nytimes.com
  • 4:53 AM » Your Money: A Bill Encouraging to Distressed Homeowners, but Its Reach Is Unclear
    Published Mon, Sep 29 2008 4:53 AM by www.nytimes.com
    The bailout package should ease tight credit and hold down interest rates. But it does not go as far as some Democrats would have liked in helping distressed homeowners.
    Click Here to Read the Full Article

    Source: www.nytimes.com
  • 4:52 AM » Treasury Would Emerge With Vast New Power
    Published Mon, Sep 29 2008 4:52 AM by www.nytimes.com
    Rarely if ever has one man had such broad authority to spend government money as he sees fit.
    Click Here to Read the Full Article

    Source: www.nytimes.com
  • 4:51 AM » Morgan Stanley, MUFG Near Deal
    Published Mon, Sep 29 2008 4:51 AM by WSJ
    Morgan Stanley and MUFG are moving closer to sealing a deal whereby Japan's biggest bank by market cap will buy a 20% stake in the Wall Street firm.
  • 4:50 AM » Paulson Speaks on the Bailout
    Published Mon, Sep 29 2008 4:50 AM by dealbook.blogs.nytimes.com
    Amid extensive negotiations to pass the record $700 billion financial rescue package, Treasury Secretary Henry M. Paulson Jr. spoke with "60 Minutes" about the importance of providing federal aid to the nation's troubled banks.
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 4:49 AM » Central Banks Pump Cash to Keep Markets Alive
    Published Mon, Sep 29 2008 4:49 AM by CNBC
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