The markets are on a roll, but it's still a tad early for Treasury Secretary Tim Geithner to be counting his bailout winnings.
Geithner said this past weekend that taxpayers have made a small profit on their investments in banks via the Troubled Asset Relief Program. "We've already earned about $6 billion for the taxpayer on those investments," Geithner said Sunday on ABC's "This Week."
Pollock said it's impossible to assess the profitability of TARP without a robust and systematic accounting of the program's costs, including interest expense and overhead.
Others have reached similar conclusions. Gary Engel, director of financial management and assurance at the Government Accountability Office, was asked at a hearing last month whether he views the stream of dividends into Treasury as a profit for taxpayers. "Not at this point," he said
One of the things they teach in Successful Investing 101 is to cut your losses short and let your winnings run. But when it comes to the Troubled Assets Relief Program, the government is stuck doing the opposite. Its gains are being cut short, because its most profitable investments are being closed out, yet its losses will continue running.
The big gains come from stock-purchase warrants that Congress insisted the Treasury get as part of the $244 billion of TARP loans it made to 662 banks and bank holding companies. Warrants, which give holders the right (but not the obligation) to purchase stock at a fixed price for a fixed period, are designed to offer taxpayers a chance to make some serious money if the stock prices of the bailed-out banks rise.
The more alert blogs have finally figured out how Goldman Sachs, et. al. are creating enormous trading profits, especially at a time when trading volumes in most securities have seriously declined. These Wall Street firms are buying toxic, illiquid garbage which institutional investors (read: your pension fund or insurance company) have marked at low levels (yet still not low enough) and selling these securities into the Fed at the Fed's inflated bid levels. This is one way in which the Fed is injecting liquidity into the big banks - at the taxpayers' and pension investors' expense. It is also a primary reason the Fed refuses to disclose what it its paying for these toxic assets and why the Fed is spending millions in lobbying to prevent an audit.
Here's the mechanics, and it's a trading ruse that was being used when I was trading junk bonds back in the 1990's: Naive pension fund has toxic crap asset marked down to 20 cents. Snake Wall Street firm has bid from
In a few weeks, the Treasury Department's czar of executive pay will have to answer this $100 million question: Should Andrew J. Hall get his bonus?
Mr. Hall, the 58-year-old head of Phibro, a small commodities trading firm in Westport, Conn., is due for a nine-figure payday, his cut of profits from a characteristically aggressive year of bets in the oil market.
There is little doubt that Mr. Hall is owed the money under his contract. The problem is that his contract is with Citigroup, which was saved with roughly $45 billion in taxpayer aid
Americans are streaming back into auto showrooms, and one reason is the “cash for clunkers” subsidy. Democrats are naturally claiming this is a great success, while Republicans are claiming that because the program has run out of clunker cash so quickly, this proves government can’t run the health-care system. How do we elect these people? What the clunker policy really proves is that Americans aren’t stupid and will let some other taxpayer buy them a free lunch if given the chance.
All of Washington professes to be surprised that the $1 billion allocated to the subsidy has been used up so quickly, but giving away money is one thing government knows how to do. The Clunkers who are in Congress are now patting themselves on the back for their great success, and the House quickly voted to pass out another $2 billion in clunker coupons. With a $1.8 trillion budget deficit, who’s going to notice this pocket change?
Clearly, we spoilsports need an attitude adjustment to Washington’s ne
Eleven months into the massive, $182.5 billion taxpayer bailout of ailing insurance giant AIG, the company appears to be foundering in a stormy sea of bungled deals, consultants run amok and a lack of senior management.
Stymied in its attempts to gain information on how taxpayer money is being spent, Congress is expected to send a team of investigators to AIG's New York offices tomorrow to begin a probe into the most costly corporate tragedy in American history.
The company has failed to disclose its spending since September on more than 3,000 consultants who have produced 53.6 million pages of documents pertaining to AIG's accounting alone
No wonder they want to let Grandma and Grandpa Die!
Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout.
Guaranty Bank is hardly a household name. But the Austin, Texas-based thrift's looming failure is shaping up as a big headache for bank supervisors -- not to mention a black eye for Carl Icahn and others in the smart money set.
Guaranty (GFG) could be soon seized by the government in what would be the biggest bank failure in a year that has already had 64 of them. Last week, the bank warned investors to expect a federal takeover after regulators forced a writedown of its risky mortgage investments and a bid to raise new capital failed.
Even when their profits dried up and they turned to taxpayers to stay afloat, the nation's biggest banks kept paying huge bonuses. But much of the money went not to top executives, but to star traders and salesmen, even as the economy battled through the worst recession in a generation.
The dozens of insurance companies that make up the American International Group show signs of considerable weakness even after their corporate parent got the biggest bailout in history, a review of state regulatory filings shows.
Over time, the weaknesses could mean trouble for AIG’s [AIG 13.0198 -0.1102 (-0.84%) ] policyholders, and they raise difficult questions for regulators, who normally step in when an insurer gets into trouble. State commissioners are supposed to keep insurers from writing new policies if there is any doubt that they can cover their claims. But in AIG’s case, regulators are eager for the insurers to keep writing new business, because they see it as the best hope of paying back taxpayers.
One of the many mysteries swirling around high-frequency trading is just how profitable the lightning-fast buying and selling of stocks, options and commodities really is. Most prefer to say simply nothing on the subject, leaving us in a very dark pool on the issue of high-frequency profits.
To be fair, Goldman Sachs (GS.N) recently came out and said "even using the broadest definition, high-frequency shares trading accounted for less than one percent of Goldman Sachs' total revenue in the first half of 2009."
But Goldman is talking only about high-frequency trading of stocks, not options and commodities. In options trading alone, Goldman's algorithmic-driven platform is estimated by a market source to account for 15 percent of the daily trading volume.
Andrew Cuomo has once again turned the bright glare on Wall Street bonuses, giving everyone a fresh chance to jeer and offer their ideas about how compensation will be reformed.
But the obsession with bonuses is a big distraction whichever side you're on.
If there's something to be enraged about, it's not the bonuses, it's the profits in the banking sector.
Because shareholders of companies like JPMorgan (JPM) and Goldman Sachs (GS) are perfectly happy fattening up their big earners.
A senior House Democrat threatened banks if they don't volunteer to save more homeowners from foreclosure, Congress will make them.
Rep. Barney Frank said Congress will revive legislation that would let bankruptcy judges write down a person's monthly mortgage payment if the number of loan modifications remain low.
Frank, chairman of the House Financial Services Committee, also said his committee won't consider legislation to help banks lend unless there is a "significant increase" in mortgage modifications.
Citigroup (C) is considering paying a $100 million bonus -- to one guy.
This is the same Citigroup that received $45 billion in bailout money. The same Citigroup that will soon be 34% owned by the U.S. government. The same Citigroup that has lost 95% of its share value since 2007.
General Electric, the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks. At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government.
The company did not initially qualify for the program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.
Ed Whtitacre admits he knows nothing about cars. And he was not a particularly outstanding CEO at AT & T. But that kind of thing is irrelevant. He has been named as the new CEO of General Motors because he is a reliably compliant government stooge.
There are still a few people who refuse to become victims of the current wave of government kleptomania--namely the governor and treasurer of Indiana, who on behalf of the teachers and police officers pension funds, are challenging the Obama administration's bullying in the Chrysler bankruptcy. The Second Circuit has stayed the sale of Chrysler and will hold a hearing Friday morning
Democrats in Congress have agreed to provide a $100 billion credit line to the International Monetary Fund, tagging it onto the war supplemental intended for operations in Afghanistan, Pakistan, and Iraq.
The measure would also increase the U.S. member contribution to the IMF by $8 billion and authorize the United States to back the IMF’s plan to sell 400 tons (12.97 million ounces) of gold, according to lawmakers’ aides quoted in a Reuters report.
This would fulfil Obama’s pledge to the G20 in April, to contribute toward a $500 billion boost for the IMF, which it says will go toward “helping poorer nations” during the economic downturn.
However, what the The Treasury Department is really proposing is an international version of the Wall Street bailout; a $100 billion bailout for the IMF, which amounts to a bailout for European banks facing big losses in Central and Eastern Europe.
If the bill pasess, we will see $100 billion in U.S. tax dollars simply handed over to foreig
Exposing the “con” in the confidence game, how profits are privatized and losses socialized, how the rule makers bend and break the rules to enrich themselves and their financial backers, a new film skillfully identifies key aspects of the systemic n
Henry Paulson, describing nine U.S. banks as “central to any solution” of the credit crisis, told their leaders to take government aid or be forced to by regulators, according to a memo his staff prepared for a private meeting in October.
Something strange is stirring. Even the young are joining the chorus of concern that this tarnished giant is part of a financial oligarchy that holds the US in its grip,
“I think we’ve been pretty forthcoming,” Ashooh said. “AIG is not a simple organization. We’re answering the question that we think we’re being asked.”
The man in charge of administering the bailouts is Treasury Secretary Timothy Geithner, who served as a staff member of the New York City-based Council on Foreign Relations
When greedy bankers gambled and lost in 1907, other rich bankers and financiers like J.P. Morgan bailed out the system with their own money. So why did the government make today's banking crisis a burden to the average over-taxed citizen?
The Founding Fathers were strongly opposed to the formation of a central banking system - the fact that England tried to place the colonies under the monetary control of the Bank of England is seen as leading directly to The War of Independence.
Most of us think of insider trading as illegal. It allows those with inside knowledge to tilt the playing field. Wikileaks has been taken down but many of their leaked documents to include this one are now in our possession.
“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.” But President Barack Obama wasn’t in a mood to hear them out.
Like a financial tornado sucking money into it, but never throwing any out, it lays waste to the true productive economy. Thus is the disaster that is the current United States Financial crisis.
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