David Kirkpatrick

February 9, 2009

Bush administration overpaid in bailout

No surprise there. Bush 43 was an eight-year corporate Xmas morning.

From the link:

The Bush administration overpaid tens of billions of dollars for stocks and other assets in its massive bailout last year of Wall Street banks and financial institutions, a new study by a government watchdog says.

The Congressional Oversight Panel, in a report released Friday, said last year’s overpayments amounted to a taxpayer-financed $78 billion subsidy of the firms.

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.

Financially ailing insurance giant American International Group, which the Treasury Department deemed 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.

November 20, 2008

The Fed is dreaming …

… of happy bunnies and warm milk.

Or, in other words, who believes this horseshit anymore? Really.

From the link:

Taking care not to declare victory, the chairman of the Federal Reserve and the secretary of the treasury told Congress on Tuesday that the unprecedented rescue efforts over the past eight weeks appear to have prevented the collapse of financial markets and returned them to a semblance of normalcy.

Reviewing the progress of the Wall Street rescue package that Congress passed Oct. 3, Fed Chairman Ben Bernanke said that stability had returned after the surprise decision to inject $250 billion into U.S. banks and thrifts, coupled with the Fed’s decision to bypass banks and lend directly to U.S. corporations in need of capital.

“These actions, together with similar measures in many other countries, appeared to stabilize the situation and to improve investor confidence in financial firms,” Bernanke told the House Financial Services Committee.

Defending his implementation of the rescue effort, Treasury Secretary Henry Paulson said success must be judged by what hadn’t happened instead of what had.

In the old west Paulson and Bernanke would have been rode out of town along with their spilling bag of snake oil by now.

November 19, 2008

No corporate socialism for automakers

Or so it seems. The Big Three flew their private jets to DC with very natty, custom-made hats in hand for a little government scratch to tide ’em over for a while.

Looks like maybe they should have flown coach on a commercial carrier and crawled in with moth-eaten ski caps. Image is everything there guys.

From the link:

A year-end drive to win new aid for the ailing auto industry was near collapse in Congress on Wednesday, pulled down by old resentments toward Detroit’s Big Three and continued fighting between Democrats and the outgoing Bush administration.

Midwestern senators mounted a last push to try to craft a compromise $25 billion loan package to be administered by the Commerce Department and financed in a manner acceptable to the White House. But even on a day of punishing economic news, the leadership vacuum in Washington is such that many prefer to leave any bailout in the hands of the two men who have handled so many already: Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

Also from the link:

“They don’t have a lot of chits here. They have people who are upset at them,” Reid told Politico. “I want to help them. It’s not the companies. I want to help the workers. That’s where I am. The people who work there deserve our attention. But the path has been laid by these bosses who came here yesterday on their corporate jets. … They all flew down here in their corporate jets. It’s just not the right picture.”

Congress wants bailout answers …

… and Paulson is taking the heat. Rightfully so. This whole thing is a disgrace.

I was against it from the get-go, and now that it’s a done deal Paulson and the Treasury Department seem to be no better than a room full of drunk monkeys in handling the process. I wouldn’t let Paulson manage my sock drawer at this point.

From the link:

Members of the House Financial Services Committee grilled Paulson for not doing enough to help distressed homeowners and for failing to force banks that get some of the bailout money to specifically use it to bolster lending to customers, one of the prime reasons behind the rescue package.

“It is essential” that some of the bailout money be used to ease foreclosures, said the panel’s chairman, Rep. Barney Frank, D-Mass., a key player in shaping the package that Congress passed and President George W. Bush signed into law Oct. 3.

Amid fits and starts in the administration’s rollout and direction of the program, “I have to say at this point that public confidence in what we have done so far is lower than anybody would want it to be, to the point where it could be an obstacle to further steps,” Frank lamented.

In a break with the administration, Federal Deposit Insurance Corp. Chairman Sheila Bair, made a fresh pitch for using $24 billion of the bailout pool to help Americans at risk of losing their homes. House Speaker Nancy Pelosi is urging Paulson to support the FDIC plan.

“As foreclosures escalate, we are clearly falling behind the curve,” Bair warned the panel. “Much more aggressive intervention is needed if we are to curb the damage to our neighborhoods and broader economic health.”

October 24, 2008

I don’t like all the corporate handouts …

… going around, and I certainly don’t like the fact automakers are right there on hands-and-knees, but the issue of auto loans to consumers is a real problem (I blogged on that issue here) so this proposal might not be all that bad.

From the second link:

Michigan’s Congressional delegation is urging the Treasury secretary and the Federal Reserve chairman to use their authority as part of the $700 billion bailout package to help more consumers obtain car loans, warning that the tightened credit markets were endangering millions of jobs.

The effort, led by Representatives John D. Dingell, a Democrat, and Fred Upton, a Republican, comes amid plunging vehicle sales as auto lenders struggle to find financing.

 

In addition, two of Detroit’s automakers, General Motors and Chrysler, are considering a merger to combine their cash reserves and cut costs.

”In this current economic environment, it is imperative that the government ensures that liquidity is restored so that the U.S. auto industry is able to function until normalcy is restored to credit markets,” the lawmakers say in a draft of a letter to the Treasury secretary, Henry M. Paulson Jr., and the Fed chairman, Ben S. Bernanke, that was obtained by The New York Times.

Automakers say that a lack of financing has compounded a weakened economy and kept consumers out of showrooms. The industry says that more than 90 percent of new-vehicle purchases are financed.

As of late Wednesday, all but three of Michigan’s 17-member delegation had signed the letter, and the others are expected to join as well, according to a person involved in the effort, who spoke on the condition of anonymity because the letter was not intended to become public until Thursday.

July 11, 2008

Global accounting gets high level support

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 12:08 pm

The merging of US and international accounting standards is coming. Global companies welcome this because this integration eases the need to keep separate books to meet two sets of standards.

The looming reality of one world-one standard recently received support from a couple of heavy hitters

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke both defended the Securities and Exchange Commission’s plans for converging American accounting standards with international bookkeeping rules.

Their comments on Thursday came in response to criticism over the rapid progression of the project that is being pushed aggressively by SEC Chairman Christopher Cox. Michael Capuano, a congressman from Massachusetts and a member of the House Financial Services Committee, questioned the Treasury and Fed chiefs on the wisdom of outsourcing, in a manner of speaking, the rules that affect how companies report their most crucial information — including earnings — at a time when the U.S. is in the midst of a regulatory overhaul. Paulson and Bernanke were testifying at hearing about how to overhaul the regulation system.

March 14, 2008

Bear Stearns reaches for bailout

Filed under: Business, Media — Tags: , , , , , — David Kirkpatrick @ 9:52 am

The media may be reporting mixed signals, but the US economic crisis is going nowhere.

From the linked NYT article:

Bear Stearns, facing a grave liquidity crisis, reached out to JPMorgan on Friday for a short-term financial lifeline and now faces the prospect of the end of its 85-year run as an independent investment bank.

With the support of the Federal Reserve Bank of New York, JPMorgan said in a statement that it had “agreed to provide secured funding to Bear Stearns, as necessary, for an initial period of up to 28 days.”

Update — Here’s a CFO.com article with more on this issue and about government financial regulation in general.

From the CFO.com link:

Treasury Secretary Henry Paulson, now dealing with his very own horror show in the melting credit markets, can probably relate.

Paulson, the former chairman and CEO of Goldman Sachs, has strived to regulate the financial markets with a light touch. Yet the most recent report of the President’s Working Group on Financial Markets, which Paulson chairs, shows financial regulators are being pulled inexorably by the worsening credit crisis to use a heavier regulatory hand, or even to intervene directly in the market.

Indeed, today, just one day after the report was released, the Federal Reserve was forced to back a bailout of Bear Stearns. And earlier in the week, the Fed poured some $200 billion of liquidity into the market. The report of the President’s Working Group itself contains recommendations that translate into increased regulatory oversight of everything from credit rating agencies to banks to institutional investors to mortgage brokers. The report also recommends that regulators intervene with other standard-setting bodies, notably the Financial Accounting Standards Board and the Basel Committee on Banking Supervision.