David Kirkpatrick

August 12, 2010

Over 50% of Treasuries held by US investors

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:19 pm

For the first time in three years.

From the link:

For the first time since the start of the financial crisis in August 2007, U.S. investors own more Treasuries than foreign holders.

Mutual funds, households and banks have boosted the domestic share of the $8.18 trillion in tradable U.S. debt to 50.2 percent as of May, according to the most recent Treasury Department data. The last time holdings were as high, Federal Reserve Chairman Ben S. Bernanke cut interest rates for the first time between scheduled policy meetings as losses in subprime mortgages spurred a flight from riskier assets.

March 24, 2010

White House foreclosure plan under watchdog fire

And seems to be for very good reason — the program just didn’t even come close to delivering on alleviating Main Street pain, and to make matters worse for homeowners in need of relief the Treasury Department still claims offering to help with a troubled mortgage counts as a success. Yes, the government is trying to say starting the process is just the same as actually following through and helping someone stay in their home. What a mess.

From the link:

The Special Inspector General for the Troubled Asset Relief Program said the Treasury Department set targets that weren’t “meaningful,” mismanaged the implementation of the program, and now risks a substantial number of “re-defaults,” with many participants ultimately losing their homes anyway.

The administration’s $75 billion loan modification program may help as little as 1.5 to 2 million people, about half the number Obama said it would when he first unveiled the program in February 2009, the inspector general, Neil Barofsky, wrote in a report.

Recently, Treasury Department officials have come under fire for saying the initial goal applied only to offering trial modifications, as opposed to permanent help.

“Continuing to frame HAMP’s success around the number of “offers” extended is simply not sufficient,” Barofsky wrote, referring to the Home Affordable Modification Program.

March 16, 2010

Social Security …

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 4:03 pm

… a long national nightmare begins. Without reform, medical care will eventually bankrupt the nation and severely cripple businesses, both large and small, long before. Social Security is that other entitlement program bugaboo, and in a moment of just terrible timing, the chickens have finally come to roost with the program — this year Social Security did not collect enough payroll taxes to cover benefit payments for the first time in over twenty years.

So what, you say? Maybe not so much.

From the link:

For more than two decades, Social Security collected more money inpayroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg’s municipal offices.

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn’t be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.

Social Security’s shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program’s finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there’s concern that the looming crisis will lead to reduced benefits.

“This is not just a wake-up call, this is it. We’re here,” said Mary Johnson, a policy analyst with The Senior Citizens League, an advocacy group. “We are not going to be able to put it off any more.”

February 24, 2010

The Fed’s borrowing $200 billion …

… to prep for raising the interest rate.

December 10, 2009

TARP stopped an “economic panic” …

… as a starting point for the entire stimulus program according to a Congressional Oversight Panel audit, but the overall report card looks like a middling “cee” at best.

From the link:

The independent panel that oversees the government’s financial bailout program concluded in a year-end review that, despite flaws and lingering problems, the program “can be credited with stopping an economic panic.”

The Congressional Oversight Panel, which issued the report, was created in October 2008 by the same law that established the $700 billion Troubled Asset Relief Program. The panel has often been critical of the Treasury Department’s management of the bailout operation, especially at its start in the Bush administration but also under the Obama administration.

In the latest monthly report released on Wednesday, the panel again criticized the Treasury Department under Secretary Timothy F. Geithner for “failure to articulate clear goals or to provide specific measures of success for the program” as it has morphed over time from rescuing financial institutions to propping up securitization markets, auto manufacturers and home mortgages in danger of default. The panel also described the program’s foreclosure mitigation efforts as inadequate.

Mr. Geithner announced Wednesday that the administration would extend the bailout program until Oct. 3, 2010. In a letter, Mr. Geithner told lawmakers that the extension was needed to assist families and stabilize financial markets.

November 19, 2009

More news from the “no duh” department

Filed under: Business, Politics — Tags: , , , , , , — David Kirkpatrick @ 3:19 pm

Today it’s from Treasury Secretary Tim Geithner:

“This credit crunch is not over,” Geithner at a small business financing forum in Washington hosted by the Treasury. “It may feel dramatically better for large companies, but it is not over for small businesses across the country.”

November 13, 2009

The US government holds the most gold …

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 4:15 pm

… reserves in the world and doesn’t plan on selling bullion anytime soon.

Fun facts about the Fed.

Another fun fact is this image:

Gold had been the standard currency for international trade for centuries. In fact, the Federal Reserve vault in New York has compartments for different countries. When one country would trade with another, a “sitter” would simply move bars from one compartment to another, according to David Girardin, spokesman for the New York Fed.

October 21, 2009

Treasury blasted on TARP transparency

And rightly so. When the government hands out $700 billion with essentially no debate as was the case a  little over a year ago, the public deserves to know where that money went and the government damn sure better be able to account for every cent. Or at least every $100,000.

From the link:

In a scathing report out Wednesday, a government watchdog blasts the Treasury Department for its handling of a $700 billion bailout program and for not adopting all of its earlier recommendations.

Special Inspector General Neil Barofsky, who is in charge of overseeing the Troubled Asset Relief Program (TARP), said Treasury’s failure to provide more details about the use of TARP funds has helped damage “the credibility of the program and of the government itself, and the anger, cynicism, and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP.”

Barofsky has made 41 recommendations to better implement the program, of which Treasury has executed 18 and partially adopted seven.

One proposal calls for Treasury to require all of the hundreds of TARP recipients to report how they use the funds, which the Treasury has applied to only three of the largest recipients —American International Group,Citigroup and Bank of America.

Barofsky also describes at least nine unimplemented proposals, saying their adoption “could help bring greater transparency to TARP and answer some of the criticisms of the program.”

October 5, 2009

The Treasury Department lied …

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 11:33 pm

pushing through the TARP bailout a year ago? I’m shocked (er, not really).

From the first link:

A government watchdog says federal officials weren’t entirely honest with the public about the health of the first 9 financial firms that got federal bailouts, according to a report released Monday.

Bailout special inspector general Neil Barofsky says in an audit that Treasury Department officials painted an overly rosy picture, creating “unrealistic expectations,” when they called the first bailout banks “healthy” institutions that would be able to lend more with government help.

“It is not our intent to suggest that government officials should make public their concerns over the financial health of individual institutions, but rather that government officials should be particularly careful, even in a time of crisis, of describing their actions (and the rationales for such actions) in an accurate manner,” the report stated.

Treasury appeared to disagree with the assessment of the Special Inspector General of the Troubled Asset Relief Program (SigTARP), saying “people may differ” on the phrasing of the original bailout announcements.

May 8, 2009

About those bank stress tests

Here’s more information on the nuts and bolts.

From the link:

The Federal Reserve marshaled hundreds of supervisors to spend 45 days rigorously reviewing the banks’ detailed loan data. They applied exacting estimates of potential losses over two years, along with conservative estimates of potential earnings over the same period, and compared them with existing reserves and capital. The results were then evaluated against strict minimum capital standards, in terms of both overall capital and tangible common equity.

The effect of this capital assessment will be to help replace uncertainty with transparency. It will provide greater clarity about the resources major banks have to absorb future losses. It will also bring more private capital into the financial system, increasing the capacity for future lending; allow investors to differentiate more clearly among banks; and ultimately make it easier for banks to raise enough private capital to repay the money they have already received from the government.

The test results will indicate that some banks need to raise additional capital to provide a stronger foundation of resources over and above their current capital ratios. These banks have a range of options to raise capital over six months, including new common equity offerings and the conversion of other forms of capital into common equity. As part of this process, banks will continue to restructure, selling non-core businesses to raise capital. Indeed, we have already seen banks, spurred on by the stress test, take significant steps in the first quarter to raise capital, sell assets and strengthen their capital positions. Over time, our financial system should emerge stronger and less prone to excess.

Banks will also have the opportunity to request additional capital from the government through Treasury’s Capital Assistance Program. Treasury is providing this backstop so that markets can have confidence that we will maintain sufficient capital in the financial system. For institutions in which the federal government becomes a common shareholder, we will seek to maximize value for taxpayers and enable these companies to attract private capital, thereby reducing government ownership as quickly as possible.

Some banks will be able to begin returning capital to the government, provided they demonstrate that they can finance themselves without F.D.I.C. guarantees. In fact, we expect banks to repay more than the $25 billion initially estimated. This will free up resources to help support community banks, encourage small-business lending and help repair and restart the securities markets.

April 29, 2009

Foreclosure prevention plan gets a little bigger

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 1:57 pm

With all the talk about the auto industry and controversy over TARP and harping about financial bailouts recipient bonuses, et. al., Main Street gets little ink spilled its direction.

Here’s news on an expansion of the Obama administration’s foreclosure prevention plan.

From the link:

Treasury broadens the President’s home-mortgage plan to address second liens. But Congress may need to act to protect banks from lawsuits

The U.S. Treasury Dept. broadened the Obama Administration’s foreclosure-prevention program on Apr. 28 in a bid to resolve a persistent obstacle to cleaning up problem mortgages. But some financial officials say the fledgling program’s success still hinges on controversial legislation pending in Congress, which is also expected to take up another contentious bill that would allow bankruptcy judges to reduce the principal owed on a home.

March 16, 2009

New banking rules

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:32 pm

Regulation is coming fast to the banking world. I’m no fan of business regulation, but the financial sector has no one to blame but itself for any rules imposed from above. Particularly after taking handouts from the taxpayers.

From the link:

U.S. Treasury Secretary Timothy Geithner will soon propose an overhaul of the financial regulatory system that is expected to give the Federal Reserve powers to monitor broad economic risks, a Treasury spokesman confirmed on Monday.

As officials grapple with the worst financial meltdown since the Great Depression, government officials plan to outline a revamp of controls over banks and financial institutions aimed at preventing a repeat of the crisis.

Geithner is due to soon outline proposed changes that are also expected to include tougher capital standards for banks, according to a report in the Wall Street Journal that a Treasury spokesman said is accurate.

The administration’s goal is to unveil its proposals before the meeting of the heads of state of the Group of 20 rich and developing economies in early April, the report said.

The rules are further expected to aim to ensure that banks cannot shop among different regulatory agencies to obtain the most lenient supervision and require more transparency and stricter rules for the way money flows between banks.

February 6, 2009

Geithner to announces latest bailout on Monday

This ought to be interesting. Bush’s sad sack team had their shot, now Obama’s team begins in earnest. I honestly don’t know what the answer is here, or that there is an answer for that matter. I do know I’m not alone in having deep suspicion and reservations about all this corporate socialism.

I wish Geithner and the rest of Obama’s team the best of luck. Anyone who hopes for failure (read: Rush Limbaugh and other nut jobs on the right) is only hoping for the failure of the United States.

From the link:

Treasury Secretary Timothy Geithner and other top officials are putting the finishing touches on a plan to overhaul the U.S. government’s $700 billion financial rescue program.

A Treasury official said Geithner will deliver a speech on Monday outlining the new plan.

But Treasury officials would not comment on a report Thursday that the administration is considering proposing changes to the current accounting standard that require banks to carry assets such as mortgage-backed securities on their books at fair value, a process known as “mark to market.”

Critics of this process contend that it has made the current financial crisis worse by forcing banks to slash the value of assets that are currently depressed because of market conditions. Treasury officials said the administration’s plan was not yet complete and would be revealed in Geithner’s speech in Washington next week.

Geithner met Thursday with Federal Reserve Chairman Ben Bernanke and other officials who serve on the President’s Working Group on Financial Markets. The group was formed in the wake of the 1987 stock market crash with the goal of better coordinating the government’s response to market crises.

“This is a critically important group,” Geithner told reporters before the meeting began. “Together this group has the authorities and instruments and experience and talent that are going to be critical to helping solve the financial problems facing our country.”

February 3, 2009

GM keeps hand out, sheds a tear

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:01 pm

It never stops with these guys.

Unbelievable.

From the link:

General Motors, which is borrowing $13.4 billion from the federal government to remain solvent, is pressing Congress to waive a tax liability of as much as $7 billion related to the overhaul plan that it is completing this month, people with knowledge of the discussions said on Sunday.

The tax bill, which could be enough to force the company into bankruptcy, would be a consequence of the terms that the Treasury Department required as part of the rescue package approved last month by the Bush administration. In accepting the loans, G.M. pledged to persuade its creditors to swap a large chunk of the automaker’s debt for equity in the company.

 

The equity-for-debt exchange is aimed at ensuring G.M.’s viability in the future, but under corporate tax law, the swap would amount to debt forgiveness and count as income for G.M. The resulting tax bill could take G.M.’s cash level below the minimum needed for daily operations.

G.M. is lobbying Congress to reduce or eliminate the tax liability, said people with knowledge of the effort, who spoke on the condition of anonymity because the discussions were private. The Detroit News first revealed the lobbying effort on Friday.

January 7, 2009

The US facing years of $1T deficits

I don’t like the idea, but there’s probably no other way about this mess. I suppose we’ll find out exactly how fiscally liberal Obama really is over the next year or two.

Thank god Bush 43 wasn’t handed this blank check.

From the link:

“At the current course and speed, a trillion-dollar deficit will be here before we even start the next budget,” Obama said Tuesday. “And potentially we’ve got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point.”

On Wednesday, the Congressional Budget Office will release its 2009 budget and economic outlook, which will tell the deficit tale in black and white. A report from the Treasury Department last month found that the deficit in just the first two months of the current fiscal year exceeded $400 billion — almost as high as it had been for all of fiscal year 2008.

But Obama promises that his administration will also embrace budget reform and put a choke collar on the country’s record annual shortfall, if not in the immediate term, then soon after.

On Tuesday, he vowed to “bring a long-overdue sense of responsibility and accountability to Washington.”

For now, many economists, even some noted deficit hawks who warn about the danger of Uncle Sam’s long-term financial shape, say the severity of the economic downturn justifies borrowing more money in order to spend big in the short run and pave the way for long-term growth.

“Such steps — even if deficits exceed $1 trillion this year and next — are necessary to help avert a deep and prolonged recession,” according to a recent report by the Center on Budget and Policy Priorities.

December 10, 2008

Bailout already panned by oversight board

Who could have seen this coming? A crazy, somewhat ad hoc tossing of money toward Wall Street, and looks like the Rust Belt very soon.

Then you have the spectacle of Merrill Lynch CEO John Thain asking for (and quickly backtracking on) a $10 million bonus in a year that saw his company get bought out after recieving $10 billion in government money in October. Talk about out of touch, and exactly why this bailout is ridiculous. Wall Street is still playing by different rules.

I’m no fan of oversight and regulation, but the rules change when government money is involved. Business is one thing, but once you go on the dole the rules change and any business ought to expect and accept a high level of oversight, and maybe even a higher level of regulation (wait, while I take a deep breath after typing that), until that business can repay the government and go back to market on its own two feet, so to speak. 

From the first link:

The report said that Treasury must establish clear measures to gauge the $700 billion Troubled Asset Relief Program. The special panel, which was set up by Congress to oversee the bailout, also said it is “essential” that the Treasury ensure taxpayer funds are being used for their intended purpose.

“American taxpayers need to know that their money is having a tangible effect on improving financial stability, credit availability, and the economy as a whole,” the draft report said. “As a first step, Treasury needs to provide a detailed assessment of whether the funds it has spent so far have had any effect – for better or worse – in these areas.”

September 23, 2008

Bush 43’s GOP has gone pinko

I’ve used the term “corporate socialism” to deride the outrageous $700B bailout proposed by Bush 43. Just one more piece of evidence our country has not been led by a conservative administration over the last seven-plus years.

Looks like George Will agrees with me.

From the link:

The political left always aims to expand the permeation of economic life by politics. Today, the efficient means to that end isgovernment control of capital. So, is not McCain’s party now conducting the most leftist administration in American history? The New Deal never acted so precipitously on such a scale. Treasury Secretary Paulson, asked about conservative complaints that his rescue program amounts to socialism, said, essentially: This is not socialism, this is necessary. That non sequitur might be politically necessary, but remember that government control of capital is government control of capitalism. Does McCain have qualms about this, or only quarrels?

Think about that for a second — George Will is calling Bush 43 more liberal than FDR.

September 21, 2008

Okay, can we all now agree …

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 1:17 am

… that George W. Bush and the Bush 43 regime are not the least bit conservative by any measuring stick other than one wielded by christianist whack jobs? His expansion of government and profligate spending puts FDR to shame.

From the link:

The Bush administration on Saturday formally proposed a vast bailout of financial institutions in the United States, requesting unfettered authority for the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from the private firms.

The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt.

A Republican, let me repeat — a Republican president dumped this steaming load of a proposal in taxpayer’s laps.