MetaFilter posts tagged with bankingcrisis

Perpetuating the Problem?

ornate insect — Fri, 06 Mar 2009 10:39:52 -0800

Is the Obama administration, in its handling of the ongoing banking crisis, dithering while Rome burns? Is it perpetuating the problem by encouraging private investors to finance its rescue plan? (quote: Term Asset-Backed Securities Loan Facility, or TALF, has been welcomed by a range of hedge funds and private-equity firms as well as some lenders who issue assets that finance consumer loans.) While hedge funds and others are preparing to make money on the downturn, we still don't have a handle on where all the AIG money is going (and forget that four years ago, AIG was being outed as the new Enron), and despite calls for more transparency in the "bailout" process, the Fed has not been forthcoming in revealing how the money is being spent.

The State of the Economy

ornate insect — Wed, 04 Mar 2009 10:38:20 -0800

So how's the economy doing? Everyone, even google's CEO, seems to acknowledge it's bleak. Of course, panic would not be good, but a glance at the headlines reveals that one in five mortgages are underwater--prompting yet more federal relief--while the FDIC's insurance fund is threatened by further bank insolvency, and the U.S. private sector hemorrhaged nearly 700,000 jobs in February. New revelations about the banking crisis show that as Merrill Lynch foundered, its top 10 earners made $209 million last year, and that some of the companies that caused the mortgage crisis are now benefitting from it. At a time when 87 million Americans can't afford health insurance, and prison spending outpaces all but Medicaid; when we still don't know where exactly $2.2 trillion in bank loans have gone, some analysts are nevertheless cautiously optimistic. One sign of progress is that Obama is taking on the kinds of costly and wasteful U.S. defense contracts that the previous administration let run amok. If he can take on that racket, and make a dent, there may be hope after all.

The Great Bank Fail Out

ornate insect — Wed, 25 Feb 2009 11:47:05 -0800

Remember the stink a few weeks back that caused Wells Fargo to cancel their Las Vegas party? Well, it appears that last week Northern Trust, a bank that received $1.6 billion dollars in federal money, held a series of lavish parties in L.A., complete with performances by Sheryl Crow, Earth-Wind-and-Fire, and others (more here and here). And as to the ongoing bank "bailout" itself, Paul Krugman made some excellent points on his blog yesterday (his piece begins I’m trying to be sympathetic to the various plans, or rumors of plans, for bank aid; but I keep not being able to understand either what the plans are, or why they’re supposed to work. And I don’t think it’s me.) Worth a read. Meanwhile retail sales remain grim. But if you live in L.A., the Dodgers may be hiring.

The Follies of TARP

ornate insect — Fri, 30 Jan 2009 11:41:54 -0800

We may never know whether the bailout worked from the FPP link: according to a new report from congressional auditors...it will be impossible to sort out which of the recent rule changes and spending programs have made a difference... Meanwhile Geithner, Bernanke work on $700B bailout overhaul. Also meanwhile, the SEC charges adviser with fraud linked to bailout. Maybe it's time to let the GAO see TARP recipients' books in order to figure out where the funds are actually going--considering that the total cost could top $4 trillion.

But if the vaults are empty, what will Scrooge McDuck swim in?

Asparagirl — Tue, 29 Jan 2008 20:58:40 -0800

According to the latest biweekly numbers released last Thursday by the Federal Reserve, for the two weeks that ended January 16th American banks had negative $1.3 billion in non-borrowed reserves. This is, historically, extremely unusual; just two months ago they had $30 billion (positive, of course) in non-borrowed reserves. The only reason some banks haven't been shut due to insufficient -- negative! -- reserve requirements is that the Federal Reserve is currently loaning them enough money through the brand new TAF (Term Auction Facility) program (also running in Canada and Europe) to make up their shortfalls. Today's TAF press release says that 52 American banks or institutions are currently receiving loans totaling ~$40 billion -- but the Fed refuses to name who they are. The banks' collateral for these TAF loans are those same yucky hard-to-price CDO's that caused the banks' liquidity problems in the first place -- and the Fed is purposely using outdated prices for the collateral to prevent their being marked-to-market and thus collapsing CDO prices and freezing matters even further. Not surprisingly, some economists see the creation of the TAF as a backdoor bailout of banks in trouble. But how much longer can this go on? [via] Coincidentally (one hopes), the banking system in the virtual online world Second Life has just collapsed following a run on their banks due to inappropriate valuations and bad counterparty risk, wiping out many players' real-world investments...