Fri 2010-09-17 19:26 EDT

Memo to Obama: time to break the refinance strike by the big banks

Christopher Whalen

...The Obama Administration and the Fed have taken the position that the crisis affecting the U.S. economy and the financial sector is slowly ending. In fact, the largest banks remain profoundly troubled by bad assets on their books as well as claims against these same banks for assets sold to investors. By allowing banks to ``muddle along'' and heal these wounds using low interest rates provided by the Fed, the Obama Administration is embracing a policy of deflation that has horrible consequences for U.S. workers and households...the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders...the Obama Administration should use the power provided in the Dodd-Frank legislation to force an accelerated cleanup of bad assets and to mandate refinancing and principal reductions for performing loans with viable borrowers...President Obama also needs to focus on the growing competitive problem in the U.S. mortgage sector...now dominated by a cozy oligopoly of Too Big To Fail banks (TBTF)...Why is there no antitrust investigation of the top banks by the Department of Justice?...

big banks; break; memo; Obama; refinance strike; Time.

Fri 2010-03-19 20:28 EDT

The Empire Continues to Strike Back: Team Obama Propaganda Campaign Reaches Fever Pitch >> naked capitalism

Yves Smith

I've seldom seen so much rubbish written by people who ought to know better in a single day...The campaign to defend Geithner and Emanuel, both architects of the administration's finance friendly policies has gone beyond what most people would see as spin into such an aggressive effort to manipulate popular perceptions that it is not a stretch to call it propaganda. This strategy, of relying on propaganda to mask their true intent, has become inevitable, given the strategic corner the Obama Adminstration has painted itself in. And this campaign has become increasingly desperate as the inconsistency between the Adminsitration's ``product positioning'' and observable reality become increasingly evident...

Empire Continues; naked capitalism; striking; Team Obama Propaganda Campaign Reaches Fever Pitch.

Mon 2010-02-08 17:08 EST

The Bernanke Disaster: The Road to Debt Peonage

Michael Hudson

...On the political front, his reappointment is being cited as yet another proof that the Democrats care more for bankers than for American families and employees. As a result, it will do what seemed unfathomable a year ago: enable GOP candidates to strike the pose of FDR-type saviors of the embattled middle class. No doubt another decade of abject GOP economic failure would simply make the corporate Democrats appear once again to be the alternative. And so it goes... For Bernanke, the current financial system (or more to the point, the debt overhead) is to be saved so that the redistribution of wealth upward will continue...Meanwhile, the government is permitting corporate tollbooth to be erected across our economy -- and un-taxing this revenue so that it can be capitalized into financialized wealth paying only a 15 per cent tax rate on capital gains...Financial and fiscal policy thus reinforce each other in a way that polarizes the economy between the financial sector and the ``real'' economy.

Bernanke Disaster; DEBT peonage; Road.

The IRA Analyst Sun 2009-12-13 09:11 EST

Three Strikes on Ben Bernanke: AIG, Goldman Sachs and BAC/TARP

The Institutional Risk Analyst

To us, the confirmation hearings last week before the Senate Banking Committee only reaffirm in our minds that Ben Bernanke does not deserve a second term as Chairman of the Board of Governors of the Federal Reserve System.

AIG; BAC/TARP; Ben Bernanke; Goldman Sachs; IRA Analyst; striking.

Wed 2009-11-25 09:59 EST

Hussman Funds - Weekly Market Comment: "Should Come as No Shock to Anyone" - November 16, 2009

John P. Hussman

The big picture is this. There is most probably a second wave of mortgage defaults in the immediate future as a result of Alt-A and Option-ARM resets. Yet our capacity to deal with these losses has already been strained by the first round that largely ended in March. The Federal Reserve has taken a massive amount of mortgage-backed securities onto a balance sheet that used to be restricted to Treasury securities. The purchase of these securities is reflected by a surge in cash reserves held by banks. Not only are the banks not lending these funds, they are contracting their loan portfolios rapidly. Ultimately, in order to unwind the Fed's position in these securities, it will have to sell them back to the public and absorb those excess reserves, so to some extent, the banking system can count on losing the deposits created by the Fed's actions, and can't make long-term loans with these funds anyway. Increasingly, the Fed has decided to forgo the idea of repurchase agreements (which require the seller to repurchase the security at a later date), and is instead making outright purchases of the debt of government sponsored enterprises (GSEs such as Fannie Mae and Freddie Mac). Again, the Fed used to purchase only Treasuries outright, but it is purchasing agency securities with the excuse that these securities are implicitly backed by the U.S. government. This strikes me as a huge mistake, because it effectively impairs the Fed's ability to get rid of the securities at the price it paid for them, should Congress change its approach toward the GSEs. It simultaneously complicates Congress' ability to address the problem because Bernanke has tied the integrity of our monetary base to these assets. The policy of the Fed and Treasury amounts to little more than obligating the public to defend the bondholders of mismanaged financial companies, and to absorb losses that should have been borne by irresponsible lenders. From my perspective, this is nothing short of an unconstitutional abuse of power, as the actions of the Fed (not to mention some of Geithner's actions at the Treasury) ultimately have the effect of diverting public funds to reimburse private losses, even though spending is the specifically enumerated power of the Congress alone.

2009; comes; Hussman Funds; November 16; shocks; weekly market comments.

Fri 2009-11-20 10:30 EST

Curious Meeting at Treasury Department >> naked capitalism

Yves Smith

The Treasury invited a small group of bloggers for a ``discussion'' with senior officials on Monday...we bloggers and the government officials kept talking past each other, in that one of us would ask a question, the reply would leave the questioner or someone in the audience unsatisfied, there might be a follow up question (either same person or someone interested), get another responsive-sounding but not really answer, and then another person would get the floor...the people we met are very cognitively captured, assuming one can take their remarks at face value. Although they kept stressing all the things that had changed or they were planning to change, the polite pushback from pretty all the attendees was that what Treasury thought of as major progress was insufficient...It was also striking to see that the Treasury officials did not articulate vision for a banking system for the 21st century that was materially different that the one we have now...

Curious Meeting; naked capitalism; Treasury Department.

Tue 2009-06-16 00:00 EDT

Jesse's Café Américain: Collapsing US Aggregate Demand Strikes Imports Hardest

Jesse's Café Américain: Collapsing US Aggregate Demand Strikes Imports Hardest

Aggregate Demand Strikes Imports Hardest; Collapse; Jesse's Café Américain.

Tue 2009-04-21 00:00 EDT

naked capitalism: AIG Posts List of <strike>Beneficiaries of Government Largesse</strike> Counterparties

naked capitalism: AIG Posts List of Beneficiaries of Government Largesse Counterparties; Goldman Sachs received 13 billion

AIG Posts List; beneficiaries; counterparty; government largesse; naked capitalism; striking.

Wed 2009-04-01 00:00 EDT

naked capitalism: Willem Buiter Strikes Again, Calls for Over-Regulation of Banks

bank; called; naked capitalism; Regulators; Willem Buiter Strikes.

Fri 2009-02-13 00:00 EST

Calculated Risk: COF: "Strikingly high FICO customers" Defaulting

we are all subprime now!

Calculated Risk; COF; default; Strikingly high FICO customers.

Fri 2008-11-07 00:00 EST

naked capitalism: A <strike>Chicken</strike> Bailout in Every Pot (Monoline Edition)

naked capitalism: A Chicken Bailout in Every Pot (Monoline Edition)

Bailout; chickens; Monoline Edition; naked capitalism; pot; striking.

Sat 2007-09-15 00:00 EDT

JURIST - Forum: The Hunt Oil Dispute and the Future of Iraqi Federalism

Hunt strikes Kurdish oil deal

Forum; future; Hunt Oil Dispute; Iraqi federation; jurists.