Post Tagged with: "crisis solutions"
All your bank are belong to us
It looks pretty clear that the U.S. regulators are going to clean house this year — at least with small banks. Hundreds of small banks and credit union will go into receivership in 2009. However, big banks are getting a free ride. First there was the juxtaposition of the kid gloves treatment of too big
Reinhart: Not everybody can be above-average in stress tests
Irrespective of whether one thinks the stress tests used to test the U.S. banking system is a sham (10% unemployment is not a worst-case scenario), the fact of the matter is these tests MUST show some differentiation in order to be credible. Vincent Reinhart, a former Fed official now at the AEI, makes this case
McCulley: We need the political will to socialize the losses
Paul McCulley of PIMCO made a few comments back in March which caught my attention. Given how well banks are doing this earnings season, I thought it relevant to quote him here. The essence of his remarks was this: Deleveraging is a self-reinforcing vicious cycle brought upon by the Paradox of Thrift. In order to
Meredith Whitney: Regardless of stress tests, banks will still need more capital
The Bloomberg video below makes it seem that Whitney believes the stress tests are a sham. She says the tests are a theoretical exercise whereby banks ask: “what will our earnings power be in two years after we sell off these ‘toxic’ assets?” She goes on to suggest that the answer to this question will
Video: Geithner calls for single agency to oversee systemic risks
Story from Investor’s Business Daily: Treasury Secretary Timothy Geithner called for “new rules of the game” on Thursday, including a systemic-risk regulator, stronger capital cushions for banks, and more disclosure from hedge funds. The broad-brush vision also would have derivatives such as credit default swaps trade via a central clearinghouse. Higher standards for money-market mutual
Krugman: Geithner Plan “won’t work”
I have the same misgivings about the Public Private Partnership Investment Program that Paul Krugman does. However, I still think it could work in conjunction with all of the other stimulus being applied (at least in inducing a cyclical rebound, which seems to be the goal). Krugman does not. Watch the video to see his
Roubini: Nationalization “fully on the table” in Geithner’s Plan
This is yet another semi-positive post about the Geithner plan. To reiterate, I think the plan is inadequate because it assumes illiquidity instead of insolvency and is a huge gift to the financial sector. But, that does not mean it will definitely not work in conjunction with other moves by Obama. In fact, to the
2003
Yesterday, I posted an item on Naked Capitalism about the bankruptcy of Yamaichi Securities in 1996 as testament to lingering weakness in a country’s financial sector if sick financial institutions are not dealt with swiftly. In essence, the entire Japanese banking sector remained weak for years despite multiple cyclical upturns after the Bubble Economy burst.
Goldman: Quote of the day – “Leopards change spots”
If you haven’t noticed, I think the Geithner Plan, while far from perfect, has a reasonable chance of success. Marshall, too, believes the plan could work as he has suggested in his last post. The optics of it are another matter. “Goldman has already said they will repay their TARP money within a month (obviously
Bernstein: America is turning Japanese
I do believe the U.S. policy response to this financial crisis is very much like the Japanese response to their crisis in the 1990s. I have a post up at “naked capitalism” making this point. I would add, however, that America is in a worse position due to its lack of exports and manufacturing and
Geithner’s Plan: one of the most regressive wealth transfers of all time
Marshall Auerback here. I do not like the Geithner Plan because it is needlessly expensive. Nevertheless, it could well work. My main objection is that it constitutes the most regressive transfer of wealth in history and it’s being done BY A DEMOCRAT ADMINISTRATION!!!! Unbelievable. It has to be done this way in terms of securing
FDIC Chairman Sheila C. Bair Statement on the Legacy Loans Program
FDIC Chairman Sheila C. Bair said, “It has been clear for some time that troubled loans and securities have depressed market perceptions of banks and impeded new lending. Difficult market conditions have complicated efforts to sell these troubled assets because potential buyers have not had access to financing. The Legacy Loans Program aligns the interests