The Fed forced to name and shame banks
"The Federal Reserve, under orders from Congress, today named the counterparties of about 21,000 transactions from $3.3 trillion in aid provided to stem the worst financial panic since the Great Depression.
Bank of America Corp. and Wells Fargo & Co. were among the biggest borrowers from one program, the Term Auction Facility, with as much as $45 billion apiece. Some aid went to U.S. units of foreign institutions, including Switzerland’s UBS AG, France’s Societe Generale and Germany’s Dresdner Bank AG. The Fed posted the data on its website to comply with a provision in July’s Dodd-Frank law overhauling financial regulation."
As someone that has studied Economics for a long time and majored in it as well, this entire situation is ridiculous. Economics 101: you don't bail out or aid failing institutions.
It depends on which school you are studying.
Read Hank Blankfein's book before you say that Nefarious. I agreed with you until I did and it totally changed my thought process
Which book and can you go into further detail?
I understand to an extent that the nation, and possibly even the world needs institutions like this, but seriously, we can't bail out every poorly run or corrupt business.
+1 for On the Brink. It really is amazing how fast everything came tumbling down at once...
Sorry I am an idiot. I meant Paulson...fuck that is embarrassing
http://www.amazon.com/Brink-Inside-Collapse-Global-Financial/dp/0446561…
You really get a sense for how quickly things were happening at the time. They didn't have the benefit of hindsight so all of the dooms day scenarios seemed very real. Its a good read and certainly worth your time...if you have it
Isn't this the same guy that scared congress into giving $700 billion to the banks?
But think of all those juicy tax revenues government could have made after everyone went long when the S&P hit 0.01.
You do realize every company, that can afford to would go private if the dow hit anything below 6,000?
lol dude that was amazing "Hank Blankfein"!
Hank Blankfein, worked alongside John Diamond at Goldman Stanley right? Shame they went bankrupt.
Do you all realize we would be fighting for food with guns and it would be an all out armagedon scenario had the Fed not done this? WAKE UP people. It was needed we would be in WW3 had this not happened.
That's utter nonsense.
What, were groceries going to suddenly vanish off of shelves if TARP got voted down? Every single one of the banks should have been allowed to fail. It would have been messy, to be sure, but far from Armageddon. All the fuckers that got bailed out just want everyone to believe that's what would have happened.
If anything they should be arguing the same point as you, no? If a bank collapse poses no systemic risk, why the fuss? No more capital requirements, none of this Volcker shit, forget CCPs!
Armageddon is a big stretch. I hang with "Main Street" and live in the middle of nowhere, and I marveled at the very simple fact that 90% of the people I interact with most had zero clue about how bad the market really was (and rarely, if ever, pay attention to financial markets outside of their quarterly 401k statements) while clinging to the hopium that real estate would rebound in latter half of 2009. So to say a panic was imminent and guns blazing in downtown no where is a falsehood. A surge of companies going private is a far larger likelihood.
Even if things had crashed (my S&P 0.01 comment was sarcasm only), the gamblers would have shot their last wad and new capital would have rushed in. Vacuums work that way. Chaotic, yes. World ending, only for the Too Big To Fails.
As Edmundo already said, this is utter non-sense.
Maybe you should stop sitting on a cucumber and educate yourself rather than listening to fuck-tards like Hank Paulson.
all i have to say is this... back in those crazy month, i thought i was going to get fired... but not by myself, along with every other co-worker as the firm stock price drop like there is no tomorrow.
So i am glad he gave some money to those banks, i am still here working, and the economy is limping along.
BTW... what counts as a foreign bank...? UBS, SG, etc... have a huge stake in the US, generates a significant portion of their reveneue from US. Same for "Domestic banks" , GS gets more revenue oversea and it does in the States. So is it really an US bank or international bank?
I do want to point something out here... this should have happened years ago.
Everyone here is missing the key fact that this entire issue and congressional involvment to release the names was brought on by an FOIA lawsuit. Congress didn't need to step in, as it can be argued that, under the FOIA rules and regulations, the Fed had no ability to use any of the nine Title 5 guarantees (most notably the 552B exception, and Rule 8 exception, althought it could be argued as a viable defense for not providing this information. It would be a stretch though, as the list of names of funding recipients has little to no bearing to be considered covered under the aforementioned rule.) or the amendments to FOIA.
Yes, these guys were flying by the seat of their pants in the decision making process. Yes, they didn't have the advantage of hindset. Yes, there wasn't a panic by supposedly saving the banks, but these banks should have failed or, in getting bailed out,they should not have been given par value to take these assets off their books. They should have been given the pittence on the dollar that these assets should have sold for instead of getting a free pass paid in full. At some point all the Maiden Lane assets will need to be marked to market, as you won't be able to sell them at Par without finding a sucker or taking a loss on them.
What I want to see is what is held in the entire Fed Book and Maiden Lane programs. That will be interesting, if ever released.
Fed: Central Bank of the World
http://www.bloomberg.com/news/2010-12-02/federal-reserve-may-be-central…
Interesting how this is evolving over time.
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Way too many dumb fucking college kids commenting in this thread.
As I stated in the beginning and Edmundo restated, you need failure in order to see success. It is the Darwinism of economics. Weak and poorly run institutions that require bailouts deserve to fail. I don't care about their history, how much money they had, how old they are, the level of intelligent people working there, etc. and neither should you. None of that matters.
In addition, I really don't think a lot of people here actually understand just how many bank and credit union closings happen on a daily basis.
Your argument is essentially a free-market vs. intervention one. And thus it should be blatantly obvious there is no single solution, it's not black and white.
Nefarious,
Agreed on both points. The thing that always bothered me with bank failure is that we have a nearbankrupt FDIC taking over so many failing banks that the tax payers are on the hook for it.
At what point is any bank allowed to fail when the Fed can prop up the world and continue the moral hazzard we are seeing.
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