I saw pigs flying..
That private capital is going to be more costly for them than government capital.
I saw pigs flying..
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That private capital is going to be more costly for them than government capital.
With electronic transfers and ATM machines--a run on the bank just won't be the same. Banks will "crash."
of course, dilution would or should be included in the after effects of private capital raise
Citi: anyone want to buy our stock at $20 a share?
Private Market: No.
There, they tried.
Citi: Hey taxpayer, want to buy our stock at $3 a share?
Taxpayer: No.
Summers to taxpayer: Open wide...
You mean the market has not yet spoken? Uh oh...
This is easy.. just get the administration of help persuade the big pension funds, like the state sponsored ones, to dump their remaining assets into bank stocks and bonds.
Instantly raises capital for the banks, and well the pension fund issue is a problem for later in the day.. perhaps even something for the next administration to figure out.
It's the GM school of management, what we know will be a problem tomorrow is not our problem today.
Some banks, such as Goldman Sachs, received more help from the FDIC than they did from TARP: here.
The no-strings-attached FDIC program is being used by the banks to back their debt.
25 people to blame for the financial crises
Time.com, good for a laugh ... or cry.
If you are private capital and you invest in May, then the government nationalizes the bank in July, what happens to your investment?
CR come on. This is a game of poker. The gov't is going to offer up someone (
in order to protect what they deem systemically important. Why do you think BAC stocks is at 10 plus. Lot less dilution at 10 then 3 obviously. To suggest this is anothing other than a clasic disinformazia campaign is to burry your head in the sand. It strains credility to suggest that this is anyhting other than fabricated lies to try and suck in more private capital. Geithner looks more foolish everyday, espite his cheerleaders in the establishment, and that includes the MSM. This guy put on one of the single greatest displays of arrogance and incompatence at the BEar Stearns hearings. If they can convict Oliver North of obstruction, then Geithner is as close to a sure thing as it gets.
"...what we know will be a problem tomorrow is not our problem today."
For most of human history no one knew what the problem tomorrow would be, though they had some idea, in some cases, of what the problem could be. Now we've advanced and are able to ignore the actual problem of the future, either by deliberately forgetting about it or denying its existence. Fatalism used to be a rational response. Now, not so much.
Pavel Chichikov
"If you are private capital and you invest in May, then the government nationalizes the bank in July, what happens to your investment?"
What are you, some kind of troublemaker?
Pavel Chichikov
I wasn't thinking that the banks would raise capital with a new equity offering. I thought they might sell bonds. They would probably have to offer an interest rate that wouldn't make it attractive to them.
JPM has issued $42B of govt backed debt/. Something like $250B outstanding which gives them more room under that program as I think 25%of total outstanidng allowed say another 10-20 of capcity for them under the program? ditto for the likes of GS and BAC...
debt is not TCE..CE is what matters and even that is suspect..
I just don't get it. If Summers et al recognized that some of the existing banks needed to be closed, why wouldn't they have prepared us before now? They could have done very well by saying that not all banks deserved to survive, but that depositors and counterparties would be fully protected when the wind-down was executed.
Their current behavior is only consistent with an attempt to keep all the (big) banks alive. That would mean that they think they can reinflate the asset bubble almost all the way. This is not responsible leadership.
Fundamental questions:
Who actually controls what, and to what extent, in this economy? How much control is possible?
What happens if those actors (!) who are supposed to control the economy lose faith in their actual ability to control it?
Pavel Chichikov
"What are you, some kind of troublemaker? "
No, serious question. Is there some way to structure these investments to make them nationalization proof? If not it would seem this is plan is exactly backwards, and the government should say "us first", nuking any existing equity holders, and perhaps many of the debtholders, then sell the newly unburdened institution back into the market (at break even or better).
"If not it would seem this is plan is exactly backwards, and the government should say "us first", nuking any existing equity holders, and perhaps many of the debtholders, then sell the newly unburdened institution back into the market (at break even or better)."
That which is rational is not always politically feasible, which is some kind of insight into the nature of politics.
Pavel Chichikov
Perhaps we should look at it this way: If we are functionally capable of rational solutions, why are we in this predicament?
Pavel Chichikov
" "What are you, some kind of troublemaker? "
No, serious question. Is there some way to structure these investments to make them nationalization proof? If not it would seem this is plan is exactly backwards, and the government should say "us first", nuking any existing equity holders, and perhaps many of the debtholders, then sell the newly unburdened institution back into the market (at break even or better)."
Perhaps the govt. wants the banks to go to the markets in order to let them show themselves that they're at the govt.'s mercy, so that there'll be none of this "we want to pay our TARP back because we don't like the rules", AFTER accepting and using tax money to distribute bonus', buy other banks, etc.
People usually address themselves effectively to a serious problem when survival is at stake. By that time, it either is or is not too late.
Pavel Chichikov
Spent a few days in San Fran. For all it's attributes, I dislike visiting because of all the street people. I have great sympathy for them, and outrage at a government that will give citbank $300billion on a Sunday night, but not take care of it's neediest citizens. Obama had a chance to change america, but he's siding with the bankers instead. A hard rains a gonna fall this summer.
Until the administration accepts that the economy trumps government trumps the banking system and not the other way around there can be no expectation of anything except "kick the can" and "buy some time."
"Perhaps the govt. wants the banks to go to the markets in order to let them show themselves that they're at the govt.'s mercy, so that there'll be none of this "we want to pay our TARP back because we don't like the rules", AFTER accepting and using tax money to distribute bonus', buy other banks, etc."
That would mean that the banks are operating at the level of recalcitrant teen-agers. But then, those who are only for themselves usually do operate that way. The obvious deficit here is of social solidarity. Survival is not yet seen to be at stake.
Pavel Chichikov
Obama had a chance to change america, but he's siding with the bankers instead. A hard rains a gonna fall this summer.
------------------------------------------
Oh, what'll you do now, my blue-eyed son?
Oh, what'll you do now, my darling young one?
I'm a-goin' back out 'fore the rain starts a-fallin',
I'll walk to the depths of the deepest black forest,
Where the people are many and their hands are all empty,
Where the pellets of poison are flooding their waters,
Where the home in the valley meets the damp dirty prison,
Where the executioner's face is always well hidden,
Where hunger is ugly, where souls are forgotten,
Where black is the color, where none is the number,
And I'll tell it and think it and speak it and breathe it,
And reflect it from the mountain so all souls can see it,
Then I'll stand on the ocean until I start sinkin',
But I'll know my song well before I start singin',
And it's a hard, it's a hard, it's a hard, it's a hard,
It's a hard rain's a-gonna fall.
-BD
In theory, there is no difference between theory and practice....But in practice, there is!
"What happens if those actors (!) who are supposed to control the economy lose faith in their actual ability to control it?"
Do they think that they are able to control it? They may be more like machine operators or video game players. If the machine/game presents some new, unknown problem, then they must improvise or quit.
Due to the accounting rule changes and all, i guess the FED is reasonably confident that their member banks will survive going forward. So it's time to throw some of the rest not in the club to the dogs to satisfy their hunger.
And the public baying approaches a creshendo.
There is no alternative but to declare insovent banks insolvent, and treat them exactly like small and mid-sized banks are treated. The good & bad assets are repackaged, the good parts are sold off, taxpayers get stuck paying for loss in asset values of the bad stuff. The whole deal stinks, but there's no way to avoid facing reality. The only way to avoid this is to never again let any bank hold assets even remotely close to 1/10 the GDP. End merger mania in the banking system for good. To paraphrase Simon Johnson: "Too big to fail is too big to exist in the first place."
"Obama had a chance to change america, but he's siding with the bankers instead."
I wonder how much of a chance he ever really had?
Anonymous wrote on Sun, 04/19/2009 - 2:07pm.
"Obama had a chance to change america, but he's siding with the bankers instead."
I wonder how much of a chance he ever really had?
________
Plenty.
There is no alternative but to declare insovent banks insolvent, and treat them exactly like small and mid-sized banks are treated.
Aren't we living out the alternative, which is funnel taxpayer money into the big banks until they are solvent and live with the consequences elsewhere in the economy?
Good news for the Bears. Marketwatch has positive Sunday headline. This recession was merely an "Inventory Correction". Yeah right
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Anything that comes from this major stooges' lips has nothing to do with any real recovery. Why would it since he was front row center in dismantling the very regulations and rules that have caused all of this.
Summers=Geithner=Rubin=Graham=Greenspan=Paulson
Ciao
MS
Comrade Coinz,
I think it's more like propping up "Zombie banks" and pretending no one notices. Citibank, etc with stock values at $1?
please....
It strains credility to suggest that this is anyhting other than fabricated lies to try and suck in more private capital.
And it's just so blindingly obvious, there's barely any attempt to conceal that fact.
Looks like a shift of policy to me. This will leave some major banks very nicely set up for public failure. They'll have 'failed' the stress test, the government will have committed to releasing results... and no way can the bank raise private money.
...and by "private market", Mr. Summers was referring to a program where the banks and hedgies would set up off-balance-sheet vehicles whereby they could borrow 97% of the money they pledged to invest, from the Treasury.
Sure I'll rush to put more money into an insolvent bank. Just ask and I'll write a big check. LOL
Obama had plenty of chances to reform the financial system and took none.
His very first mistake i thought was political. He refused to campaign in support of the democrat (martin?) for the N. Carolina senate seat. It went downhill from there. It almost seems as if he is afraid of being fully in charge...
In the face of the biggest financial crisis of our lifetime, he has been depressingly timid.
Perhaps we should look at it this way: If we are functionally capable of rational solutions, why are we in this predicament?
Because some people and their enablers like the present predicament. A lot of bonuses were earned landing us in this spot. I'm sorry for all you poor smucks not getting regular distributions of the booty.
The banks want the "market to know" the health of their balance sheets, he said today on CBS's "Face the Nation."
Bwahahahahahahaha.....