As America's bankers take a day of rest to honor the precepts of Martin Luther King comes the suggestion of an anomaly in their policy of equal-opportunity bloodsucking.
A New York Times editorial finally catches up with the reality that "Retirees Saved the Banks," a situation described here some time ago under the heading, "The Fed's Financial Death Panels."
The Times explains how the bailout has victimized older Americans:
"By lowering the short-term interest rate it controls to virtually zero and creating lending programs, the Federal Reserve has enabled banks to borrow cheaply. The banks re-lend that cheap money, but not necessarily to consumers and businesses. They can, for example, lend it to back to the federal government by buying Treasury securities, and earn a nice spread between their cost of funds and Treasury yields.
"At the same time, banks are awash in deposits, much of it from investors who have pulled their money out of riskier investments. With money rolling in, big banks don’t need to compete with one another for savers, which further depresses the interest on offer.
"The result is presumably healthier banks and certainly poorer savers."
Just so, a recognition that, as stated here, the Fed has pursued a "free-money-for-banks policy by holding interest rates near zero, as the largest deploy their profits (at least in part the result of giving retirees nothing in return for using their life savings) to repay bailout loans so they can start rewarding themselves with pre-bubble bonuses instead of making loans to get the economy moving again."
One unintended but painfully real side effect of bailing out banks too big to fail has been the failure to keep afloat older Americans, who played by the rules and prudently saved for retirement and are now too old to earn new income and too experienced to start gambling what they have left in Wall Street's rigged casinos.
As bankers launch what the President describes as "a massive lobbying campaign against common-sense rules to protect consumers and prevent another crisis" with guess-who's money, older Americans should be reminding Congress that, from now to November, they will be watching closely to see who has their interest in mind.
Showing posts with label bank bailout. Show all posts
Showing posts with label bank bailout. Show all posts
Monday, January 18, 2010
Wednesday, October 21, 2009
Back to the Future for Banks?
A movement is stirring both here and in Britain to roll back commercial banks to the post-Depression era, when they were barred from gambling on markets with depositors' money by the Glass-Steagall Act.
Today Paul Volcker, the former Fed chairman who heads the President's Economic Recovery Advisory Board but is overshadowed by ex-Wall Streeters Tim Geithner and Lawrence Summers, goes public with his proposal to do just that.
“The banks are there to serve the public,” Volcker says, “and that is what they should concentrate on. These other activities create conflicts of interest. They create risks."
He wants to break up the too-big-to-fail giants created by a Republican Congress repeal of Glass-Steagall and signed by Bill Clinton in 1999 that led to the 21st century gambling spree on Wall Street.
If Volcker had his way, JPMorgan Chase would have to shed its Bear Stearns trading operations, Bank of America would un-merge from Merrill Lynch and Goldman Sachs would stop being a bank holding company.
Bank of England Governor Mervyn King calls for other governments to deal with the same dangers posed by banks that are “too important to fail,” urging separation of risky activities from more stable businesses such as taking deposits.
“The massive support extended to the banking sector around the world, while necessary to avert economic disaster," he says, "has created possibly the biggest moral hazard in history.”
Meanwhile, Obama's watchdog of the $700 billion bank bailout is warning that it will fail to earn back taxpayer money and hasn't changed Wall Street's culture of recklessness.
"The American people's belief that the funds went into a black hole, or that there was a transfer of wealth from taxpayers to Wall Street, is one of the worst outcomes of this program, and that is the reputational damage to the government," says Neil Barofsky, special inspector general of the Troubled Asset Relief Program.
With all the Wall Street lobbyists still working in Washington and attending fund-raisers like the President's in New York last weekend, will anybody in Congress or the White House be willing to do anything about it?
Today Paul Volcker, the former Fed chairman who heads the President's Economic Recovery Advisory Board but is overshadowed by ex-Wall Streeters Tim Geithner and Lawrence Summers, goes public with his proposal to do just that.
“The banks are there to serve the public,” Volcker says, “and that is what they should concentrate on. These other activities create conflicts of interest. They create risks."
He wants to break up the too-big-to-fail giants created by a Republican Congress repeal of Glass-Steagall and signed by Bill Clinton in 1999 that led to the 21st century gambling spree on Wall Street.
If Volcker had his way, JPMorgan Chase would have to shed its Bear Stearns trading operations, Bank of America would un-merge from Merrill Lynch and Goldman Sachs would stop being a bank holding company.
Bank of England Governor Mervyn King calls for other governments to deal with the same dangers posed by banks that are “too important to fail,” urging separation of risky activities from more stable businesses such as taking deposits.
“The massive support extended to the banking sector around the world, while necessary to avert economic disaster," he says, "has created possibly the biggest moral hazard in history.”
Meanwhile, Obama's watchdog of the $700 billion bank bailout is warning that it will fail to earn back taxpayer money and hasn't changed Wall Street's culture of recklessness.
"The American people's belief that the funds went into a black hole, or that there was a transfer of wealth from taxpayers to Wall Street, is one of the worst outcomes of this program, and that is the reputational damage to the government," says Neil Barofsky, special inspector general of the Troubled Asset Relief Program.
With all the Wall Street lobbyists still working in Washington and attending fund-raisers like the President's in New York last weekend, will anybody in Congress or the White House be willing to do anything about it?
Friday, August 28, 2009
Jaws, the Bank Sequel
Too-big-to-fail is morphing into bigger-than-ever swallowing up failing-faster-than-ever.
The nation's largest banks, infused with taxpayer billions, are feasting on the weak as the Washington Post reports that "no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected."
FDIC chair Sheila Bair sums it up succinctly: "It is at the top of the list of things that need to be fixed. It fed the crisis, and it has gotten worse because of the crisis."
This alarm follows news that her agency's insurance fund, which guarantees deposits, shrank another 20 percent in the second quarter, down to $10.4 billion, the lowest level since the savings and loan crisis in the early 1990s.
So far this year 81 banks have failed with another 416 on the FDIC'S "problem list."
Meanwhile, the bailout-bloated sharks are flourishing. J.P. Morgan Chase, Bank of America and Wells Fargo each now holds more than $1 of every $10 on deposit in the country. "Those three banks, plus government-rescued and -owned Citigroup," the Post reports, "now issue one of every two mortgages and about two of every three credit cards, federal data show."
As politicians debate socialized medicine, the country has moved toward a bastardized form of socialized banking, fed by the government for the ballooning profit of the few, who are squeezing out struggling smaller competitors by being able to borrow at lower interest rates while doing little to ease the consumer credit crunch, the original object of the bailout.
Now that the President has reappointed Fed chairman Ben Bernanke, the Obama economic team can get to work trying to undo some of its unintended consequences by starting to rein in superbanks with much tougher regulation.
The nation's largest banks, infused with taxpayer billions, are feasting on the weak as the Washington Post reports that "no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected."
FDIC chair Sheila Bair sums it up succinctly: "It is at the top of the list of things that need to be fixed. It fed the crisis, and it has gotten worse because of the crisis."
This alarm follows news that her agency's insurance fund, which guarantees deposits, shrank another 20 percent in the second quarter, down to $10.4 billion, the lowest level since the savings and loan crisis in the early 1990s.
So far this year 81 banks have failed with another 416 on the FDIC'S "problem list."
Meanwhile, the bailout-bloated sharks are flourishing. J.P. Morgan Chase, Bank of America and Wells Fargo each now holds more than $1 of every $10 on deposit in the country. "Those three banks, plus government-rescued and -owned Citigroup," the Post reports, "now issue one of every two mortgages and about two of every three credit cards, federal data show."
As politicians debate socialized medicine, the country has moved toward a bastardized form of socialized banking, fed by the government for the ballooning profit of the few, who are squeezing out struggling smaller competitors by being able to borrow at lower interest rates while doing little to ease the consumer credit crunch, the original object of the bailout.
Now that the President has reappointed Fed chairman Ben Bernanke, the Obama economic team can get to work trying to undo some of its unintended consequences by starting to rein in superbanks with much tougher regulation.
Monday, June 29, 2009
Non-Profit-News News
A report in today's Washington Post raises questions about what's happening to the American economy, government and journalism.
Headlined "How a Loophole Benefits GE in Bank Rescue," it details how the world's largest company wormed its way into the Obama bailout and profited from issuing almost a quarter of the $340 billion in debt backed by the Temporary Liquidity Guarantee Program, qualifying by owning two small Utah banks but at the same time escaping regulation of its huge financial operations.
The story exposes one element in a complex process but, beyond that, in its provenance, reflects wider problems in helping the public understand what's going on under the surface of government handouts and conventional reporting in these days of shrinking investigative journalism.
The Post notes: "This article was reported jointly with Jeff Gerth of ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest. ProPublica is supported entirely by philanthropy and provides the articles it produces, free of charge, both through its own Web site and to leading news organizations."
It's not only disturbing to find such charity behind the work of Washington's hometown news source but to consider the complications of how much attention it will generate in such GE-owned media outlets as NBC, MSNBC and CNBC.
Half a century of working in journalism and as a media critic have made me leery of conspiracy theories, but it will be interesting to see how much, if any, play this particular news gets tonight from Brian Williams, Keith Olbermann, Chris Matthews, Jim Cramer and other corporate employees.
It's same to assume that the President of GE won't be on the list of contenders for Worst Person in the World.
Headlined "How a Loophole Benefits GE in Bank Rescue," it details how the world's largest company wormed its way into the Obama bailout and profited from issuing almost a quarter of the $340 billion in debt backed by the Temporary Liquidity Guarantee Program, qualifying by owning two small Utah banks but at the same time escaping regulation of its huge financial operations.
The story exposes one element in a complex process but, beyond that, in its provenance, reflects wider problems in helping the public understand what's going on under the surface of government handouts and conventional reporting in these days of shrinking investigative journalism.
The Post notes: "This article was reported jointly with Jeff Gerth of ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest. ProPublica is supported entirely by philanthropy and provides the articles it produces, free of charge, both through its own Web site and to leading news organizations."
It's not only disturbing to find such charity behind the work of Washington's hometown news source but to consider the complications of how much attention it will generate in such GE-owned media outlets as NBC, MSNBC and CNBC.
Half a century of working in journalism and as a media critic have made me leery of conspiracy theories, but it will be interesting to see how much, if any, play this particular news gets tonight from Brian Williams, Keith Olbermann, Chris Matthews, Jim Cramer and other corporate employees.
It's same to assume that the President of GE won't be on the list of contenders for Worst Person in the World.
Saturday, June 27, 2009
Congress' Iffy Insider Trading
Members of the House Financial Services Committee were wheeling and dealing in the stocks of banks they were about to bail out last fall, a revelation that may test Congress' rock-bottom approval ratings.
Both Democrats and Republicans were scurrying to profit from cashing in or out, according to enterprising reporters from the Cleveland Plain Dealer, who mined disclosure forms for the fourth quarter of 2008:
"Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup--some of the very corporations their committee would later rap for greed."
Compounding the news of such avarice is the suggestion that some were inept at it.
Rep. Ginny Brown-Waite, a Florida Republican, bought Citigroup stock the day before the House passed the rescue bill and President Bush signed it into law. She voted against it. The stock, which closed at $22.50 a share the day she acquired it, is now worth $3.
The Plain Dealer reports that "members of the Financial Services Committee were privy to closed-door discussions, staff briefings and political horse-trading decisions between political parties, Congress and the White House. Banks lobbied Congress and the administration heavily."
At least one of them missed the point.
Both Democrats and Republicans were scurrying to profit from cashing in or out, according to enterprising reporters from the Cleveland Plain Dealer, who mined disclosure forms for the fourth quarter of 2008:
"Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup--some of the very corporations their committee would later rap for greed."
Compounding the news of such avarice is the suggestion that some were inept at it.
Rep. Ginny Brown-Waite, a Florida Republican, bought Citigroup stock the day before the House passed the rescue bill and President Bush signed it into law. She voted against it. The stock, which closed at $22.50 a share the day she acquired it, is now worth $3.
The Plain Dealer reports that "members of the Financial Services Committee were privy to closed-door discussions, staff briefings and political horse-trading decisions between political parties, Congress and the White House. Banks lobbied Congress and the administration heavily."
At least one of them missed the point.
Thursday, April 09, 2009
Backseating-Driving the Banks
After its vaunted stress tests, the Obama Administration is telling us, through unnamed officials, that banks are "in better shape than many people think" but will "probably need to be bailed out again, either by private investors or, more likely, the federal government." After billions of taxpayer bailout, some still need more capital.
The picture of Treasury hovering over American banks with constant questioning and advice, like a backseat driver, is not reassuring. It recalls a time when I had to explain to a lifelong politician turned company president why Time Magazine had called him an "amateur":
If a division head is doing well, the president should support him; if not, replace him. Anything else is like having people sitting next to the coach during a game whispering advice into his ear. That looks amateur.
The banks these days need supervision, especially over the use of taxpayer money, but, according to the New York Times, "it is becoming increasingly clear, industry insiders say, that the government will use its findings to press certain banks to sell troubled assets. The hope is that by cleansing their balance sheets, banks will be able to lure private capital, stabilizing the entire industry.
"In some cases, however, the investments of existing shareholders could be severely diluted by large sales of new stock.
"Some of the banks could also face more stringent restrictions on employee compensation or be ordered to change their boards or management. In extreme instances, the government could wind up taking larger, perhaps even controlling, stakes."
From the cheap seats, this kind of piecemeal supervision by pressure and without public disclosure looks amateur--nationalization by slow drip--and creates a no-win situation for taxpayers, blaming government interference for failures, no matter how badly individual banks are managed.
Within the limits of not creating public panic, the bank bailout could use a lot more Obama transparency and less of the traditional "trust us" secrecy by the Treasury, Federal Reserve and FDIC.
The picture of Treasury hovering over American banks with constant questioning and advice, like a backseat driver, is not reassuring. It recalls a time when I had to explain to a lifelong politician turned company president why Time Magazine had called him an "amateur":
If a division head is doing well, the president should support him; if not, replace him. Anything else is like having people sitting next to the coach during a game whispering advice into his ear. That looks amateur.
The banks these days need supervision, especially over the use of taxpayer money, but, according to the New York Times, "it is becoming increasingly clear, industry insiders say, that the government will use its findings to press certain banks to sell troubled assets. The hope is that by cleansing their balance sheets, banks will be able to lure private capital, stabilizing the entire industry.
"In some cases, however, the investments of existing shareholders could be severely diluted by large sales of new stock.
"Some of the banks could also face more stringent restrictions on employee compensation or be ordered to change their boards or management. In extreme instances, the government could wind up taking larger, perhaps even controlling, stakes."
From the cheap seats, this kind of piecemeal supervision by pressure and without public disclosure looks amateur--nationalization by slow drip--and creates a no-win situation for taxpayers, blaming government interference for failures, no matter how badly individual banks are managed.
Within the limits of not creating public panic, the bank bailout could use a lot more Obama transparency and less of the traditional "trust us" secrecy by the Treasury, Federal Reserve and FDIC.
Monday, March 30, 2009
What's Good for General Motors...
As news sinks in that President Obama has, in effect, fired the head of GM, it recalls that half a century ago President Eisenhower asked the man in that position to help him run the country.
When Ike picked Charles E. Wilson as Secretary of Defense in 1953, Congress wanted Wilson to sell his GM stock, which he reluctantly agreed to do. But when asked if he could conceive of making a decision adverse to the corporation, Wilson said yes but added that he could not imagine such a situation "because for years I thought what was good for the country was good for General Motors and vice versa."
Now, in an era when the auto industry is dragging down the US economy, the Washington Post reports, "The Obama administration has forced the longtime head of General Motors to resign and said yesterday that it would withhold additional federal aid to the auto industry unless the ailing companies undertake changes they so far have been unwilling or unable to make."
As the President promises to make Detroit "much more lean, mean and competitive than it currently is" in return for more bailout billions, there is the mirror image of unease about the symbiotic nature of that relationship.
The White House's willingness to take over GM is in sharp contrast to its hands-off approach to the banks in the plan to make toxic assets disappear. Does anybody in Washington know more about making cars than making loans?
After four stormy years of trying to modify and unify the Armed Forces, when Charles E. Wilson stepped down, Eisenower said he had managed the Defense Department "in a manner consistent with the requirements of a strong, healthy national economy."
Can Obama find someone to reverse the process now?
When Ike picked Charles E. Wilson as Secretary of Defense in 1953, Congress wanted Wilson to sell his GM stock, which he reluctantly agreed to do. But when asked if he could conceive of making a decision adverse to the corporation, Wilson said yes but added that he could not imagine such a situation "because for years I thought what was good for the country was good for General Motors and vice versa."
Now, in an era when the auto industry is dragging down the US economy, the Washington Post reports, "The Obama administration has forced the longtime head of General Motors to resign and said yesterday that it would withhold additional federal aid to the auto industry unless the ailing companies undertake changes they so far have been unwilling or unable to make."
As the President promises to make Detroit "much more lean, mean and competitive than it currently is" in return for more bailout billions, there is the mirror image of unease about the symbiotic nature of that relationship.
The White House's willingness to take over GM is in sharp contrast to its hands-off approach to the banks in the plan to make toxic assets disappear. Does anybody in Washington know more about making cars than making loans?
After four stormy years of trying to modify and unify the Armed Forces, when Charles E. Wilson stepped down, Eisenower said he had managed the Defense Department "in a manner consistent with the requirements of a strong, healthy national economy."
Can Obama find someone to reverse the process now?
Tuesday, March 24, 2009
Ubiquitous Obama
If we were paying the President by the hour, the economic crisis would be worse. After the Tonight Show, 60 Minutes and town halls everywhere, we get a prime-time news conference this evening.
If that sounds like a complaint, it isn't. In this time of multiple anxieties, Barack Obama, despite the inevitability of falling approval ratings, has succeeded brilliantly as Comforter-in-Chief.
With his remarkable capacity to put mixed feelings into context (i.e., the AIG bonuses are an outrage, but we can't afford to govern out of anger and then helping bury the nutty House tax bill), Obama is just the President we need psychologically at this moment, no matter what reservations we may have about specific moves such as the stimulus and the bank bailout.
"Obama Dials Down Wall Street Criticism" proclaims the Wall Street Journal today, as he reaches out for a public-private answer to the credit crunch, the latest step in his progress from defining the problem to trying to solve it.
Frustrated Republicans are reduced to sneers and nitpicking. As Carl Ericson observes at Simply Left Behind: "It's driving his opponents crazy. Obama has at once lifted himself above the fray while encouraging the fray using surrogates. The more conservatives focus on Obama's miscues and teleprompters, the more the American people will understand that the GOP offers no rational alternative at this time, that they are spinning their wheels waiting for an opportunity to seize the upper hand on an issue of substance."
In advance of the G20 economic summit next week, the President is going global with his ubiquity. In an OpEd today running in 31 countries around the world, he writes:
"We are living through a time of global economic challenges that cannot be met by half measures or the isolated efforts of any nation. Now, the leaders of the Group of 20 have a responsibility to take bold, comprehensive and coordinated action that not only jump-starts recovery, but also launches a new era of economic engagement to prevent a crisis like this from ever happening again."
No matter what final grades he gets from history, Obama has already earned his A for effort.
If that sounds like a complaint, it isn't. In this time of multiple anxieties, Barack Obama, despite the inevitability of falling approval ratings, has succeeded brilliantly as Comforter-in-Chief.
With his remarkable capacity to put mixed feelings into context (i.e., the AIG bonuses are an outrage, but we can't afford to govern out of anger and then helping bury the nutty House tax bill), Obama is just the President we need psychologically at this moment, no matter what reservations we may have about specific moves such as the stimulus and the bank bailout.
"Obama Dials Down Wall Street Criticism" proclaims the Wall Street Journal today, as he reaches out for a public-private answer to the credit crunch, the latest step in his progress from defining the problem to trying to solve it.
Frustrated Republicans are reduced to sneers and nitpicking. As Carl Ericson observes at Simply Left Behind: "It's driving his opponents crazy. Obama has at once lifted himself above the fray while encouraging the fray using surrogates. The more conservatives focus on Obama's miscues and teleprompters, the more the American people will understand that the GOP offers no rational alternative at this time, that they are spinning their wheels waiting for an opportunity to seize the upper hand on an issue of substance."
In advance of the G20 economic summit next week, the President is going global with his ubiquity. In an OpEd today running in 31 countries around the world, he writes:
"We are living through a time of global economic challenges that cannot be met by half measures or the isolated efforts of any nation. Now, the leaders of the Group of 20 have a responsibility to take bold, comprehensive and coordinated action that not only jump-starts recovery, but also launches a new era of economic engagement to prevent a crisis like this from ever happening again."
No matter what final grades he gets from history, Obama has already earned his A for effort.
Sunday, March 22, 2009
Obama's Biggest Bet and Ours
We are back in the casino now, ready to play a hand that could make us whole again or leave us broke for a long time to come.
After huge bets on bailouts and stimulus plans, we are about to go all in with $1 trillion to buy bad loans and toxic assets from ailing banks in partnership with private investors.
As Obama pushes our chips into that pot, there is a sinking feeling that the game may be rigged for the Wall Street players around the table who have been hoarding theirs, waiting for a time when the odds are with them.
It's unnerving that the President's chief advisers, Tim Geithner and Larry Summers, have been house men so long that their vision of the game may be inadequate to the needs of a nation that is gambling real money--rent money and what could put food on millions of family tables--on the outcome.
The Public Investment Corporation to be announced tomorrow sounds like a rehash of ideas that have been floating around for months and been picked apart by economists and knowledgeable financial operators. It has the look and feel of another Wall Street heads-I-win, tails-I-break-even proposition.
Before taking the plunge, we should hear the case for temporary and/or partial nationalization of the banks that has been pushed aside for political reasons, which amounts to leaving our fate in the hands of the Congressional clowns who have been showing us who they are in the past week.
As we try to clear our heads of AIG bonus madness and other distractions, let's take the time to get this one right. We have been betting everything on Obama's judgement. There is too much at stake to make the wrong call.
After huge bets on bailouts and stimulus plans, we are about to go all in with $1 trillion to buy bad loans and toxic assets from ailing banks in partnership with private investors.
As Obama pushes our chips into that pot, there is a sinking feeling that the game may be rigged for the Wall Street players around the table who have been hoarding theirs, waiting for a time when the odds are with them.
It's unnerving that the President's chief advisers, Tim Geithner and Larry Summers, have been house men so long that their vision of the game may be inadequate to the needs of a nation that is gambling real money--rent money and what could put food on millions of family tables--on the outcome.
The Public Investment Corporation to be announced tomorrow sounds like a rehash of ideas that have been floating around for months and been picked apart by economists and knowledgeable financial operators. It has the look and feel of another Wall Street heads-I-win, tails-I-break-even proposition.
Before taking the plunge, we should hear the case for temporary and/or partial nationalization of the banks that has been pushed aside for political reasons, which amounts to leaving our fate in the hands of the Congressional clowns who have been showing us who they are in the past week.
As we try to clear our heads of AIG bonus madness and other distractions, let's take the time to get this one right. We have been betting everything on Obama's judgement. There is too much at stake to make the wrong call.
Wednesday, February 11, 2009
Baby-the-Banks Bailout
Making some amends for her newspaper's hyping yesterday, Maureen Dowd, bless her salty tongue, today pistol-whips Tim Geithner's baby-the-banks bailout plan:
"The problem is that the 'lost faith' that Geithner talked about...cannot be restored as long as the taxpayers who are funding these wayward banks don’t have more control.
"Geithner is not even requiring the banks to lend in return for the $2 trillion his program will try to marshal, mostly by having the Fed print money out of thin air, thereby diluting our money, or borrowing more from China. (When, exactly, can China foreclose on us and start sending us toxic toys again?)
"There’s a weaselly feel to the plan, a sense that tough decisions were postponed even as President Obama warns about our 'perfect storm of financial problems.' The outrage is going only one way, as we pony up trillion after trillion."
This cautious approach is in striking contrast to the Obama Administration's all-in attitude toward the stimulus bill.
“If folks are still unemployed," the President told a Florida rally yesterday, "then you guys won’t employ me next time I come down here...I expect to be judged by results. I’m not going to make any excuses. If stuff hasn’t worked and people don’t feel like I’ve led the country in the right direction, then you’ll have a new president.”
Putting himself on the line this way, why is Obama unwilling to take on the banks more directly, as some of his advisers apparently wanted him to do?
Geithner's cautious, sketchy "plan" even sent Wall Street into a swoon. No one expects government to control the banks forever, but as long as taxpayers pour trillions into their greedy little hands, someone should be making sure they are keeping their sticky fingers clean.
"The problem is that the 'lost faith' that Geithner talked about...cannot be restored as long as the taxpayers who are funding these wayward banks don’t have more control.
"Geithner is not even requiring the banks to lend in return for the $2 trillion his program will try to marshal, mostly by having the Fed print money out of thin air, thereby diluting our money, or borrowing more from China. (When, exactly, can China foreclose on us and start sending us toxic toys again?)
"There’s a weaselly feel to the plan, a sense that tough decisions were postponed even as President Obama warns about our 'perfect storm of financial problems.' The outrage is going only one way, as we pony up trillion after trillion."
This cautious approach is in striking contrast to the Obama Administration's all-in attitude toward the stimulus bill.
“If folks are still unemployed," the President told a Florida rally yesterday, "then you guys won’t employ me next time I come down here...I expect to be judged by results. I’m not going to make any excuses. If stuff hasn’t worked and people don’t feel like I’ve led the country in the right direction, then you’ll have a new president.”
Putting himself on the line this way, why is Obama unwilling to take on the banks more directly, as some of his advisers apparently wanted him to do?
Geithner's cautious, sketchy "plan" even sent Wall Street into a swoon. No one expects government to control the banks forever, but as long as taxpayers pour trillions into their greedy little hands, someone should be making sure they are keeping their sticky fingers clean.
Sunday, September 28, 2008
Fear-Mongering to the Finish
George W. Bush's political epitaph will read: "From first to last, he scared the hell out of the American people."
Starting with fabricated forebodings about Saddam Hussein's imminent plans to nuke us into oblivion, his Administration played the fear card all the way to this week's deadpan televised alarm about financial panic. At the White House meeting the next day, he warned Congressional leaders and the presidential candidates in his usual elegant phrasing, “If money isn’t loosened up, this sucker could go down.”
In 2002, we had a president who made us want hide under our beds and, six years later, he was inspiring us to hide our money under the mattress.
Franklin D. Roosevelt started his tenure by telling Americans, "The only thing we have to fear is fear itself." In a new century, when the new president came to office, political prophets should have told us, "The only thing we have to fear is Bush himself."
Even the most diehard horror-movie lovers will find eight years of being terrified too much. For the next White House movie, they will be looking for a new theme. Hope, perhaps.
Starting with fabricated forebodings about Saddam Hussein's imminent plans to nuke us into oblivion, his Administration played the fear card all the way to this week's deadpan televised alarm about financial panic. At the White House meeting the next day, he warned Congressional leaders and the presidential candidates in his usual elegant phrasing, “If money isn’t loosened up, this sucker could go down.”
In 2002, we had a president who made us want hide under our beds and, six years later, he was inspiring us to hide our money under the mattress.
Franklin D. Roosevelt started his tenure by telling Americans, "The only thing we have to fear is fear itself." In a new century, when the new president came to office, political prophets should have told us, "The only thing we have to fear is Bush himself."
Even the most diehard horror-movie lovers will find eight years of being terrified too much. For the next White House movie, they will be looking for a new theme. Hope, perhaps.
Thursday, September 25, 2008
The Swindlers at Your Friendly Bank
As Washington prepares to pump $730 billion into rescuing banks, consumer advocates are reminding the public of the ways in which the beneficiaries already have their hands in taxpayers' pockets without government protection.
Today, Americans for Fairness in Lending brings forth former employees of credit card issuer MBNA, now owned by Bank of America, to tell how they were forced to use aggressive and deceptive practices with customers to push them into taking cash advances and max out their credit cards.
"Every customer who calls in is a mark," according to one phone operative who estimated that she sold almost a quarter of a billion dollars in the four years she worked for MBNA before it was bought in 2005 by Bank of America, She tells of a supervisor, listening in, pushing her to sell more to a man in his 90s who had a $100,000 limit.
"I was hired to sell money," she told reporters on a conference call organized by the advocacy group. "We had a goal of selling $25,000 an hour, $4 million per month. And I was one employee among hundreds, just at this one site."
Even those of us old enough to pay as we go can testify to the greed of our friendly local banks. Deposit a check, and you can't draw against it for five business days, even though the bank gets your money overnight by electronic clearance and uses it at no charge, a "float" of untold millions of dollars daily.
They stopped giving away toasters a long time ago to get hard-working customers to part with their money, but banks are still putting the heat on customers every day.
The advocacy groups have a laundry list of reforms that are needed and now that the government is in partnership with the banking industry, Congress should start working on them.
Today, Americans for Fairness in Lending brings forth former employees of credit card issuer MBNA, now owned by Bank of America, to tell how they were forced to use aggressive and deceptive practices with customers to push them into taking cash advances and max out their credit cards.
"Every customer who calls in is a mark," according to one phone operative who estimated that she sold almost a quarter of a billion dollars in the four years she worked for MBNA before it was bought in 2005 by Bank of America, She tells of a supervisor, listening in, pushing her to sell more to a man in his 90s who had a $100,000 limit.
"I was hired to sell money," she told reporters on a conference call organized by the advocacy group. "We had a goal of selling $25,000 an hour, $4 million per month. And I was one employee among hundreds, just at this one site."
Even those of us old enough to pay as we go can testify to the greed of our friendly local banks. Deposit a check, and you can't draw against it for five business days, even though the bank gets your money overnight by electronic clearance and uses it at no charge, a "float" of untold millions of dollars daily.
They stopped giving away toasters a long time ago to get hard-working customers to part with their money, but banks are still putting the heat on customers every day.
The advocacy groups have a laundry list of reforms that are needed and now that the government is in partnership with the banking industry, Congress should start working on them.
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