Joe Nocera, New York Times business analyst, thinks so.
Christopher J. Dodd, a Connecticut Democrat and chair of the Senate Banking Committee On Thursday, asked Neel Kashkari - the former Goldman Sachs Vice President Henry Paulson appointed to oversee the bailout - why the banks were being slow to make loans.
Senator Dodd: "How was Treasury going to ensure that banks used their new government capital to make loans — “besides rhetorically begging them?”
Kashkari: “We share your view. We want our banks to be lending in our communities.”
According to Nocera, what is actually happening is quite different. He suggests that Paulson’s rationale for the bailout - that banks would start lending again - "is a fig leaf.”
Instead the real agenda is more bank mergers.
Treasury recently introduced a new tax break that, according to Nocera, has only one purpose: to encourage bank mergers”. He cites tax expert Robert Willens: “It couldn’t be clearer if they had taken out an ad.”
As a result of this and other moves, “investors no longer trust Treasury.”
"First it says it has to have $700 billion to buy back toxic mortgage-backed securities.
"Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.
"Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions."
And loans to the public meantime?
“The dirty little secret of the banking industry is that it has no intention of using the money to make new loans”. Nocera listened in on a conference call between Chase executives and caught the following discussion of how Chase was going to spend the $25 billion it received from the Treasury:
“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”
“Read that answer as many times as you want”, says Nocera, “you are not going to find a single word in there about making loans to help the American economy.”
Nocera chased down Senator Dodd “and asked him what he was going to do if the loan situation didn’t improve. “All I can tell you is that we are going to have the bankers up here .... If it turns out that they are hoarding, you’ll have a revolution on your hands. ... There will be hell to pay.”
Nocera’s summary:
“I don’t know about you, but I’m starting to feel as if we’ve been sold a bill of goods.”
So When Will Banks Give Loans? By Joe Nocera, NYT. Published: October 24, 2008
Saturday, October 25, 2008
Thursday, October 23, 2008
A sleazy blizzard
It's a blizzard of really nasty robocalls and flyers in the mail.
After several last week we got 2 calls yesterday, but one friend got 3 in an hour - all disgusting anti-Obama stuff, from the Republican National Committee and the McCain campaign - they aren't even using cover.
Here' s one we got (I got the text from Democracy Now's website, but it is word for word)
McCAIN ROBOCALL: Hello, I’m calling for John McCain and the RNC, because you need to know that Barack Obama has worked closely with domestic terrorist Bill Ayers, whose organization bombed the US Capitol, the Pentagon, a judge’s home, and killed Americans. And Democrats will enact an extreme leftist agenda if they take control of Washington. Barack Obama and his Democratic allies lack the judgment to lead our country. This call was paid for by McCain-Palin 2008 and the Republican National Committee at 202-863-8500.
The flyer covers the same ground.
Unlike John Kerry, who was slow responding to the Swift Boat crap, Obama folk move fast. Here is their response:
OBAMA ROBOCALL: Hi. This is Jeri Watermolen calling for the Campaign for Change. I live in Green Bay, and like you, I’ve been getting sleazy phone calls and mail from John McCain and his supporters, viciously and falsely attacking Barack Obama. I used to support John McCain, because he honorably served our country. But this year he’s running a dishonorable campaign. We know McCain will continue many of Bush’s policies, and now he’s using George Bush’s divisive tactics. In fact, he hired the Bush strategist whose attacks even McCain once called hateful. Barack Obama will turn the page on these negative politics and stand up for the middle class. That’s the change we need, and it is why I have changed my mind about John McCain. Join me in voting for Barack Obama. Paid for by the Campaign for Change, a project of the Democratic Party of Wisconsin, 608-255-5172, and authorized by Obama for America. (Again, text from Democracy Now website).
And the reaction is good. For one, a Madison man who quit his job rather than make these calls is getting national attention, including in the NYT today. And this from that same story.
"On MSNBC, Representative Michele Bachmann of Minnesota was launching into the Obama/terrorist spin when she suggested that the news media should investigate “the views of the people in Congress and find out: Are they pro-America or anti-America.” So far, the only person who’s felt the impact of her call to reinvent McCarthyism for a post-Communist planet has been her opponent, a hitherto totally ignored Democrat named Elwyn Tinklenberg, who was stunned to discover in the following days that he had received close to $1 million in donations."
MAYBE sleaze isn't going to pay off this time.
After several last week we got 2 calls yesterday, but one friend got 3 in an hour - all disgusting anti-Obama stuff, from the Republican National Committee and the McCain campaign - they aren't even using cover.
Here' s one we got (I got the text from Democracy Now's website, but it is word for word)
McCAIN ROBOCALL: Hello, I’m calling for John McCain and the RNC, because you need to know that Barack Obama has worked closely with domestic terrorist Bill Ayers, whose organization bombed the US Capitol, the Pentagon, a judge’s home, and killed Americans. And Democrats will enact an extreme leftist agenda if they take control of Washington. Barack Obama and his Democratic allies lack the judgment to lead our country. This call was paid for by McCain-Palin 2008 and the Republican National Committee at 202-863-8500.
The flyer covers the same ground.
Unlike John Kerry, who was slow responding to the Swift Boat crap, Obama folk move fast. Here is their response:
OBAMA ROBOCALL: Hi. This is Jeri Watermolen calling for the Campaign for Change. I live in Green Bay, and like you, I’ve been getting sleazy phone calls and mail from John McCain and his supporters, viciously and falsely attacking Barack Obama. I used to support John McCain, because he honorably served our country. But this year he’s running a dishonorable campaign. We know McCain will continue many of Bush’s policies, and now he’s using George Bush’s divisive tactics. In fact, he hired the Bush strategist whose attacks even McCain once called hateful. Barack Obama will turn the page on these negative politics and stand up for the middle class. That’s the change we need, and it is why I have changed my mind about John McCain. Join me in voting for Barack Obama. Paid for by the Campaign for Change, a project of the Democratic Party of Wisconsin, 608-255-5172, and authorized by Obama for America. (Again, text from Democracy Now website).
And the reaction is good. For one, a Madison man who quit his job rather than make these calls is getting national attention, including in the NYT today. And this from that same story.
"On MSNBC, Representative Michele Bachmann of Minnesota was launching into the Obama/terrorist spin when she suggested that the news media should investigate “the views of the people in Congress and find out: Are they pro-America or anti-America.” So far, the only person who’s felt the impact of her call to reinvent McCarthyism for a post-Communist planet has been her opponent, a hitherto totally ignored Democrat named Elwyn Tinklenberg, who was stunned to discover in the following days that he had received close to $1 million in donations."
MAYBE sleaze isn't going to pay off this time.
Sunday, October 5, 2008
Goldman Sachs fingers in Wall Street bailout?
I was struck by the fact that no-one in power seemed to have noticed that we were in economic trouble until their pockets were threatened, when all of a sudden they decided to pick ours.
So I was intrigued by the question as to whether Henry Paulson's Goldman Sachs background and connections had anything to do with his sudden discovery of the problem. (Or rather whether there were any smoking pistols). Seems pretty clear from the following timeline:
On Sept 14 Lehmans was allowed to go into bankruptcy, Merrill Lynch was in trouble, and AIG asked The Fed for $40b.
Over the weekend Sept 14-15, there were meetings at the New York Federal Reserve. Henry M. Paulson Jr., the Treasury secretary, attended as did Lloyd C. Blankfein, the chief executive of Goldman Sachs attended the weekend meetings.
On Sept 15 the Fed said no to AIG, the Dow Jones sank over 500 points.
On Sept 16 there was another high level meeting to discuss financial aid for A.I.G. which Henry Paulson did not attend, but Blankfein was the ONLY Wall Street chief executive who attended this meeting. The Fed changed its mind and gave AIG $85b.
Why let Lehman collapse, but first deny then save AIG?
Probably not the only reason, but my guess is not unrelated, Goldman Sachs was deeply threatened by an AIG collapse, though few people were aware of this at first. A Goldman spokesman, declined to detail how badly hurt his firm might have been had A.I.G. collapsed and Goldman’s chief financial officer, assured analysts on Sept. 16 that his firm’s exposure was “immaterial". But other stories have confirmed that GS was in danger. By one calculation Goldman had $20 billion worth of risk tied to A.I.G.
On Sept. 16 the government announced its two-year, $85 billion loan to A.I.G. What is notable is that the plan saved the insurer’s trading partners - such as Goldman Sachs - but decimated its shareholders.
A Treasury spokeswoman declined to comment about Goldman’s role in the A.I.G. rescue. However turn around again and suddenly Goldman had changed its regulatory status to help bolster its finances.
Regarding Mr. Blankfein’s presence at the Fed during talks about an A.I.G. bailout, Goldman's CFO said: “I think it would be a mistake to read into it that he was there because of our own interests. We were engaged because of the implications to the entire system.”
On Sept 18 Secretary Paulson went the next step and proposed the $700 billion to bailout 'the entire system'.
So I was intrigued by the question as to whether Henry Paulson's Goldman Sachs background and connections had anything to do with his sudden discovery of the problem. (Or rather whether there were any smoking pistols). Seems pretty clear from the following timeline:
On Sept 14 Lehmans was allowed to go into bankruptcy, Merrill Lynch was in trouble, and AIG asked The Fed for $40b.
Over the weekend Sept 14-15, there were meetings at the New York Federal Reserve. Henry M. Paulson Jr., the Treasury secretary, attended as did Lloyd C. Blankfein, the chief executive of Goldman Sachs attended the weekend meetings.
On Sept 15 the Fed said no to AIG, the Dow Jones sank over 500 points.
On Sept 16 there was another high level meeting to discuss financial aid for A.I.G. which Henry Paulson did not attend, but Blankfein was the ONLY Wall Street chief executive who attended this meeting. The Fed changed its mind and gave AIG $85b.
Why let Lehman collapse, but first deny then save AIG?
Probably not the only reason, but my guess is not unrelated, Goldman Sachs was deeply threatened by an AIG collapse, though few people were aware of this at first. A Goldman spokesman, declined to detail how badly hurt his firm might have been had A.I.G. collapsed and Goldman’s chief financial officer, assured analysts on Sept. 16 that his firm’s exposure was “immaterial". But other stories have confirmed that GS was in danger. By one calculation Goldman had $20 billion worth of risk tied to A.I.G.
On Sept. 16 the government announced its two-year, $85 billion loan to A.I.G. What is notable is that the plan saved the insurer’s trading partners - such as Goldman Sachs - but decimated its shareholders.
A Treasury spokeswoman declined to comment about Goldman’s role in the A.I.G. rescue. However turn around again and suddenly Goldman had changed its regulatory status to help bolster its finances.
Regarding Mr. Blankfein’s presence at the Fed during talks about an A.I.G. bailout, Goldman's CFO said: “I think it would be a mistake to read into it that he was there because of our own interests. We were engaged because of the implications to the entire system.”
On Sept 18 Secretary Paulson went the next step and proposed the $700 billion to bailout 'the entire system'.
Subscribe to:
Posts (Atom)