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tarp: Wells Fargo "Earnings" - 08/06/09 10:00 PM
Wells Fargo reported earnings on July 22nd which showed a surge in non-performing assets, not unlike the earnings report that Bank of America reported.
According to a Reuters article, non-performing assets soared 45% from the first quarter.
Non-performing assets typically are loans that the borrower has stopped making payments on.
Wells Fargo non-performing commercial and commerial real estate loans surged 69% from the 1st quarter.
While Wells Fargo, as well as the rest of the banking industry, has been the beneficiary of favorable government tax breaks, loan guarantees, TARP money, accounting principles, the PPIP, and the grand-daddy of all refinancing booms, it continues to remain under … (6 comments)
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tarp: Geithner's PPIP Moving Forward - 07/09/09 10:39 AM
Despite the fact that Congress never actually approved Geithner's plan to use TARP money to subsidize the PPIP, and despite the reality that the PPIP will do little to actually stimulate the credit markets, (the banks will only ratchet up their lending once the housing market and economy stabilize, not when they are given money; see TARP) Geithner is continuing to move forward with yet another program to help the banking sector.
From the $700 billion of TARP, to hundreds of billions of loan guarantees, to preferential tax treatment, to the relaxation of mark to market accounting, the banks continue to be the focus government … (1 comments)
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tarp: Fed's Citi Loan Guarantees - 06/26/09 11:48 PM
Exactly $300 billion of what did taxpayers guarantee when the Fed stepped in to provide support to Citigroup in November of 2008?
According to CNBC, that is the question that Rep. Alan Grayson is asking Neil Barofsky, the special inspector general for TARP.
It is a fair question considering that we needed an act of Congress to pass the $700 billion TARP program in the first place and yet the Treasury Department on its own accord, independent of Congress, signed on to guarantee an additional $300 billion of loans.
But that wasn't the only guarantee the Treasury made, the Treasury also back-stopped $118 … (4 comments)
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tarp: TARP Bank Lending Falls 7% In April - 06/18/09 04:15 PM
According to CNNMoney.com and a government report, the nations 21 largest banks that received TARP funds showed a decline of 7% in their lending volume in April compared to March.
This of course continues a trend that we saw established in 2008 when the credit markets seized and loan volume declined by 55% in 2008 compared to 2007.
As I have written about before, lending is a two-way transaction. Not only does credit need to be available, but there also needs to be demand for it.
This article confirms this, "Regulators attributed part of the decline to lower demand for new commercial and … (7 comments)
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tarp: Bank Stress Tests Not "Stressful" Enough - 06/13/09 07:56 AM
CNBC.com reported this past week that according to Harvard University professor Elizabeth Warren, the Congressionally-appointed panel chair overseeing the Troubled Asset Relief Program (TARP), said that, "We've already blown past the worst-case scenario on unemployment".
The bank stress test had two different "pressure" tests to see how banks would fair under varying economic conditions.
According to the oversight's report, the more adverse economic scenario planned for an average unemployment rate of 8.9% in 2009. Currently, the unemployment rate in May is 9.4% and has averaged 8.5% for 2009.
Additionally, apparently the Treasury's stress test was for less than a two year period. The reason … (4 comments)
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tarp: The PPIP Could Be Done Before It Starts - 06/07/09 11:02 AM
The Wall Street Journal is reporting that the PPIP, the Public-Private Investment Program that was designed by Geithner, the Fed, and the FDIC, may actually never come to fruition.
The program was designed to leverage billions of TARP money into nearly $1 trillion worth of tax-payer backed loan guarantees in an effort so remove toxic assets from banks balance sheets so as to "get credit moving again."
There are several reasons why this plan was a fraud and I am pleased that this ship may be sank.
First, if the motive was really about credit, then shouldn't the $700 billion in TARP money we … (2 comments)
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tarp: Stress Test Mess - 05/07/09 06:53 PM
Ok, so let me get this straight because I didn't go to a fancy school; the Federal Reserve wants us to believe that 19 of our largest banks need to raise only $74.6 billion in new capital while at the same time Geithner and the Treasury wants us to believe that we need to leverage $100 billion of TARP funds into upwards of $600 billion (or more) in tax-payer guarantees in order to remove toxic assets from the banks balance sheets as part of the PPIP. Am I missing something?
If the bank problem is only a $74.6 billion dollar problem, then why don't we just … (6 comments)
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tarp: But It's All About Credit, Right? - 05/04/09 06:41 PM
How many times have we heard either politicians, talking heads, or CEOs say, "we need to get credit moving again"?
As I have written about before the accepted philosophy has been that once we fixed the banking system and gave the banks enough capital, or guaranteed enough of their loans, or when we removed the toxic assets (all at the cost of the tax payer of course), that the banks will start lending again, the economy will turn around, and as Clark Griswold said in Vacation, we'll all be whistlin' Zip-a-dee-do-dah out of our you know whats as we skipped to work each day.
Well, we have … (6 comments)
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tarp: It's NOT About Credit - 04/26/09 10:21 AM
For the past several months I have listened to CNBC analysts, politicians in Washington, and bank CEOs talk about the need to get credit flowing. That once we fixed the banking system and gave the banks enough capital, or guaranteed enough of their loans, or when we removed the toxic assets (all at the cost of the tax payer of course), that the banks will start lending again, the economy will turn around, and as Clark Griswold said in Vacation, we'll all be whistlin' Zip-a-dee-do-dah outta out of our you know whats as we skipped to work each day. And I will admit, they had me going for … (9 comments)
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tarp: TARP Fraud - 04/25/09 06:12 PM
While Larry Kudlow is not afraid to turn weeds into mustard seeds, I will give him this, he's also not afraid to call bull on what is taking place with TARP.
In his latest bog post Kudlow illustrates how Special Inspector General Neil Barofsky's report into TARP has "opened 20 criminal probes into possible securities fraud, tax-law violations, insider-trading, and mortgage-modification fraud related to TARP."
Barofsky's report states that TARP is, "inherently vulnerable to fraud, waste and abuse, including significant issues related to conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering."
Barofsky, according to Kudlow, goes on … (10 comments)
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tarp: Wells Fargo Looks To Be A "Buyer" of Toxic Assets - 04/18/09 07:00 PM
Howard Atkins, the CFO of Wells Fargo, plans to take advantage of the now wildly popular Public-Private Investment Program, the PPIP. "We think the Public-Private Investment Program is a really good idea", Atkins said during a recent CNBC interview.
And what's not to like, not only can Wells Fargo sell their toxic, now "legacy", assets that have been weighing on their books for more than they are worth, but now they can also invest in other banks toxic assets with government guarantees. In other words, they can be absolved of the bad investments they have made while at the same time they can make new investments that … (6 comments)
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tarp: Washington's New Housing Plan: Inflation - 03/20/09 11:03 AM
If lower mortgage rates and first time home buyer tax credit's don't work, and they are showing they have not, it appears that Washington's backup plan for the housing market is inflation.
Between Obama's housing plan of $275 billion and now the Fed's recent move to purchase an additional $750 billion worth of mortgage backed securities on top of the $250 billion they agreed to purchase a couple of months ago, Washington has spent over $1 trillion on "housing" in just the past month. And that doesn't include $700 billion for TARP or Obama's $787 billion "stimulus" plan.
The end result of all of this is … (14 comments)
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tarp: Greenspan on housing - 02/17/09 11:27 PM
A reportby Reuters today quoted former Federal Reserve Chairman Alan Greenspan as saying that a housing recovery is a necessary condition for the end of the financial crisis.
I don't disagree with this. In fact I have written a book and nearly 200 blog posts to the same effect. It's the housing market, stupid.
Greenspan goes on to say that, "the prospect of stable home prices remains many months in the future."
I don't disagree with this either. In fact, depending on how effective or ineffective the government's effort is to stem foreclosures by "subsidizing" mortgage payments with $50 billion worth … (2 comments)
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tarp: Chrysler & GM Need More Money - Is Anybody Surprised? - 02/17/09 05:42 PM
According to the AP, Chrysler & GM announced today that they are going to need more money. For Chrysler it is $2 billion more than they had originally requested.
I have one question.
Is ANYBODY surprised by this?
Would anybody be shocked if they need even more money in another 6 months?
Isn't this the nature of bailouts?
Isn't this what AIG did, and then Citi, and then Bank of America did? Didn't they all end up going back to the trough, I mean Treasury, after their first bailout?
Isn't this what happened with the first half of TARP, the original $350 billion? It was … (6 comments)
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tarp: Washington is Insane - 02/08/09 03:01 PM
I know what you're thinking, "thank you, captain obvious, tell me something I don't know".
But I'm not talking about O.J. Simpson insane, I'm talking about the other definition of insanity, the one that says, "doing the same thing and expecting different results" kind of insane.
Representative Darrell Isa of California was quoted by Matthew Benjamin in a Bloomberg.com article as saying, "They continue to assume that if you do something and it hasn't worked, you have to continue to do more of it" Isa went on to say, "That's the definition of insanity".
The first $350 billion of TARP capital injections didn't work? … (17 comments)
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tarp: There is no free lunch with falling home prices - 02/02/09 09:55 AM
A week ago I wrote a post about Peter Schiff on the housing market. It was in response to U.S. News & World Report's Luke Mullins and an interview he did with Schiff on his blog. In the interview Schiff lobbys for home values to come down and for the government to allow the free market to sort it out. The problem with this is that a lot of people overlook is that there is no "free lunch" with a free market solution, somebody always has to pay for it, and its usually not the person who got the free lunch.
… (2 comments)
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tarp: "You're gonna need a bigger boat" - 01/31/09 03:30 PM
I have to give credit to Tom Friedman of the New York Times for this analogy. Last week on Meet The Press with David Gregory, Tom Friedman compared the current banking crisis to the scene in Jaws when Roy Scheider sees the killer shark for the first time and says in shock and disbelief, "You're gonna need a bigger boat".
Well, that's exactly the reality of this banking crisis. Everybody knows we have a problem, but what a lot of people are beginning to realize is that the problem is much, much, bigger than anybody realized.
Joseph E. Stiglitz, a professor … (8 comments)
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tarp: "Bailout: The Sequel" Coming to a Bank Near You... - 01/19/09 12:36 PM
(Begin voiceover by Don LaFontaine)
"In a world where every bank wants something for nothing, only one branch of government has the answer, meet the U.S. Treasury Department!"
(End voiceover by Don LaFontaine)
If you thought movies like Teen Wolf Too, Jaws: The Revenge, Speed 2 Cruise Control, and Weekend at Bernies II, were a waste of your money, just wait until the new bank bailout is unveiled; and no, I'm not talking about the second tranche of the $350 billion of TARP money that was approved last week.
Here's the problem, while the original capital injections that were made by … (7 comments)
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tarp: Did you hear that sound today on Capitol Hill? - 01/16/09 06:52 PM
Did you hear that sound today on Capitol Hill?
It was the sound of Congress flushing another $350 billion of tax payer money down the toilet.
The Senate approved Bush's request of Obama's request for the second tranche of $350 billion of TARP money to be made available for the Treasury's disposal.
And it appears as though the vote and approval could not have come at a better time for both Citigroup and Bank of America whose stock has been decimated in recent days. They will likely be the first banks to receive additional capital injections, Bank of America for the second … (55 comments)
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tarp: A third bailout for Citigroup? - 01/14/09 10:01 AM
Is there a third bailout for Citigroup in the making?
On October 13, after Paulson had abandoned the original intent of the TARP program, Citigroup became one of the first nine banks to receive capital injections from the Treasury; for Citigroup it was to the tune of $25 billion.
Just over a month later, on November 24, as shares of Citigroup had plunged nearly 75% in a little over two weeks to $3.77, the Treasury was once again forced to step in in order to prevent the bank from failing. This time it was to the tune of a $20 billion … (9 comments)
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Mark MacKenzie
Phoenix,
AZ
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