In a weekend meeting with U.S. Treasury Secretary Timothy Geithner, Mr. Miller, a lawmaker from North Carolina said, "if we had regulators to go in and examine the books like we did with Fannie Mae and Freddie Mac, a great number of our systemically important financial institutions could be insolvent."
In other words, these guys have the instrument panel turned off and are flying into the fog, over the Andes, without a pilot or copilot. If we have no regulators to go in and check the banks' books and banks won't disclose their losses, how in the world can we justify giving more taxpayer money to the banks? This whole plan is just smoke and mirrors.
Nevertheless, the Treasury plans to go ahead and give more TARP money to the banks, but they said the banks would need to keep a record of how the money is spent.
They are not calling it a "bad bank" plan anymore. Now its called an "aggregate bank" that is to be seeded with TARP money and partnered with private equity. These guys still will not bite the bullet and take their losses. They insist on hiding banks' losses under the guise of this new "aggregator bank."
The Treasury would probably expand TALF (Term Asset Backed-Securities Loan Facility) by providing financing to investors to purchase securities backed by consumer loans.
For homeowners, the Administration is expected to announce creation of a national standard for loan modification to be adopted by Fannie Mae and Freddie Mac. It would establish a mechanism to determine the value of homes facing foreclosure. This could speed up negotiations with troubled borrowers. Another proposal is to use taxpayer money to modify loans. Under such a plan, the government would match mortgage companies' interest rate reductions to a certain amount.
In closing, here's a proposal from our common-sense man-on-the-street. Step 1: Don't waste another $350 billion of taxpayer money and throw it down a sump hole. We have about 7,500 banks in this country, the overwhelming majority of which are solvent. Work with these banks, and don't worry about a big bank going bust. A cornerstone of British banking, Barings Bank, founded in 1762 went bankrupt and Britain survived.
Step two: Use the $350 billion of TARP money to refinance home mortgages at 3% and help homeowners avoid foreclosure whenever possible. Trust our man on the street when he says: nothing will jumpstart the housing market better than 3% mortgages. And while you are at it, lower the interest rates on credit cards to 3%.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
Reader Comments (Page 1 of 1)
2-09-2009 @ 9:47AM
Save Money Tips said...
So is the answer for banks to 'bite the bullet and take their losses' if they have more toxic waste on their books than they could possibly survive taking losses on?
Suggestions like this seem like knee-jerk responses; we need solutions that won't sink the ship here.....
http://savemoneytips.org
2-09-2009 @ 12:01PM
Frank ODonnell said...
Give the $$$ to the taxpayers,home owners and small businesses, not money center Banks that are insolvent...., community banks and
taxpayers should be rewarded, not NYC MBA's
who know nothing about work and families or
Wall Street Crooks who love to rake anybody
they do business with, I used to be a stockbroker
and am shamed I was. Ditto for educators and
State governments who waste $$$ on bureaucrats and politics. Non-profits are the highest paid
people in the USA, they produce little except
abstract rationalizations of benefits.
2-09-2009 @ 2:36PM
ed said...
There were 138 million taxpayers in the US last year. If you divide the 900 billion dollars of the stimulus bailout amoung the taxpayers, it would amount to over $6000 each. Give US back out money and we will be able to pay up our mortgages ( and the banks would benefit), buy cars, ( will help the auto industry), and/or use the money to do home improvements or purchase other items which would really stimulate the economy instead of these dumbass proposals the morons in Washington come up with, which do nothing but fatten the pockets of themselves and the people they have to suck up to in order to raise money. Write your congressmen and senators the voice your outrage at this bullshit before it's too late!!! When are we going to stop taking it?? Lets take our country back.
2-10-2009 @ 6:22AM
Nearly Gold said...
I agree about allowing banks that have loaded up with loans to insolvent buyers to go bust; proposed it to John McCain during the recent campaign; but I don't agree that borrowers who shouldn't have obtained loans in the first place now get preferential treatment just because they reneged. Let them all go bust. The real solution is in shrinking ballooning FED and State bureaucracies, fees, penalties, taxes, over regulation, and police state tactics to assist the ruling class, at the at the expense of Joe Taxpayer/citizen. There is insufficient money to go 'round. Crime is a direct result of a facist type governments that feel it must control everyone and everything! Mortgage renegees are just poor folk that tried to take advantage of a system designed to keep and continually enhance the welfare of civil servants at the expense of non civil servants and entrepreneurs. I think we better go back to the gold standard and eliminate a few million useless civil servant jobs. That's what I think!