The Treasury Department is preparing a Chapter 11 bankruptcy filing for struggling U.S. automaker Chrysler that could come as soon as next week, according to a New York Times report.
People with direct knowledge of the action told the newspaper that the U.S. Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing.
Wonder when GM will do the same? From the NYT writeup linked above:
Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.
The only major question that remains unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler. Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake.
Officials at Chrysler and the Treasury were not immediately available for comment.
Timmy G looked a little pissed off at all the grilling he was getting.
Bennie Bernanke got down right hostile at one point. From the WaPo link above:
Earlier, Bernanke came the closest that anyone is likely to see to flashing public anger when responding to some hounding from Rep. Donald Manzullo (R-Ill.), who was demanding a "simple yes or no" from Bernanke, Treasury Secretary Tim Geithner and N.Y. Fed President Bill Dudley on a complicated matter.
"Not one of you three can give me a yes or no?" Manzullo thundered.
"That's because it's a poorly posed question," Bernanke zinged back. Naturally, Bernanke's facial expression remained unchanged.
The members of the committee, especially Maxine Waters, were not in a happy place today. They looked and sounded highly pissed off. Ms Waters is a democrat, but that didn't stop her from going off on Geithner.
Oh, and I finally got Sirens Chronicles back to normal, graphics and all. Happy Happy Joy Joy! ;) I am checking on strengthening the security on the site.
Both parties deserve credit for hosing up the banking, credit and financial markets. Mother Jones has a very nice timeline that shows all the changes made to our laws and regulations, starting with of course the 1913 Federal Reserve Act which created our national banking system. The timeline points fingers at the executive branch and the congress critter that wrote the bills and/or regulations that slowly put us into this very large shithole we find our nation in now.
Nomi Prins, a former Wall Streeter who worked for Bear Stearns, has her take on wtf went down here. Ms. Prins lays the blame at many feet, among them:
Newt Gingrich. The 1994 Home Ownership and Equity Protection Act was the birth of the sub-prime lending. I have never liked Newt, and in many ways he reminds me of Weathervane McCain.
Phil the fuckwit Gramm and his infamous Enron Loophole within the Commodity Futures Modernization Act of 2000 . Need I say more?
Pointing fingers now will only serve to show us where not to go from here on out. I am not a financial guru and have never claimed to be, but it isn’t rocket science to say what and who screwed the pooch.
MoJo has a piece up by James Ridgeway entitled; How to fix it, take the Fed Public. In it he says the following, which some might construe as gasp…socialism!!! :
What form could a Fed overhaul take-if Congress and the next president had the guts to do it? One option would be to make the bank part of the Treasury Department, a scheme that has been floated by various economists. Under such a plan, the Fed would be subject to congressional oversight and the heads of the regional Federal Reserve banks-who wield considerable power through the Federal Open Market Committee, which sets key interest rates-would become government appointees as well.
A move to Treasury, points out William Greider, author of Secrets of the Temple: How the Federal Reserve Runs the Country, would place the body that functions as the fulcrum of the national economy firmly within the constitutional system of checks and balances. “The grand bargain that ought to be pursued is more leverage for more accountability,” says Financial Markets Center founder Tom Schlesinger.
As a socialist-minded progressive, I don’t mind this idea one damn bit. Ridgeways piece is short but chock full of interesting information. I still say its quite simple….if you socialize the losses, so too should the profits go back into the Federal ‘kitty’. Fuck those free market sons of bitches.
They won't tell us what the agreement is of course, which is total and complete bullshit. Jon Tester, a blue dog btw, had some choice words during one of the hearings this week, and I agree with him. From the NYT:
“I’m a dirt farmer,” said Senator Jon Tester, the Montana Democrat who still lives on his family homestead. “Why do we have one week to determine that $700 billion has to be appropriated or this country’s financial system goes down the pipes?”
My question is why are the Dems rushing to judgment? Why can't they ask some hard questions and demand answers before they sign on the dotted line? Again, from Tim Egan's blog on the NYT:
There is certainly a food chain of greed, from the lowliest house-flipper in the Southern California exurbs to the Hamptons hedge fund manager. We all put reason in a box and buried it for a time. But before $700 billion is committed to a secretary whose decisions “may not be reviewed by any court of law or any administrative agency,” as the original draft of the bailout states, it’s worth remembering where the biggest heist took place, and how Wall Street dragged down the rest of the country once before. You could hear the echoes of history in Tester’s question, riding the fierce urgency of now at a time when the Great Depression and all its gloomy atmospherics are in the air again.
Five bucks says the folks losing their homes, or those little stockholders or mom and pop investors won't get any protection in this 'bailout package', just the greedy bastards that caused it. Jon Tester and I probably agree on very little, but I trust him on this issue. From The Great Falls Tribune:
Tester said he's worried about the nation's financial health and stays awake at nights thinking about it.
"A lot of people's investments in the future are tied up in the financial markets, and we've got to try to make sure that the folks who invested honestly are secure," he said. "The way we originally got here is because of greed and speculation, and we need to make sure that the people who pay the price are the greedy buggers and the speculators."
We need to protect the honest folks and fuck those greedy bastards like they have been fucking us. And rushing to judgment will only mean this isn't the final word on bailing out these assholes, Tester again:
"I fully feel the urgency. Every time we've made a spur-of-the-moment decision that we didn't do our due diligence on, it has been a wreck, but the truth is, we have to be given the time to do this right, or you'll be up here in a year or two asking for another $700 billion or more,"
All I can say is...fuck the old man...the show must go on! MSNBC is reporting he is using the excuse that he wants to craft and work on...wait for it...
A bailout plan!
Yeah..right. His numbers are dropping like a rock..that has no bearing on his decision right?
The House Republican Study Committee (RSC) called an emergency meeting Monday afternoon to finalize an alternative proposal to the administration’s plan to bail out struggling financial institutions, according to several congressional sources.
It is unclear what changes the RSC will seek, but the conservative group’s concerns about the $700 billion package are another indication that the administration’s proposal will not sail through Congress.
Chris Dodd, who heads the Senate Banking Committee isn't thrilled by a long shot. Indiana's Republican rep, Mike Pence had this to say about the White House Bailout Plan:
“Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt.”
I hope they all, every single elected member of Congress, tells Paulson and Bernake to take their plan and shove it.
Amy Goodman interviews investment banker turned journalist, Nomi Prins, and Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends in the video. The transcript of the interview can be read here. Some of the choice quotes from the interview below:
NOMI PRINS: It’s insane, actually. It’s bad math, and it’s a bad precedent, because they’re not simply bailing it out with putting taxpayers’ money through the Fed into taking on the risks of these companies; they’re taking on risks. They’re not bailing out and selling debt; they are taking on the risk. They’re becoming-the Fed is continuing to become a larger and larger hedge fund. And it’s doing it with taxpayer money, and it’s doing it with the future debt of the United States.
So, for the one thing, they’re not attaching any rules to these bailouts. You know, you bail out Bear Stearns, effectively you’re putting up $30 billion to take Bear Stearns’s junk and say, “Alright, we’ll back the junk. JPMorgan Chase, you take Bear Stearns. We’ll back whatever junk is there.” But there’s no decision to say, “But, you know, you’ve got to tell us what’s there. And JPMorgan, by the way, as you’re taking on this bank, you have to explain to us what you really have. And Bank of America, you have to explain to us what your risks are.”
I know that at Bank of America they were struggling with their own risks and trying to figure out what was going on in their own company, and now they have assumed Merrill Lynch. That creates a tremendous institution, where the Fed is now obligated, when that starts to have more and more trouble, which it will.
Our government is nationalizing private debt. Too many people, progressives included, are saying these moves by the Fed are needed to keep our economy stable. Yet our government refuses to take care of, or bail out, the Social Security system. A system which takes care of the elderly and disabled. Our government will NOT be bailing out the pension funds, the labor funds or the small investors who are being bankrupted by the current financial meltdown.
So, how is giving billions to these private entities going to help the average joe and jill?
It won’t. Simply put…it will take years if not decades for pension funds and individual investors to recoup their losses, if they can at all.
And thats wrong on every damn level to me. This article in The Nation tells us who is taking the hard hit in this horseshit, and its not the banks, its people like you and me. Its people like Mildred:
She is not a rich woman and her retirement investments have been decimated by the perpendicular drop in the stock market. Despite a lifetime of working and saving, like a thrifty squirrel burying acorns in the backyard, she’s now broke.
One of the places she buried her acorns was AIG, thinking it would be hard to find a more conservative, rock-solid place to put her retirement money. She bought AIG preferred shares, that is, shares that are guaranteed to pay dividends and are thus ideal for retirement.
What none of the experts let the investors know was that somewhere along the path, AIG had stopped being rock-solid. Before Mildred knew it, the government had bought AIG and wiped out the stockholders. She, along with others, read in the papers that AIG’s new owners will not be paying preferred stockholders their promised dividends.(emphasis mine)
Where is Mildred’s parachute? It doesn’t have to be golden like the CEO’s get, just enough so she doesn’t have to work until the day she dies. Naomi Klein ties all this bullshittery to BushCo in the video below.
Profits are a private matter but losses are a public responsibility? Since when? Since our government bailed out the airline and insurance industries after 9/11. Where is the end of this process? The American automakers are now looking to the Federal Government now for their handout after years of getting their financial asses kicked by Japanese automakers. Will our federal government once again reward incompetence?
My guess is yes…they will. The only question remaining is:
Will regulation of these industries and financial systems be part of the bail out package? Will the Glass-Steagall act be resurrected?
Not if Phil Gramm has any say in the matter…
These bastards want to socialize something..socialize healthcare you scum-sucking bags of batshit! They sure hate socialism until they need it to cover their own greedy asses, don't they? Friggin amazing.
Bring financial markets under control. Government must ensure that financial transactions are transparent and fundamentally fair. If a bank is too big to fail, then it must face public scrutiny and federal regulation. No private financial institution should be allowed to pocket its winnings and make the taxpayers responsible for its losses.
Keep the secondary mortgage market under control. There is no reason to re-privatize Fannie Mae and Freddie Mac. Fannie Mae was a federal agency for thirty years. If it had remained a public body instead of a private one, the mortgage crisis would likely have been much less severe.
Focus on the economic wellbeing of Americans instead of the profits of rich corporations. It is irrational to bail out giant corporations that willfully took imprudent risks, while refusing to help average Americans who are feeling their economic pain. We must jump-start the economy by investing in clean energy; better schools; and safer bridges, highways and levees, simultaneously creating millions of new jobs.
Federal officials will take 80% stake in the nation's largest insurer in an $85 billion rescue plan to prevent financial chaos worldwide.
In a stunning turn, the Federal Reserve Board is taking over crumbling insurer American International Group in an $85 billion rescue plan, officials announced Tuesday evening.
The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) up to $85 billion. In return, the federal government will receive a 79.9% stake in the company.
Officials decided they must act lest the nation's largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries.
Somehow, this doesn't surprise me one iota. What makes this even more heinous imho...this is an insurance company, that evidently has broken federal laws about being able to cover their own ass.
With time running out after A.I.G. failed to get a bank loan to avoid bankruptcy, Treasury Secretary Henry M. Paulson Jr. and the Fed chairman Ben S. Bernanke convened a meeting with House and Senate leaders on Capitol Hill about 6:30 p.m. Tuesday to explain the rescue plan.
They emerged just after 7:30 p.m. with Mr. Paulson and Mr. Bernanke looking grim, but with top lawmakers generally expressing support for the plan. But the bailout is likely to prove controversial, because it effectively puts taxpayer money at risk while protecting bad investments made by A.I.G. and other institutions it does business with.
What frightened Fed and Treasury officials was not simply the prospect of another giant corporate bankruptcy, but A.I.G.’s role as an enormous provider of financial insurance to investors who bought complex debt securities. That effectively required A.I.G. to cover losses suffered by the buyers in the event the securities defaulted. It meant A.I.G. was potentially on the hook for billions of dollars worth of risky securities that were once considered safe.
Johnny's son Andrew McCain has resigned two high up posts he held on two bank boards per the Las Vegas Review Journal:
Andrew McCain, son of Republican presidential candidate John McCain, on Saturday resigned from the boards of Silver State Bancorp of Henderson and Silver State Bank for "personal reasons," the holding company said.
Calls seeking comment from Andrew McCain weren't returned. A spokesman for Silver State said the company wouldn't elaborate on its announcement.
Personal reasons my hairy ass. The stock value of these two banks has plummeted recently, which might mean Federal takeover of them is close at hand. Again, from the LVRJ:
Andrew McCain, formerly director of Scottsdale, Arizona-based Choice Bank, joined Silver State's boards in February after the Henderson bank acquired Choice Bank.
The senator's son owned 1,226 Silver State shares of stock, according to the company's latest report to the Securities and Exchange Commission. That investment was worth more than $1,500 on Friday when the Nasdaq stock market closed.
Shares in Silver State and other publicly owned bank holding companies in Southern Nevada have lost most of their value over the past year as they reported increasing numbers of problem loans.
Silver State closed at $1.28 on Nasdaq Friday, down 2 cents for the day, but off from a 52-week high of $24.10.
Hmm...sounds fishy wouldn't you say? Hope this shit splatters all over Andy's daddy..it would make my day! ;)
The second largest bank failure in our history might of been caused by fraudulent practices. From CNN:
A source said the federal government is looking into whether the bank engaged in fraud when it made home loans to high-risk borrowers.
The source said the investigation is focused primarily on the company, not individuals.
Meanwhile, Josh Hochberg, the former head of the U.S. Justice Department's fraud section, said that any investigation of Indymac would probably look into whether the bank used false information to give loans to people who wouldn't have otherwise been eligible.
I know for a fact that it was common for banks/lenders to boost customers income and other criteria in order to get the loan up to snuff here in Cali. I have observed it when I worked in account recovery and sent folks to refi their homes in order to pay off exorbitant debts like hospital bills or car loans they defaulted on.
The FBI has a full plate in this regard, investigating at least 21 other lending institutions for fraud according to the CNN writeup. As far as the customer accounts at Indymac the writeup has this:
About 95 percent of the $19 billion in deposits in Indymac bank are insured, but that leaves $1 billion that was not covered by Federal Deposit Insurance Corp. guarantees, according to CNNMoney. According to the FDIC, 10,000 IndyMac customers could lose as much as half of that amount, or $500 million.
The agency says the failure will cost the Deposit Insurance Fund between $4 billion and $8 billion, based on preliminary estimates.
As Dave said in one of his comments here recently, and I quote:
Another great example of the Republican "capitalistic" ideal of privatizing profit and socializing loss.
Today the Dow has plunged to its lowest point in two years this afternoon. What makes me cry is the fact that another government bailout is on the horizon. From the MSNBC writeup:
Investors seemed unimpressed by a statement from Treasury Secretary Henry Paulson, who said the government’s focus is ensuring that Fannie Mae and Freddie Mac remain as presently constituted to carry out their mission.
The government-chartered companies at times each lost more than 40 percent on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.
Christ, they can't help Americans make ends meet, but they can bailout corporations like it's a fucking contest.
I have purchased a domain name. I have been meticulously working on a new site,Leftwing Nutjob. Please change your bookmarks people..this puppy will no longer be updated as of July 1st 2011.
