Fed Audit - $16 trillion in secret loans

Quote from zdreg:
your use of the word "organize" says it all since you are obviously familiar with markets to make pricing decisions. failed enterprises should have been allowed to fail. wilbur ross and people like him would have picked up assets pennies on the dollar and a true economic up cycle would eventually begin anew. instead we have continuous government made bubbles.the executives of the failed enterprises would have had to scramble to make a living. it is socialism for the rich and the government class and havoc for the private sector and a depreciating currency to protect the favored classes.

argentina here we come.
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I have said this before. Sure, maybe we should have let it all crash 'n burn. However, note that we have tried that in the past and the outcome wasn't pleasant. So it's a queston of risk management. To me it's like a trading decision, right? Do you run the risk of possible ruinous loss (very unlikely, but possible) or do you cut the position? I honestly don't know what I would have done. Maybe in hindsight, I wouldn't have rescued any of the banks, 'cause they don't deserve it. However, that's hindsight for you.
 
Quote from Martinghoul:

I have said this before. Sure, maybe we should have let it all crash 'n burn. However, note that we have tried that in the past and the outcome wasn't pleasant. So it's a queston of risk management. To me it's like a trading decision, right? Do you run the risk of possible ruinous loss (very unlikely, but possible) or do you cut the position? I honestly don't know what I would have done. Maybe in hindsight, I wouldn't have rescued any of the banks, 'cause they don't deserve it.
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Ideology aside, you could have temporarily nationalized the biggest offenders, fired all the management, kill the equity, restructure the debt, write down the bad assets and recapitalize, then re-privatize.

Then you don't lose the jobs; let the management and equity holders fail; keep the bad assets from being liquidated during the crisis and give the taxpayers a better deal.
 
Quote from joneog:
Ideology aside, you could have temporarily nationalized the biggest offenders, fired all the management, kill the equity, restructure the debt, write down the bad assets and recapitalize, then re-privatize.

Then you don't lose the jobs; let the management and equity holders fail; keep the bad assets from being liquidated during the crisis and give the taxpayers a better deal.
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I would agree with that... I think this is similar to the Swedish solution that they have implemented with a reasonable degree of success.
 
Quote from joneog:

Ideology aside, you could have temporarily nationalized the biggest offenders, fired all the management, kill the equity, restructure the debt, write down the bad assets and recapitalize, then re-privatize.

Then you don't lose the jobs; let the management and equity holders fail; keep the bad assets from being liquidated during the crisis and give the taxpayers a better deal.
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Can't do that. That would mean the management of the TBTF banks wouldn't be rewarded and get their huge bonuses. That would be anti-Communist/Socialist.

You have to consider that the TBTF banks are all back-stopped by the Federal Reserve doing whatever it takes to save them, which is not true for any other (real) business.

And even with that huge edge - they STILL manage to f-k up!

That makes them the WORST managed business in the history of the world.

But they are not welfare queens. They are the captains of capitalism with the Best and Brightest (at wealth transfer - not actually wealth creation). :D
 
Quote from MarketMasher:

Can't do that. That would mean the management of the TBTF banks wouldn't be rewarded and get their huge bonuses. That would be anti-Communist/Socialist.

You have to consider that the TBTF banks are all back-stopped by the Federal Reserve doing whatever it takes to save them, which is not true for any other (real) business.

And even with that huge edge - they STILL manage to f-k up!

That makes them the WORST managed business in the history of the world.

But they are not welfare queens. They are the captains of capitalism with the Best and Brightest (at wealth transfer - not actually wealth creation). :D
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The Federal Reserve system has always been part cartel, part central planning agency. That's a good framework for studying the history of the institution imo. It's also why the right and left are both wrong when they criticize or support it.

Really the two mandates are: 1) protect the large financial frims from the rigors of the market and 2) help the politicians get votes in the next election.

As to the firms themselves, ya they may be the worst managed out there. Housing bubble? Why not hold a multi-billion dollar inventory of MBS, CDOs etc. Credit bubble? Why not leverage up 30-to-1, and fund it with short-term paper. Yield curve inversion? Stop worrying, our VAR is fine.

Wall st. used to work pretty well before this form of managerial-state-capitalsim. Back in the days of the partnership where the managers were the principals, when the decision makers had a stake in the game. Now you have limited liability and a bunch of cowboy traders who realize that big risk = big bonus, and since society has written them an implied put on the downside (bailout, bankruptcy, no claw-backs etc) why worry about it? Perverse incentives for sure.

For some reason I don't see J.P or Jack Morgan allowing a Howie Hubler (I think that was his name) to effectively be long $16 bil (I think that was the amount, maybe it was only $14 bil) of mortgage paper. (ya I know, he was short the "worse" credits against it, which makes the size of the loss even more amazing)
 
Quote from joneog:

T

Wall st. used to work pretty well before this form of managerial-state-SOCIALISM.
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Fix it for ya. :D

The problem, of course, is no socialist can ever legitimately harangue against other socialist policies when they are one themselves...
 
what was never answered for me was why verizon got a loan, I mean geez, verizon? there was no secret to any of this, it was all quite published in the wall st journal. Harley davidson? I never found out why they got cash, why give guys loans who have money in foreign locales as well. repatriate your money from foreign lands and use it for your corporation, no need to use government resources since 9 out of 10 corps dont pay fed taxes,
 
Can someone tell me that Why did the Federal Reserve recently bail out these nonblank financial institutions?


Regards,

<a href="http://www.la.bbb.org/business-reviews/Business-Services/Certified-Forensic-Loan-Auditors-LLC-in-Los-Angeles-CA-100090278">Certified Forensic Loan Auditors</a>
 
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