Category Archives: bailouts

GM’s Whining Bondholders

Andrew Ross Sorkin takes aim at GM’s bondholders today: Not three hours after the president spoke on Monday I received an e-mail message from a group representing G.M. bondholders — people who are likely to have an enormous influence over … Continue reading

Posted in bailouts, bonds and loans | 48 Comments

Why Healthy Banks Shouldn’t Repay TARP Funds

I got an interesting response from one reader to my post on whether healthy banks should be able to give back TARP funds. Here it is, with permission; the short version is basically "no". The TARP preferred shares were extended … Continue reading

Posted in bailouts, banking | 7 Comments

Who’s Gaining from the AIG Unwinds?

Tyler Durden has a scary post up, connecting banks’ profitability in January and February to the fact that those were the months when AIG Financial Products was unwinding an enormous number of its contracts en masse. These trades, initiated by … Continue reading

Posted in bailouts, derivatives | 5 Comments

America’s Insolvent Banks

John Hempton has 5,155 words on bank insolvency today, and makes the good point that "insolvency" is not well-defined. So what do I mean when I say that some big banks are insolvent? I mean that when you look at … Continue reading

Posted in bailouts, banking | 2 Comments

The Psychic Bailout

Guess what? It turns out that hope is a plan, after all! Six middle-aged Englishwomen have decided that they can get the country to "overcome whatever obstacles and difficulties we may face as a country, an economy and as individuals": … Continue reading

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Barack Obama for Treasury Secretary!

After Tim Geithner’s uninspired and uninspiring performance today, Barack Obama stepped up to show him how questions about nationalization should be answered: TERRY MORAN: There are a lot of economists who look at these banks and they say all that … Continue reading

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Geithner’s Vague Plan

I like the symmetry here. On November 21, when Barack Obama announced that he was nominating Tim Geithner to be his Treasury secretary, the Dow rose 494 points and broke through the 8,000 barrier. On February 10, when Geithner gave … Continue reading

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Treasury’s $78 Billion TARP Giveaway

The Congressional Oversight Panel is certainly doing its job of double-checking TARP expenditures and Treasury statements. Here’s a bit of its latest report, which accuses Treasury of overpaying for assets to the tune of $78 billion: Valuation of the transactions … Continue reading

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Sachs’s Nationalization Idea

Jeff Sachs has a slightly peculiar idea for nationalizing banks, which he calls "contingent nationalisation". As best I can work out, it involves the government buying up toxic assets at par, and then selling them off over the course of … Continue reading

Posted in bailouts, banking | 2 Comments

Nationalizing Bank Losses

Tyler Cowen has a new argument against nationalization: Say that banks are in the red by $2 trillion for ever and all eternity. Taking over the banks simply means that the government picks up these losses as owner. Government ownership … Continue reading

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Where’s the Nationalization Debate?

There’s a lot of words but less actual news in the NYT’s big report today on Tim Geithner and his plan for the US banking system. But one thing does interest me, given the extent to which Warren has been … Continue reading

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How Do You Recapitalize $1.8 Trillion in Bank Loan Losses?

I’ve been having a look at Nouriel Roubini’s estimate of a total of $1.8 trillion of losses in the US banking system, compared to just $230 billion in TARP recapitalizations to date and $200 billion of new money from private-sector … Continue reading

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Felix Salmon Smackdown Watch

Jim Surowiecki provides proof that I’ve been writing too much and too hastily about bank nationalization of late: At one point, Felix describes nationalization as "elegantly" putting an end to the current morass, while at another he describes it as … Continue reading

Posted in bailouts, banking | 2 Comments

More on Bank Nationalization

I’m not sure why I bothered writing my blog entry on nationalization last night, since Paul Krugman wrote essentially the exact same thing, only more concisely and with much greater elegance. Still, I did get some interesting comments, both on … Continue reading

Posted in bailouts, banking | 1 Comment

Why Nationalization is the Best Alternative

Kevin Drum is a bit like Joe Nocera: he’s reluctant to nationalize, but he doesn’t really say why. It’s wise to be wary of nationalization. It should be a last resort, and I’ve gotten a sense recently that a lot … Continue reading

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Why We Should Nationalize Now

Joe Nocera says he’s looking for a bold new plan to tackle the financial crisis — but the one he spends essentially his entire column talking about is the creation of a government-owned "bad bank" — an idea which is … Continue reading

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TARP Datapoint of the Day

The CBO has done the hard work of marking to market all the assets purchased with TARP funds, including preferred stock in various banks. It concludes that today’s mark-to-market value of the $247 billion spent in 2008 is just $183 … Continue reading

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Bailout Incrementalism Continues

According to the WSJ, Treasury and the Fed are considering two big ideas. The first is to create a new state-owned "bad bank" to buy up toxic assets — TARP I, essentially, rebranded. The second is to institutionalize the deals … Continue reading

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Why Banks Need to Lend Out Their TARP Funds

Justin Fox likes Jack Guttentag’s argument as to why it makes sense for banks to sit on TARP funds rather than lending them out. I don’t. Guttentag defines a bank’s capital as "the difference between its assets and its debts", … Continue reading

Posted in bailouts, banking | 1 Comment

Warren vs Treasury, Cont.

I’m not quite sure what to make of the fact that Elizabeth Warren is shamelessly leaking her latest TARP oversight report all over the media — to the NYT, to the WSJ, even, on-camera, to Good Morning America. Doesn’t she … Continue reading

Posted in bailouts, Politics | 1 Comment

From Crunch to Catatonia

Bloomberg has a great headline this morning: Banks’ ‘Catatonic Fear’ Means Consumers Don’t Get TARP Relief While it does have a little bit of on-the-other-hand, the thrust of the story is strong and clear: we’re trying to kick-start bank lending … Continue reading

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GMAC, the Fed, and Moral Hazard

The GMAC announcement on December 10 was quite unambiguous. The headline alone told you everything you needed to know: GMAC Announces That the Results of Its Exchange Offers Are Insufficient To Meet Regulatory Capital Requirements To Become a Bank Holding … Continue reading

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A Victory for GMAC Holdouts?

It looks like anybody who refused to participate in the GMAC bond tender offer is going to end up feeling pretty smug: The U.S. Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of … Continue reading

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Can GMAC Lose its Newfound Bank Status?

GMAC says it’s still "tabulating" the results of its bond exchange, which means we still don’t know whether the crucial 75% hurdle has been reached. If it isn’t, then what? On Friday morning, the answer was clear: The deadline for … Continue reading

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From TARP to ARRP

Larry Summers channels Barack Obama in the Washington Post: Our president-elect understands both the peril and the promise of the situation and the importance of responding to changing conditions. That is why his economic team is crafting a broad proposal, … Continue reading

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