Bloomberg story: Feds loaned $7.77 Trillion to banks

[aldante]

Brian,
I hope you are trying to be sarcastic but knowing you you may even have a staight face.

If someone offered you the ability to make untold billions of dollars for your shareholders in a no lose situation – legally (maybe with a slight “moral hazard”) you would turn them down?

Its not the banks. That is the whole point. The guys in the government (who are supposed to be the regulators) did this. According to the Gramm-Leach-Bliley Act the Fed is the ultimate regulator of so many of these transactions.

If you don’t have a fire hydrant you can’t access the water. Actually I like the drug analogy much better. No one wants less money. Of course that is not true becasue I do know one person…Ron Paul turned down his Congressional Retirment Benefits years ago.

[briansd1]

[quote=aldante]

Its not the banks. That is the whole point. The guys in the government (who are supposed to be the regulators) did this. According to the Gramm-Leach-Bliley Act the Fed is the ultimate regulator of so many of these transactions.
[/quote]

Phil Gramm (R-Texas)
Jim Leach (R-Iowa)
Thomas J. Bliley, Jr. (R-Virginia)

Granted, Bill Clinton signed the bill but the was facing a Republican Congress. And in 1998, the Lewinski scandal exploded and the House impeached Clinton.

[quote=aldante]
If you don’t have a fire hydrant you can’t access the water. Actually I like the drug analogy much better. No one wants less money. Of course that is not true becasue I do know one person…Ron Paul turned down his Congressional Retirment Benefits years ago.[/quote]

I applaud your support for Ron Paul.

I like his classical liberal views, his support for legalization of drugs, etc…

[Arraya]

Almost 8 trillion and they still can’t mark to market. That is one big black hole of bad debt.

[aldante]

[quote=briansd1][quote=aldante]

Its not the banks. That is the whole point. The guys in the government (who are supposed to be the regulators) did this. According to the Gramm-Leach-Bliley Act the Fed is the ultimate regulator of so many of these transactions.
[/quote]

Phil Gramm (R-Texas)
Jim Leach (R-Iowa)
Thomas J. Bliley, Jr. (R-Virginia)

Granted, Bill Clinton signed the bill but the was facing a Republican Congress. And in 1998, the Lewinski scandal exploded and the House impeached Clinton.

[quote=aldante]
If you don’t have a fire hydrant you can’t access the water. Actually I like the drug analogy much better. No one wants less money. Of course that is not true becasue I do know one person…Ron Paul turned down his Congressional Retirment Benefits years ago.[/quote]

I applaud your support for Ron Paul.

I like his classical liberal views, his support for legalization of drugs, etc…[/quote]

Brian,
If it seems that I am emotional about this it is because I am. In the business I am in my competitors should have been wiped out in 2008. I should have been able to compete for their clients. Instead, those brokers received hundreds of thousands of, if not millions $$ from their “new”employer who was bailed out by the government. I paid a lot in taxes that year. so essentially my money went to bail out my competitors who were so frigging smart that they leveraged their business 40:1 on the “fact” that real estate only goes up in value.

So yes I take this very personally. These sh**bags who tout their IVY league eduation, but are really just common criminals trading on inside information. Then protected by the very “REGULATORs” that so many on this board believe will save us from the evils of greed.

By the way GM is wacking their business out of the ball park!!!

[briansd1]

[quote=Arraya]Almost 8 trillion and they still can’t mark to market. That is one big black hole of bad debt.[/quote]

Well Arraya, that $8 trillion were loans that were paid back.

According to the article, the banks made $13 billion off the loans, or 0.1625%. The banks were saved from bankruptcy; and they made some money. So I agree with pri_dk that the Fed did the right thing.

As was mentioned in the article, with TARP there were springs attached so,of course, the banks quick paid back TARP.

With the Fed credit lines, the article said that were no string attached.

So the banks got great benefit. It’s only fair pay a price/tax.

[swave]

Too Big To Fail is the obvious problem. But the government should not decide who to make the banks smaller.
The larger banks should be required to either have a higher capital ratio, or pay more for FDIC insurance or both. It should be enough higher that they will decide on their own to become smaller.

[briansd1]

It’s mostly sensationalism. For starters, the $7.77 trillion figure is bogus. Any reasonable person reading the story would conclude that the Fed lent banks and others $7.77 trillion. Not so. This was the amount, Bloomberg later explained, that the Fed might have lent. The Fed’s lending never topped $1.5 trillion, which of course is a lot but still pales next to a financial sector worth in excess of $20 trillion. Virtually all the loans have been repaid with interest, says the Fed.

Economist James Hamilton of the University of California at San Diego meticulously examined how the $7.77 trillion figure was constructed. The number involved calculations that are “nonsensical,” he concluded. Suggesting that the Fed lent all that money to banks is “outrageously inaccurate” and ultimately “a lie.” Economics columnist David Wessel of the Wall Street Journal wrote that the notion that the Fed lent banks $7.77 trillion simply “isn’t true.”

http://www.washingtonpost.com/opinions/fed-bashing-gone-wild/2011/12/09/gIQA6sMDoO_story.html

[markmax33]

I guess the Government Accountabilty Office lied too? If nobody has ever fully audited them and they have been secret for 80 years with the ultimate power to create money and no oversight is there any way it couldn’t be corrupt?

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

They should be guilty until proven innocent.

[CA renter]

[quote=Allan from Fallbrook][quote=briansd1]What’s beyond comprehension to me is that many of those who are upset about TARP and Fed bailout, feel that, now that we are faced with a fait accompli, the banks should not be regulated or taxed in return for what we, as a country, did for them.

The banks essentially got a free ride.[/quote]

Brian: This is a combination of a strawman (“many of those who are upset about TARP… should not be regulated…”: Who, exactly are you speaking of?) and what appears to be willful ignorance of the fact that regulations do in fact exist and that additional regulations (post-fall 2008), such as Dodd-Frank have not been implemented with any vigor.

It appears you’re trying to toe the populist/Progressive line, while at the same time trying to ignore the fact that both Dems and GOP are complicit in not only the looting of America, but in the cover-up as well.

I’m especially interested in the deafening silence surrounding Jon Corzine and the implosion of MF Global (ever wonder what the “MF” stands for?), which includes $1.2B of missing funds.

Here’s a nifty YouTube clip of Joe Biden with Jon Corzine, wherein Biden references he and Obama calling Corzine for economic advice and touting Corzine as one of the “smartest guys he knows”: http://www.youtube.com/watch?v=xm3VMrKqJSA

All politicians, regardless of stripe or affiliation, are lying shitbags. What further proof do you need?[/quote]

Amen!

[ltokuda]

[quote]For those that are brave enough to remove their tinfoil hats for a moment, here’s a short article explaining why the Fed did the right thing:
Bloomberg Report Exposes the Federal Reserve Doing Its Job
http://www.theatlantic.com/business/arch…%5B/quote%5D

Actually, this article is very misleading. The Fed’s job was to be the lender of last resort for the banks (who they were in charge of regulating). Many of the corporations that got bailed out were NOT banks. AIG, Morgan Stanley, etc, lost money on unregulated gambling but got bailed out by the Fed none the less.

[briansd1]

[quote=Allan from Fallbrook] what appears to be willful ignorance of the fact that regulations do in fact exist and that additional regulations (post-fall 2008), such as Dodd-Frank have not been implemented with any vigor.[/quote]

I wonder why “regulations (post-fall 2008), such as Dodd-Frank have not been implemented with any vigor.”

We have certain lawmakers who are ignoring the law and refusing to fill a position created by law.

http://www.foxnews.com/politics/2011/12/10/obama-presses-gop-to-approve-consumer-watchdog-nominee/

[masayako]

So what? They will keep doing The evil things and we will keep blogging. At the end of the day, no one is caring enough to actually do some something about it. And life goes on as usual.

You and I are going to move on and Ron Paul is never going to be president. Nothing will ever change. We all pretend we care, but in reality, we only care enough to bitch about it, but not enough to actually make a difference.

This country is over and you know it.

[Allan from Fallbrook]

[quote=masayako]
This country is over and you know it.[/quote]

Nah. It ain’t, and you should know that. This is the same crap that’s being going on since the birth of this great republic. Democracy is a messy thing and we periodically go through this sort of seemingly intractable nonsense and then right the ship.

Anyone who thinks that America is done hasn’t really been paying attention or hasn’t delved too deeply into the real history of this country. We’re a combination of P.T. Barnum, H.L. Mencken and Hunter S. Thompson. Not quite smart enough, but also not too stupid, either.

[Allan from Fallbrook]

[quote=briansd1][quote=Allan from Fallbrook] what appears to be willful ignorance of the fact that regulations do in fact exist and that additional regulations (post-fall 2008), such as Dodd-Frank have not been implemented with any vigor.[/quote]

I wonder why “regulations (post-fall 2008), such as Dodd-Frank have not been implemented with any vigor.”

We have certain lawmakers who are ignoring the law and refusing to fill a position created by law.

http://www.foxnews.com/politics/2011/12/10/obama-presses-gop-to-approve-consumer-watchdog-nominee/%5B/quote%5D

Brian: Uh, dude, you are aware that you just quoted Fox News? What’s next, William Buckley?

Both sides are complicit in this. Showing GOP intransigence is fully justified, but I’d also ask that you look at the Obama Administration as well and be honest about all the shenanigans there, too. Obama is a product of the Chicago Machine, wherein its possible for ALL, regardless of party affiliation, to sup at the trough.

[briansd1]

[quote=Allan from Fallbrook][quote=masayako]
This country is over and you know it.[/quote]

Nah. It ain’t, and you should know that. This is the same crap that’s being going on since the birth of this great republic. Democracy is a messy thing and we periodically go through this sort of seemingly intractable nonsense and then right the ship.

Anyone who thinks that America is done hasn’t really been paying attention or hasn’t delved too deeply into the real history of this country. We’re a combination of P.T. Barnum, H.L. Mencken and Hunter S. Thompson. Not quite smart enough, but also not too stupid, either.[/quote]

I agree Allan.

But it’s a little different today. Leaders around the world are better technocrats and managers these days. They understand economics a lot better than in the past (post WWII, and post colonialism, many leaders were uneducated strongmen).

Central banks and treasuries around the world are better at providing capital to local corporations. People have better access to education and technology so they no longer look to America with the same admiration.

Yes, we have a great continent-wide country with vast natural resources. Our society is very adaptive and can easily absorb talent from around the world.

Our politics are dysfunctional but we will remain a great country. Our proportional influence and our brand will decline as others get richer. But I have confidence that we will get even more prosperous with the rest of the world.

BTW, I believe that proportional power decline is what people fear most. It’s psychological. My dad told me about his travels when he was young. Decades ago, when ordinary Americans traveled they’d be greeted warmly like celebrities. Now an American traveling in Asia or Africa would be considered an ordinary tourist or perhaps even a bum.

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