Oldtent Archives 2007 - 2008

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Who is   JOHN GALT!

DJ WSJ(9/22) UPDATE: Banks Rush To Shape Rescue Plan

(From THE WALL STREET JOURNAL)
By Elizabeth Williamson

WASHINGTON — With as few as 72 hours before Congress votes on a federal
financial-markets rescue, the financial industry has launched a ferocious
effort to shape key provisions, in a fight that could yet stall the bill.

Lobbyists and financial-services executives are working deep connections
within the administration to ensure as many institutions as possible benefit
from a $700 billion federal mechanism to buy distressed assets, then sell them
off in better times. In a particularly controversial move, they also oppose
proposals by Democrats in Congress to provide mortgage reductions for
homeowners facing bankruptcy. Bankers say such a move would raise rates for
mortgage seekers, as banks factor in the possibility that a loan would be
restructured in court.

Separately late Sunday, the Federal Reserve Board approved the applications
of Goldman Sachs Group Inc. and Morgan Stanley to become bank holding companies
and provided them liquidity support by authorizing the Federal Reserve Bank of
New York to extend credit to their U.S. broker-dealer subsidiaries and to the
broker-dealer subsidiary of Merrill Lynch Inc.

In another move late Sunday, bankers won an important clarification from the
Treasury Department of its intention to guarantee money market mutual funds
against crisis-related losses, a plan announced Friday. Instead of extending a
guarantee against such losses for up to a year, implying the government would
guarantee new investments, Treasury explained in a statement that it would
limit its guarantee to losses on money market mutual fund investments as of the
close of business Friday, Sept. 19. New investments would therefore not be
covered by the guarantee. As well, Treasury said it would include tax-exempt
money market mutual funds in the guarantee program, reversing a decision it
announced Friday.

The news came after the American Bankers Association and bank regulators
spoke with Treasury and Fed officials, describing possible flight from
FDIC-insured bank accounts.

But even as they press for changes that could determine which businesses
survive the crisis, some lobbyists worry that questioning the $700 billion
rescue plan sets up the industry for a public — and regulatory — backlash.

“How you publicly oppose loan modifications and bankruptcy law while at the
same time advocating a huge taxpayer bailout is beyond me,” said a lobbyist for
a major bank holding company. “Pigs get fat and hogs get slaughtered.”

Already, Democrats in Congress are talking about a regulatory crackdown.

“Next steps should also include an examination of the failed management and
failed regulation of the financial markets and how it led us to this remarkable
and historic crisis,” House Majority Whip James Clyburn, of South Carolina said
in a statement.

Foreign-owned institutions with U.S. mortgage-market exposure are fighting to
benefit from the federal rescue. Influential Democrats, including Illinois Sen.
Dick Durbin, the Senate majority whip, are said to oppose including foreign
banks in a taxpayer-backed program. But late Saturday, lobbyists won the
support of Treasury Secretary Henry Paulson to extend the government asset buys
to a range of institutions that could potentially include insurance companies.

Sen. Durbin is sensitive to the fact that there are foreign-owned banks that
employ a significant number of people in Illinois and across the country, said
Durbin spokesman Joe Shoemaker. “But, his focus right now is on protecting the
interests of the taxpayers and homeowners and ensuring that we place
appropriate oversight over the banks that are being bailed out.”

The industry has gone directly to the SEC demanding a letter changing U.S.
accounting rules that require banks to state the value of their assets at the
market price. Banks say that without such a change, the government would pay an
artificially low price for distressed assets. But they face steep opposition to
what some regulators and lawmakers say would lead to misleading financial
statements.

In a skirmish with longstanding roots, banks and brokerages have banded
together to push back against any effort by Congress to include a provision in
the bill allowing judges to decrease the amount homeowners must pay on
mortgages that are part of a bankruptcy proceeding.

The urgency of the situation and Congress’s schedule leaves no time for
traditional lobbying — which can involve months and even years of
coalition-building, personal contacts, and campaign support to attract sponsors
for changes the industry wants. Instead, lobbyists and industry CEOs worked the
weekend on email, home phones and conference calls.

On Sunday, Mr. Talbott, attending a Redskins game with his wife, saw little
of it. He spent most of the game typing on his Blackberry, reviewing progress
on the group’s agenda.

By Sunday, the group had gained the support of Treasury Secretary Henry
Paulson for its stance that foreign-owned banks must be included in the rescue.

When the contours of the plan were unveiled Saturday morning, it included
only banks with headquarters in the U.S.

“We suggested that they make it explicit and put some flesh on the proposal,
that a foreign flagged bank with significant U.S. mortgage presence . . .
should be included,” Mr. Talbott said. “They need to have broad authority and
flexibility to send the relief where it would do the most good.”

Within hours, Treasury issued a revised communique, that echoed the
Roundtable’s own wording: Banks with “significant operations” in the U.S.
should be included. Further, the Treasury should be allowed to include other
institutions at its discretion, leeway that could potentially include insurers’
assets in the buy-up plan.

“If a financial institution has business operations in the United States,
hires people in the United States, if they are clogged with illiquid assets,
they have the same impact on the American people as any other institution,” Mr.
Paulson said on ABC News’s “This Week with George Stephanopolous,” Sunday.

The Financial Services Roundtable and the American Bankers Association oppose
proposals supported by some Democrats that would allow judges to order mortgage
reductions for bankrupt homeowners. Ed Yingling, president and CEO of the
bankers association, has said the issue is a vital one for bankers, who believe
the possibility of a modification down the road would raise mortgage rates.

September 20, 2008,  4:46 pm

No deal

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a “fair price” for mortgage-related assets will still leave much of the financial sector in trouble. And there’s nothing at all in the draft that says what happens next; although I do notice that there’s nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

For those who marvel at our ability to stagger from crisis to crisis without experiencing a disaster and think we can continue indefinitely to overload our economic and social system with laws of plunder and legislative nonsense, I will remind you that the man who is guillotined is breathing right up to the moment the blade hits his neck

Thanks…another book I learn from is THE POWER OF YOUR SUBCONSCIOUS MIND by Dr. Joseph Murphy, revised by Ian McMahan  Bantam Books.  For me it is good to learn the power in thought.  Important at this time to be strong, mentally, physically, spiritually and financially….there is a balance in the four that complement each other.  Appreciate the postive on this site. 

 Welcome back !!!

and you think you got probs with your note

DJ PRESS RELEASE: Federal Reserve Statement On Goldman, Morgan

Following is a press release from the Federal Reserve:

The Federal Reserve Board on Sunday approved, pending a statutory five-day
antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley
to become bank holding companies.

To provide increased liquidity support to these firms as they transition to
managing their funding within a bank holding company structure, the Federal
Reserve Board authorized the Federal Reserve Bank of New York to extend credit
to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley
against all types of collateral that may be pledged at the Federal Reserve’s
primary credit facility for depository institutions or at the existing Primary
Dealer Credit Facility (PDCF); the Federal Reserve has also made these
collateral arrangements available to the broker-dealer subsidiary of Merrill
Lynch.

In addition, the Board also authorized the Federal Reserve Bank of New York
to extend credit to the London-based broker-dealer subsidiaries of Goldman
Sachs, Morgan Stanley, and Merrill Lynch against collateral that would be
eligible to be pledged at the PDCF.

^^^^^^

  I don’t have faith that Congress will do the right thing but Mish says flood em’ with calls.

http://www.safehaven.com/article-11324.htm

DJ WSJ: Fed: Goldman Sachs, Morgan Stanley To Become Bk Holding Cos

By Jon Hilsenrath
Of THE WALL STREET JOURNAL

WASHINGTON (Dow Jones)–The Federal Reserve said it had approved the
transformation of both Morgan Stanley (MS) and Goldman Sachs (GS) from
investment banks to traditional bank holding companies, a step that would place
the last two Wall Street titans under the close supervision of national bank
regulators, subjecting them to new capital requirements and additional
oversight.

The Fed said it would also extend additional lending to the broker-dealers of
the two firms, in addition to Merrill Lynch’s, as they make the transition. The
steps effectively mark the end of Wall Street as it’s been known for decades,
and formalizes a quid-pro-quo that regulators have warned about in the months
after Bear Stearns’ near collapse - in return for access to the Fed’s emergency
lending facilities, the firms would need to subject themselves to more
oversight. The step could have far reaching effects on their profitability and
their business models.

In addition, the Board also authorized the Federal Reserve Bank of New York
to extend credit to the London-based broker-dealer subsidiaries of Goldman
Sachs, Morgan Stanley and Merrill Lynch (MER) against collateral that would be
eligible to be pledged at the PDCF.

:57:45 UTC
^^^^^^
DJ US Fed To Let Goldman, Morgan Stanley Become Bk Holding Cos

By Brian Blackstone
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–The Federal Reserve late Sunday approved requests by
Goldman Sachs (GS) and Morgan Stanley (MS) to become bank holding companies.

The decision, which includes a five-day antitrust waiting period, would allow
the firms long-term access to the Fed’s discount window and make it easier for
them to gain better access to stable sources of funding.

As a transition for the firms as they move to a bank holding structure, the
New York Fed will extend credit to the broker-dealer arms of Goldman Sachs and
Morgan Stanley against all types of credit currently accepted at the Fed’s
discount window for commercial banks or its discount window for investment
banks. The Fed said Merrill Lynch is eligible for a similar arrangement.

The Fed said the New York Fed will also extend credit to London-based
broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch
(MER) against all collateral currently eligible at the Fed’s primary dealer
credit facility for investment banks

UTC
^^^^^^

How can you tell if a wall street banker is lying?

You can call in the morning.. You should have a wire tomorrow.

…If you want to know whats going on in the Gold Market…come to goldtent.net

…If you just want to know …Whats Going On ?…..go to abraham-hicks.com

Gatta go get more credits on phone

www.cnbc.com/id/26827154

The Federal Reserve says it has granted a request by the country’s last two major investment banks—Goldman Sachs and Morgan Stanley—to change their status to bank holding companies.

Sept. 21 (Bloomberg) — The Bush administration widened the scope of its $700 billion plan to avert a financial meltdown by including assets other than mortgage-related securities.

The U.S. Treasury submitted revised guidance to Congress on its plan a day after first submitting it, as lawmakers and lobbyists push their own ideas. Officials now propose buying what they term troubled assets, without specifying the type, according to a document obtained by Bloomberg News and confirmed by a congressional aide.

http://www.youtube.com/watch?v=pL2Iy9JzJdk&feature=related

The change suggests the inclusion of instruments such as car and student loans, credit-card debt and any other troubled asset (including a bad debt owed to FloridaGold from 10 years ago). That may force an eventual increase in the size of the package as Democrats and Republicans in Congress negotiate the final legislation with the Bush administration, analysts said.

“The costs of the bailout will be significantly higher than originally considered or acknowledged,” said Josh Rosner, an analyst with independent research firm Graham Fisher & Co. in New York. “How, given these changes, can the administration and Federal Reserve believe they are being forthright in their unrevised expectation of future losses?”

In another change today, the Treasury said it would limit its $50 billion plan for insuring money-market funds to those held by investors as of Sept. 19, excluding any subsequent contributions.

The American Bankers’ Association, which had expressed concern about the plan last week, praised the move, saying it would eliminate an incentive for savers to shift out of bank accounts into money-market funds.

In its latest guidance on the bad-debt fund, the Treasury said firms that are headquartered outside the U.S. will now be eligible.

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net

Last Updated: September 21, 2008 21:24 EDT