Everything is awesome!
Glad that's over.
Yes. We. Can.
My new investment strategery is to only buy banks whose shares are down 46% that suddenly buy a failed bank.
Attention: Bagholders
“I've seen $100 million movies with less excitement than this 7 minutes.”
Oh yeah, Jeremy. They sure beat inflation, ya freak.
Anyone remember this 2013 story? Good times.
Depositors at bailed-out Cyprus' largest bank will lose 47.5% of their savings exceeding 100,000 euros ($132,000), the government said Monday.
There is no way we can entertain the idea of any kind of haircut to any kind of deposits. This would be an accident in the euro zone not caused by markets, but a self- inflicted wound, a self-inflicted catastrophe, not only for Cyprus, but for the euro zone and perhaps even beyond.
Cypriot Finance Minister Michael Sarris, not long before they did exactly what he said they would never do.
Head up. Dig in. Hold on.
How many times have I heard,
“Oh, I made ‘this much’ in the stock market this year.”
Did you sell everything? No.
Well, you’ve ‘made’ nothing.
Unless recognized, it’s not a real thing.
- Randy Woodward
(Good interview. Woodward is excellent at explaining the regional banks’ POV)
“I don’t want to be paying interest on cars that I don’t even have anymore”
There’s a motto on Wall Street: “I.B.G.-Y.B.G.” or “I’ll Be Gone, You’ll Be Gone.” The idea is that long as you’re making money right now, what happens tomorrow is not your problem. According to Todd, it is most definitely our problem. He explains why bailout capitalism is bad for everybody. - Yves Smith
What’s Actually Behind the Banking Crisis? Why You Pay When They Play Interview with Walker Todd, former assistant counsel of the New York Federal Reserve, assistant general counsel, and research officer at the Cleveland Fed
“Investment banking had been separated from commercial banking in 1933 during the Great Depression with the Glass-Steagall Act. Now pressure rose to repeal it. That repeal (1999) played a role in what later came to be called “the financialization of everything”…” - Walker Todd
I think the 1999 repeal of Glass Steagall (the Gramm-Leach-Bliley Act) was the major mistake for the long haul. It set in motion trends that culminate, ultimately, in each successive crisis being more difficult to resolve than the one that preceded it. That’s where we are today.
Bingo. I’ve written a lot about this. Just another reason to despise Larry Summers.
Pot meet kettle: Top Fed official blasts SVB collapse as ‘textbook case of mismanagement’
“We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools for any size institution, as needed, to keep the system safe and sound,” Barr said.
“The savings-and-loan crisis showed that, too often, the regulators became too close to the industry, and run interference for friends by hiding the problems.” - William K. Black
Hmmm.
History would've been very different if we had Bill Black in 2008, instead of the Citadel intern Bernanke.
I suggest everyone read this entire statement from 2010.
STATEMENT OF WILLIAM K. BLACK, ASSOCIATE PROFESSOR OF ECONOMICS
AND LAW, UNIVERSITY OF MISSOURI-KANSAS CITY SCHOOL OF LAW, April 20, 2010
Members of the committee, thank you.
You asked earlier for a stern regulator. You have one now
in front of you. And we need to be blunt, and you haven't heard
much bluntness in hours of testimony.
We stopped a non-prime crisis before it became a crisis in
1991 by supervisory actions. We did it so effectively that the
people had forgotten it even existed, even though it caused
several hundred million dollars in losses, but none to the
taxpayers. We did it by preemptive litigation and by
supervision. We broke a raging epidemic of accounting control
fraud without new legislation in the period 1984 through 1986.
Legislation would have been helpful; we sought legislation, but
we didn't get it. And we were able to stop that because we
didn't simply continue business as usual.
Lehman's failure is a story in large part of fraud. And it
is fraud that begins at the absolute latest in 2001, and that
is with their subprime and their liar's loan operation. Lehman
was the leading purveyor of liar's loans in the world for most
of this decade. Studies on liar's loans show incidence of fraud
of 90 percent. Lehman sold this to the world with reps and
warranties that there were no such frauds.
If you want to know why we have a global crisis, in large
part, it is before you. But it hasn't been discussed today,
amazingly. Financial institution leaders are not engaged in
risk when they engage in liar's loans. Liar's loans will cause
a failure. They lose money. The only way to make money is to
deceive others by selling bad paper, and that will eventually
lead to liability and failure as well.
When people cheat, you cannot as a regulator continue
business as usual. They go into a different category, and you
must act completely differently as a regulator. What we have
gotten instead are sad excuses. The SEC--we are told there are
only 24 people in their comprehensive program. Who decided how
many people there would be in their comprehensive program? Who
decided the staffing? The SEC did. To say that we only had 24
people is not to create an excuse, it is to give an admission
of criminal negligence--except it is not criminal because you
are a Federal employee.
In the context of the FDIC, Secretary Geithner testified
today that this event pushed the financial system to the brink
of collapse. But Chairman Bernanke testified we sent two people
to be on site at Lehman. We sent 50 credit people to the
largest savings and loan in America. It had $30 billion in
assets. We had a whole lot less staff than the Fed does. We
forced out the CEO. We replaced the CEO. And we did that not
through regulation, but because of our leverage as creditors.
Now, I ask you, who had more leverage as creditors in 2008;
the Fed, compared to the Federal Home Loan Bank of San
Francisco 19 years earlier? Incomprehensibly, greater leverage
in the Fed, and it simply was not used.
So let's start with the Repos. We have known since Enron in
2001 that this is a common scam in which every major bank that
was approached by Enron agreed to help them deceive creditors
and investors by doing these kind of transactions. And so what
happened? There was a proposal in 2004 to stop it, and the
regulatory heads--it was an interagency effort--killed it. They
came out with something pathetic in 2006 and stalled its
implementation to 2007, but it is meaningless.
We have known for a decade that these are frauds. We have
known for a decade how to stop them. All of the major
regulatory agencies were complicit in that statement in
destroying it. We have a self-fulfilling policy of regulatory
failure because of the leadership in this era.
We have the Fed, the Federal Reserve Bank of New York,
finding that this is three-card Monte. What would you do as a
regulator if you knew that one of the largest enterprises in
the world, when the Nation is on the brink of collapse,
economic collapse, is engaged in fraud, three-card Monte? Would
you continue business as usual?
That is what was done. Oh, they met a lot. They say, we
only had a nuclear stick. It sounds like a pretty good stick to
use if you are on the brink of collapse of the system.
But that is not what the Fed has to do. The Fed is a
central bank. Central banks, for centuries, have gotten rid of
the heads of financial institutions. The Bank of England does
it with a luncheon. The board of directors are invited; they
don't say no. They are sat down. The head of the Bank of
England says, ``We have lost confidence in the CEO of your
enterprise. We believe that Mr. Jones would be an effective
replacement.'' And by 4:00 that day, Mr. Jones is running the
place, and he has a mandate to clean up all the problems.
Instead, every day that Lehman remained under its
leadership, the exposure of the American people to loss grew by
hundreds of millions of dollars on average. Aurora was pumping
out up to $3 billion a month in liar's loans. Losses on those
are running roughly 50 cents to 85 cents on the dollar. It is
critical not to do business as usual, to change.
We have also heard from Secretary Geithner and Chairman
Bernanke, ``We couldn't deal with these lenders because we had
no authority over them.'' The Fed had unique authority since
1994 under HOEPA to regulate all mortgage lenders. It finally
used it in 2008. They could have stopped Aurora. They could
have stopped the subprime unit of Lehman that was really a
liar's loan place, as well, as time went by.
Thank you very much.
Satyajit Das explains stuff for you.
(I do take offense at “lazy literary references.”)
Banking is essentially a confidence trick because of the inherent mismatch between short-term deposits and longer-term assets. As the rapid demise of CS highlights, strong capital and liquidity ratios count for little when depositors take flight. Just as the genius of Keyzer Soze (which in Turkish means someone who talks too much) is to pass himself off as Verbal Kint in The Usual Suspects, banking’s greatest trick is convincing depositors that liquidity risk does not exist. While deposit withdrawals are possible most of the time, that may not always be the case.
…Since 2018, in the US, monthly mortgage repayments on a new median-price house with a 20 percent deposit has risen by nearly 90 percent (from $1,259 to $2,360) because of higher property prices and interest rates. Similar increases are evident globally…
On 12 March 2023, US Treasury Secretary Janet Yellen stated: “I have full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event.”
The statement was reminiscent of the statement of then US Treasury Secretary Henry Paulson almost exactly 15 years ago on 16 March 2008: “We’ve got strong financial institutions…Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.”
There is a concerted effort by financial officials and their acolytes to reassure the population and mainly themselves of the safety of the financial system. Protestations of a sound banking system and the absence of contagion is an oxymoron. If the authorities are correct than then why evoke the ‘systemic risk exemption’ to guarantee all depositors of failed banks? If there is liquidity to meet withdrawals then there why the logorrhea about the sufficiency of funds? If everything is fine, then why have US banks borrowed $153 billion at a punitive 4.75% against collateral at the discount window, a larger amount than in 2008/9? Why the compelling need for authorities to provide over $1 trillion in money or force bank mergers?
John Kenneth Galbraith once remarked that “anyone who says he won’t resign four times, will”. In a similar vein, the incessant repetition about the absence of any financial crisis suggests exactly the opposite…
For the moment, whether the third banking crisis in two decades remains contained is a matter of faith and belief. Financial markets will test policymakers resolve in the coming days and weeks.
"Never believe anything in politics until it has been officially denied." - attributed to Otto von Bismarck
While the current focus is on the banking sector, emerging financial and economic stresses are likely to reveal other exposures. This may include risky investments, the shadow banking system, structured products, trading and the bank-sovereign debt doom loop especially in Europe – the ‘usual suspects’.
Recent years have seen increased investment in venture capital (“VC”) and early/ late stage start-ups. While some of this may turn out to be sensible, a significant part financed two people in a garage on the basis of a skimpy PowerPoint deck as febrile FOMO (fear of missing out) obsessed investors chased the next new thing.
Abundant capital became its own strategy. Low interest rates, abundant liquidity combined with superior, privileged information and deal access, advantageous tax treatment and generous regulations encouraged investment. It stimulated the entry of ‘VC tourists’ or, as the National Venture Capital Association terms them ‘non-traditional capital’ – mutual funds, hedge funds, sovereign wealth funds etc. These new investors predictably drove up deal sizes and values while simultaneously devaluing expertise, due-diligence and common sense.
The apparently unlimited supply of cheap capital led to an explosion of firms with little or no possibility of creating a long-term viable, sustainable, self-financing operation. Fraud became a cost of doing business. The objective was to spend other people’s money to acquire customers to either on-sell onto the next fool or, more unlikely, emerge the victor in a desperate and expensive winner-takes-all race. [Uber and Lyft come to mind here - rh]
And now a brief intermission for an excerpt by John K. Galbraith, from A Short History of Financial Euphoria:
Those involved with the speculation are experiencing an increase in wealth—getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition.
The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved…
Contributing to and supporting this euphoria are two further factors little noted in our time or in past times. The first is the extreme brevity of the financial memory. In consequence, financial disaster is quickly forgotten.
In further consequence, when the same or closely similar circumstances occur again, sometimes in only a few years, they are hailed by a new, often youthful, and always supremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world.
There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
Well said. Now back to Das:
John Kenneth Galbraith in The Great Crash, 1929 described ‘bezzle’ – theft where there is an often lengthy of time period between the crime and its discovery. The person robbed continues to feel richer as he does not know as yet of his loss. Bezzle, which increases under benign conditions, is only exposed by changes in the environment. Over the last decade, investors have been bezzle-d’ by investments offering high returns which did not adequately compensate for the real risk that only emerges much later. If a major financial crisis develops, losses on these bezzle based investments will be revealed to impoverish investors.
For the moment, financial markets are holding. But as one analyst of the 1929 crash observed: “Everyone was prepared to hold their ground, but the ground gave way.”
More from Das:
There are important differences in the policy options available compared to those present in 2008.
Debt levels are much higher meaning borrowing to fund bank rescues and support the economy is more difficult.
Interest rates are relatively low in nominal terms and negative in real (after adjusting for inflation) terms. Persistent inflation means that policymakers must grapple with keeping rates high or loosening monetary policy to prevent financial deterioration. While high interest rates may be ineffective against the supply side factors underlying higher prices, there remains a risk that inflation becomes entrenched inflicting not inconsequential damage. The scope for the magnitude rate cuts needed (around 3 to 5 percent in past cycles) is limited.
Since 2009, the size of central bank balance sheets has grown significantly. Since 2007, the US Federal Reserve balance sheet grew from just under $1 trillion (7 percent of GDP) to nearly $9 trillion (34 percent of GDP). Other central bank balance sheets have experienced similar growth – the ECB is at more than 60 percent of GDP, the Bank of England’s around 40 percent and the Bank of Japan’s 127 percent. Further growth may be difficult especially given the large unrealised losses on their existing investments. The US Fed has around $330 billion of unrealized losses, nearly 8 times its $42 billion in capital.
The recovery after 2008 was assisted by robust growth in emerging markets, led by China. These countries now have multiple challenges. Strong emerging market activity and Chinese credit expansion (bank assets increased between 2007 and 2022 from less than $8.0 trillion to over $60 trillion) are unlikely to cushion any downturn.
The global economy may now be trapped in an easy money-forever cycle. A weak economy or financial crisis forces policymakers to implement fiscal measures and more monetary expansion. If the economy responds and the financial sector stabilises, then there are attempts to withdrawal the stimulus. Higher interest rates slow the economy and trigger financial crises, setting off a new round of the cycle.
If the economy does not respond or external shocks occur, then there is pressure for additional stimuli, as policymakers seek to maintain control. All the while, debt levels continue to increase, making the position ever more intractable.
Economist Ludwig von Mises was pessimistic on the denouement: “There is no means of avoiding the final collapse of a boom brought about by credit expansion…The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Forbes: America's Best Banks of 2015
Watching this curve stuff. Don’t think an end to inversion would be a good thing for stocks or the economy.
Hey Now! (said in a Hank Kingsley voice)
The Great Financial Crisis I & II
[The Sudden Debt blog was one of the most prescient blogs in the runup to the last housing bubble, as the Fed and most pundits remained clueless, so take it or leave it.]
“Many historians view WWI and WWII as one world war separated by a brief period of peace…Drawing a parallel to the Great Financial Crisis of 2007-10, I believe that the way it was handled by central banks and governments in the US, EU and Japan is now - inevitably - causing the current spate of trouble…GFC I was "handled" by - literally - papering it over: Western central banks "printed" enormous amounts of money to save the financial/banking systems in their countries and drove interest rates below zero…
We really and truly need to act fast and decisively, before the "Nazis" take over:
We must immediately bring inflation down to as close to 2% (maximum) as possible. There is only one way to do so in a rational manner: QT.
We must immediately eliminate budget deficits and eliminate the need for more public debt.
We must immediately start the process of re-balancing socially unjust income and wealth excesses.
We must do everything necessary before GFC II starts.’
A straight line runs from the madness of the German Inflation to the madness of the Third Reich…In those days the market woman who without batting an eyelash demanded a hundred million for an egg, lost the capacity for surprise. And nothing that has happened since has been insane or cruel enough to surprise her.
It was during the Inflation that the Germans forgot how to rely on themselves as individuals and learned to expect everything from "politics", from the "state", from "destiny." They learned to look on life as a wild adventure, the outcome of which depended not on their own effort but on sinister, mysterious forces.
The millions who were then robbed of their wages and savings became the "masses" with whom Dr. Goebbels was to operate. Inflation is a tragedy that makes a whole people cynical, hardhearted and indifferent. Having been robbed, the Germans became a nation of robbers.
"State bankruptcy is a one-time surgical intervention, while inflation is a permanent poisoning of the very bloodstream of a society."
(For more on Somary, check out The Raven of Zurich - note his comments on Joseph Schumpeter. A Very Ordinary Life might also be of interest.)
New Report Claims Blackstone Group is Buying San Diego's Affordable Housing, Hiking Up Rent Prices
Some thoughts on Blackstone (from some random internet person).
I’d be happy if Blackstone was forced to stop empowering feudalism by overpaying for single-family homes your kids can no longer afford.
No position - I just don’t like Stephen Schwarzman. Caveat emptor:
Blackstone ($BX):
Revenues in 2021 were $22.57billion and dropped to $8.5 billion in 2022. OUCH [I checked this out. Wow. - rh]
Worse, net interest income dropped from $461 million to NEGATIVE $105 million.
Long term debt rose from $7.7 billion in 2021 to $12.3 billion in 2022 - I think BX is trying to borrow to buy itself time.
BX does have access to about $187 billion in credit to bring to bear so its not like they will go out of business. think of them as one of the Too Big To Fail CRE firms.
BX runs an internal non traded $71 billion REIT - which they have halted withdrawals for 4 months and counting.
Operating income dropped from $13 billion in 2021 to $4.9 billion in 2022.
But the big data point for me is that over the last 6 months, BX insiders sold 97.83% of BX stock. Now, a lot of this selling was from various BX limited partnerships which companies like BX use to hide the salami but still, that is a crap ton of selling.
BX has a current PE of 35 and a forward PE of 13ish while the industry has a PE of 9
BX has a PEG ratio (PE plus what earnings are expected to grow at) of 3.43 while the industry average is .73
By these two metrics, BX is priced at a premium, probably due to the fact that they have some very smart people working for them. But smart people cannot overcome negative momentum when it starts to affect things they cannot control.
Finally, while they do have a nice 5% div, their payout ratio is 208%.
So, falling revenues, falling asset performance, falling asset values, negative dividend coverage, insiders dumping. Not a good picture.
Office Vacancy Rate
Barry Sternlicht is whining again for a bailout. Love the comments. Seriously. Comments unedited.
In today’s news: Guy whose income and wealth depends on low interest rates warns of impending doom if interest rates aren’t lowered immediately.
The incessant whining of PE firms, hedge funds, tech bros, is giving me a case of priapism. For fucks sake, we have had artificially low interest rates for far to long. And if you can't figure out how to make money in a higher interest rate environment, you just ain't as smart as you think you are.
Any moron can make money in a bull market. Very few can make money in a bear market.
There’s nothing concrete mentioned in this article just a bunch of smoke blown up the publics ass. All these hedgefund types just don’t want the people to know how much unrealized losses they have an their books. They just keep crying
Barry is sitting on a mountain of debt. Starwood is in trouble. Like SVB, First Republic, Credit Suisse and hundreds of other banks he thought the Federal Reserve was bluffing.
He assumed the "Master's of the Universe" were going to bully the market. They assumed the tail could wag the dog. He's now clutching his pearls pleading for taxpayers to save him from his poor decisions. Remember the Japanese executives who would commit ceremonial suicide before being disgraced by failure? Weak.
Are you suggesting he let of go his pearls?
My comment: Barry is worried that capitalism might be coming for him.
Hmm, why would he say this? Could it be because his firm has taken advantage of low interest rates and cheap money to overleverage, and now with inflation and rising rates hurting the value of their real estate assets and their ability to refinance he's looking for help? Couldn't at all be self-serving, could it? Nope, nothing to read into, it's just another altruistic billionaire looking out for the little guy.
Lowering rates PLUS turning Fed printer back on equals more billions for billionaires, higher inflation, higher housing costs, higher rents and risk free passive income for owners, and further contraction of the middle class. The best way to combat inflation while sparing the middle class and poor is to more aggressively do Quantitative Tightening but QE padded the bank accounts of billionaires doubling their wealth and they don’t want that. Also banks have completely and recklessly mismanaged risk again and with out more Fed QE the banking system could have collapsed. The Fed should have used QT as the primary tool to lower inflation as it would have taken trillions of QE out of the money supply. Too much money floating around was a big driver of inflation and asset bubbles including housing which has become unaffordable for younger middle class families in many part of the US and throughout the western world. QT should have been the primary lever used to lower inflation while increasing interest rates at a much slower rate. But instead the Fed took a hammer to the debtor class (the middle class and poors) while barely mentioning QT and barely made a dent in the Fed balance sheet before having to undo most of that again bailing out the banks.
Here is a follow up question for any reporter interviewing a CEO or asset manager trying to tell us what the Fed or government needs to do. How would what you are recommending befit you personally? And if getting no answer, the reporter should be competent enough to tell the reader anyway how what they are proposing will personally benefit the speaker and their corporate interests.
Reminiscing About AIG
No wonder Goldman Sachs was suddenly so eager to sell Mike Burry credit default swaps in giant, $100 million chunks, or that the Goldman Sachs bond trader had been surprisingly indifferent to which subprime bonds Mike Burry bet against. The insurance Mike Burry bought was inserted into a synthetic CDO and passed along to AIG. The roughly $20 billion in credit default swaps sold by AIG to Goldman Sachs meant roughly $400 million in riskless profits for Goldman Sachs. Each year. The deals lasted as long as the underlying bonds, which had an expected life of about six years, which, when you did the math, implied a profit for the Goldman trader of $2.4 billion.
New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers (Jan. 2010)
“There’s no way they should have paid at par. AIG was basically bankrupt.”
The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG…
The New York Fed board, which normally consists of nine directors, in November 2008 included Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Friedman…[Shocking! - rh]
Far more money was wasted in paying the banks for their swaps, says Donn Vickrey of financial research firm Gradient Analytics Inc. “In cases like this, the outcome is always along the lines of 50, 60 or 70 cents on the dollar,” Vickrey says…
One reason par was paid was because some counterparties insisted on being paid in full [so what? - rh] and the New York Fed did not want to negotiate separate deals, says a person close to the transaction. “Some of those banks needed 100 cents on the dollar or they risked failure,” Vickrey says…
Edward Grebeck, CEO of Stamford, Connecticut-based debt consulting firm Tempus Advisors, says the most serious breach by the government was to keep the process of approving the bank payments secret.
“It’s inexcusable,” says Grebeck, who teaches a course on CDSs at New York University. “Everybody should be privy to the negotiations that went on. We can’t have bailouts like this happening behind closed doors.” [LAUGHTER - rh]
…Friedman’s role remains controversial. In December 2008, weeks after the payments to the banks were authorized in November, Friedman bought 37,300 shares of Goldman stock at $80.78 a share, according to SEC filings. On Jan. 22, he bought 15,300 more at $66.61.
Both purchases took place before the payments to Goldman Sachs were publicly disclosed…On Oct. 26, Goldman Sachs stock closed at $179.37 a share, meaning Friedman had paper profits of $5.4 million.
Jerry Jordan, former president of the Federal Reserve Bank of Cleveland, says Friedman should have resigned from the New York Fed as soon as it became clear that Goldman stood to benefit from its actions.
“It’s an outrage,” Jordan says. “He needed to either resign from the Fed board or from Goldman and proceed to sell his stock.”
Friedman remains a member of Goldman’s board and held a total of 98,600 shares of the firm’s stock as of Jan. 22.
Vickrey says that one reason the New York Fed should have insisted on discounted payments for AIG’s CDSs is that the banks likely had hedges against their insured CDOs or had already written down their value. On March 20, Goldman Sachs CFO David Viniar said in a conference call with investors that Goldman was protected. [Geithner bailed them out anyway, as a gift. - rh]
NARRATOR: When AIG was bailed out, the owners of its credit default swaps, the most prominent of which was Goldman Sachs, were paid 61 billion dollars the next day. Paulson, Bernanke, and Tim Geithner forced AIG to pay 100 cents on the dollar, rather than negotiate lower prices. Eventually, the AIG bailout cost taxpayers over 150 billion dollars.
MICHAEL GREENBERGER: A hundred and sixty billion dollars went through AIG; 14 billion went to Goldman Sachs.
Geithner's New York Fed Told AIG to Limit Swaps Disclosure
The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. (AIG) to withhold details from the public about the bailed-out insurer's payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show…Under pressure from lawmakers, AIG disclosed the names of the counterparties, which included Deutsche Bank AG and Merrill Lynch & Co., on March 15. The disclosure said AIG made more than $27 billion in payments without identifying the securities tied to the swaps or listing the value of individual purchases by each bank, details the Fed wanted to keep out
The above is an example of the fabled “Fed Transparency,” which the Fed invokes when it doesn’t want taxpayers to know about the bad things they’ve done.
[Editor’s note: The U.S. Treasury Secretary at the time of the AIG creditor bailout, Hank Paulson, joined Goldman Sachs in 1974, becoming a partner in 1982. He was Goldman CEO from 1999 to 2006, succeeding the infamous Jon Corzine. His tenure as CEO coincided with the height of bank mortgage fraud. Now he works for China. Senior Citade Advisor Ben Bernanke now also works now for Pimco, and Tim Geithner heads up Warburg Pincus. Stephen Friedman, 85, is near the end of his pact with Satan, and looks forward to seeing Donald Rumsfeld soon.]
AIG’s contention is that the driver of how its rescue was done was to force as many RMBS and CDO credit losses on AIG, so as to reduce the amount of support that would have to go directly to banks. In other words, it was to facilitate the bailout of the investment banks and banks that were perceived to be essential due to operating the payments system and large domestic and international over-the-counter debt markets. AIG could be handled more roughly because it was not a critical part of the financial plumbing and also had never done much to curry political favor. By contrast, if foreign investors were part of the rescue team, they would almost certainly have insisted on haircuts on the AIG credit default swaps, a large mechanism for laundering bailout dollars through AIG to banks and former investment banks like Goldman and Morgan Stanley.
I found this podcast with P. Conklin of Pensford on multi-family financing interesting
Top 5 Crypto-Friendly Banks for Investors and Enthusiasts I’m not a crypto-guy (or a rapper).
Can Bitcoin reach $1 million in 90 days? Can I win the Heisman Trophy?
20 banks that are sitting on huge potential securities losses — as was SVB For what it’s worth. I don’t know if anything matters anymore. They have a printing press.
Saudi National Bank chair resigns after Credit Suisse comments Soon to be hanging upside-down at the Four Seasons.
This is apparently completely normal now in parts of America.
Luckin's Disgraced Founder Is Back With Another Coffee Chain Unbelievable. Once anyone in finance has shown themselves to be crooked you can never trust them again.
Qian, who calls herself a coffee “dreamer,” lost her CEO job at Luckin in May 2020 after an internal probe uncovered a scheme of fabricated transactions.
“Consumers care more about a good product and good price than a company’s financial situation,” said Yi Yongjian, an analyst at Ping An Securities Co. in Shanghai
This story (if true) is a nightmare: My battle with squatters. (MFH = Multi-family home).
As an aside, last night I was with some people for the first time, I guessed they’d be called Yuppies, 40’s. Anyway, I didn’t pry, because I’d just met them, but several of them talked about their “Airbnbs”, plural, problem with squatters, and the apparently multiple issues when changing your Wifi password at Airbnbs you manage remotely in other states. Very The Big Short vibe.
No blue checks here!
Two pointless comments:
One of my favorite novels, The Tenured Professor, was written by John Kenneth Galbraith.
I'm old enough to know that the Sticky Fingers album has an actual zipper on the cover.
Didn’t Iceland take the medicine in 2008 and let the banks fail? Wonder how they’re doing? Funny about the car window thing - was just talking with my dad recalling in the 80s how people used to put signs in their car ‘no radio’ to try to avoid such break-ins (NY area). You’re right - history repeats. But what are the crooks stealing now? Surely not car radios?