Category Archives: Banking industry

Is the Plan Still in Play? (Updated Further, Yes There May Be No Deal As of Now)

Readers Dean and Dwight wrote to tell me that CNBC is reporting that Senator Shelby (R-Alabama, and the ranking member of the Senate Banking Committed) came out of the White House waving the University of Chicago organized letter from economists objecting to the plan and said there was no agreement. Given the apparent momentum to […]

"A Bailout We Don’t Need"

As James Galbraith points out in today’s Washington Post (hat tip reader Marshall), the Paulson bailout plan wasn’t necessary, and any rescue could have been handled by expanding existing programs: Now that all five big investment banks — Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley — have disappeared or morphed into […]

More Clarification of Bailout Details (Updated)

From the Washington Post: House Financial Services Committee Chairman Barney Frank (D-Mass.) said the bailout deal reached by key lawmakers calls for dividing the $700 billion pricetag into three parts: Paulson would receive $250 billion immediately and another $100 billion upon White House certification of its necessity. The final $350 billion could be dispersed without […]

Goal of Paulson Plan: Restore Mark-to-Myth Accounting

While we have focused on the fact that the Treasury bailout plan, which with some tweaks, is moving towards approval. is a covert and inefficient recapitalization of the banking system, other observers see another goal for the plan. The contend that its main purpose is to circumvent mark-to-market accounting. The belief is that mark to […]

Paulson Plan Officially On

While there have been various reports during the day that a version 2.0 of the Treasury bailout bill was moving towards passage, the agreement in principle now appears to be official. From the Wall Street Journal: A bipartisan group of House and Senate lawmakers left a two-hour-plus meeting in the U.S. Capitol on Thursday saying […]

The New York Times Spreads Disinformation About the Paulson Plan

Vikas Bajaj of the New York Times is an able reporter and I have often enjoyed his work. I was therefore taken aback when I read his article, “Plan’s Basic Mystery: What’s All This Stuff Worth?” since it misleads readers as to the intent and thrust of the so-called Troubled Asset Relief Program. This is […]

Democrats Say "Breakthrough" Enables Them to Pass Bailout Bill Tomorrow

As we said when the idea of this bill was first mooted, bye bye US AAA rating, bye bye dollar. Not overnight, but the die is cast. We have also said that the eagerness to pass this measure is based on the faulty premise that this package will actually do something to solve the problem. […]

Republican Congressmen Tell Paulson Ballout Won’t Pass

I would not get optimistic yet, since Our Fearless Feckless Leader is on prime time tonight, but Republican legislators are telling the Treasury secretary that trying to rush a skeletal bill through is not going to succeed, and they need time to craft something more fully fleshed out. From Bloomberg: House Republicans warned Treasury Secretary […]

Libor Rises as Banks Hoard Cash

The bank funding market continues to be under stress. To some degree, this was anticipated, as various market participants saw signs that the year-end liquidity squeeze, and the months preceding it, would be worse than last year, which was bad enough to lead to the creation of the first special liquidity vehicle, the Term Auction […]

Banking Expert: Bailout Not Necessary, Industry Can Take Losses

One of the premises of the bailout bill is that the banking industry must have government help to get back on its feet. A banking industry expert, Bert Ely, who has a stellar track record in predicting crises and calling false alarms says that the banking industry can handle this mess internally and does not […]

"Corporate America sits on its cash"

Since this blog routinely traffics in bad news, I thought I ought to pass along a positive tidbit: a lot of US companies have considerable cash on hand, so they should not be too badly affected by the credit crunch. However, the fact that they are so well endowed is curious. It is partly because […]

Guest Post: The Inside-the-Beltway Take on the Bailout Bill

Reader Lune, who has been a guest contributor on this blog and was once a Congressional aide (health care was his beat) took a gander through his HIll newspapers and was so kind as to write up what they were saying about the Paulson plan. Bottom line: whatever enthusiasm there was for it appears to […]

On the Dishonest Sale of the Bailout Bill

We received this via e-mail from reader Jonathan Bernstein. It makes a point that occurred to us in passing, and we’ve been hugely remiss in not pointing it out, namely, the near-meltdown of the financial system was averted. The urgency about passing a bailout bill is completely phony. Jonathan makes the case well: One of […]

Protests Against Bailout Bill Registering With Congress

We received this e-mail today from one of the Congressional staffers who has taken to corresponding with us (boldface ours): I know that people are often cynical about contacting their representatives. Frankly, they should be. Most days, the overwhelming volume of constituent contacts is form letter e-mails, pre-printed postcards, blast faxes, and automated phone calls. […]

Bernanke Tells Congress Economy Will Contract if Bailout Bill Not Passed (Updated)

It is becoming clear that Bernanke simply does not get it. Just as he once thought subprime was contained, and has continued to misread the nature and trajectory of the credit crisis, so too he has said that there is a way out of it that involves little or no cost in terms of growth. […]