A bad day for the GOP on politics, bailout plan
Friday September 26, 5:16 am ET
By Charles Babington, Associated Press Writer
Uncertainty dawns after bad day for Bush, McCain and the huge financial bailout plan
WASHINGTON (AP) -- Even for a party whose president suffers dismal approval ratings, whose legislative wing lost control of Congress and whose presidential nominee trails in the polls, it was a remarkably bad day for Republicans......
a good day for someone standing up for taxpayers.
The House GOP leaders are really risking major havoc here. I frankly thought Bush did an excellent job explaining the matter, laying out the history, explaining why the plan should be passed and accepting in principle the oversight, equity for taxpayers, phased in spending.... I would have dwelt more on the need for liquidity in the marketplace as it is the issue of cash on hand that is forcing firms into bankruptcy as they can't meet current obligations, minimum capital requirements or refinance short term debt. I actually gave him an A+ for the speech. However, as the speech progressed I looked at my wife and lamented that he is actually telling the truth and doing it well without his normal condescending speech patterns. But will anyone believe him since he has told so many lies.
I am right now exploring ways to capitalize on the CDO's (collateralized debt obligations). At 30 to 40 cents on the dollar, this has the potential for huge profits in 3 to 5 years - if done right, we could actually pay off the debt and more. With an 80% stake in AIG, this also could be a potential windfall to taxpayers. But where is the Republican philosophy of free markets? Sometimes government is the only player big enough to step in - rather not have it that way, but in this case this is the right plan.
Now if the financial system melts down and these obligations become worthless - well, we are all screwed then.
I can't believe I am saying this but Bush is right on this one with the Democratic concerns regarding oversight.....included. We do need to address the homeowner situation and frankly giving Bankruptcy judges the ability to alter terms is a win for the institutions and homeowners. Banks need the debts to stay whole and not suffer a write down which imperils minimum capital requirements. We need consumers with credit histories that let them participate in any economic upturn by being able to get loans and spend.
Standing up for taxpayers is good and I'm on that side. But I can also see benefits if the CDO's are bought at the right price. Not all the mortgages that are collateralized in these obligations will go bad. I don't think we will see a 60% default rate even in the sub prime loans except where they are concentrated in states hit hard by the housing meltdown.
We need to establish a market for the CDO's, inject liquidity into the market place, and assure banks they can lend to credit worthy customers. Right now it's tight and it threatens to make a business down turn even worse.
My 2 cents.
The guy has zero juice left, his incompetency has been so overwhelming on so many issues, nobody from either side of the Congressional aisle is giving anything he says any credibility. He's an empty suit, now more than ever, and that's saying alot.
To make profits and buy some failing banks, and then consolidate more and more institutions back into a few and then propose legislation to undo what was done, Ground Hog Day all over again.
Sept. 26 (Bloomberg) -- JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.'s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.
Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank ``unsound,'' the Office of Thrift Supervision said late yesterday. WaMu's branches will open today and depositors will have full access to all their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said on a conference call.
WaMu is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business and led to the hastily arranged rescues of Merrill Lynch & Co. and Bear Stearns Cos., which was itself absorbed by JPMorgan. WaMu in March rejected a takeover offer from JPMorgan Chief Executive Officer Jamie Dimon that the savings and loan valued at $4 a share.
``This is a fabulous franchise,'' Dimon, 52, said in an interview. ``We think we got this at a price that protects us, where if we were wrong, it still protects us.''
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ao0E1sRCSORQ
To make profits and buy some failing banks, and then consolidate more and more institutions back into a few and then propose legislation to undo what was done, Ground Hog Day all over again.
Sept. 26 (Bloomberg) -- JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.'s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.
Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank ``unsound,'' the Office of Thrift Supervision said late yesterday. WaMu's branches will open today and depositors will have full access to all their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said on a conference call.
WaMu is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business and led to the hastily arranged rescues of Merrill Lynch & Co. and Bear Stearns Cos., which was itself absorbed by JPMorgan. WaMu in March rejected a takeover offer from JPMorgan Chief Executive Officer Jamie Dimon that the savings and loan valued at $4 a share.
``This is a fabulous franchise,'' Dimon, 52, said in an interview. ``We think we got this at a price that protects us, where if we were wrong, it still protects us.''
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ao0E1sRCSORQ
It is a fear of mine that we will end up with far too much consolidation and set ourselves up for greater catastrophe next time around. AIG is the perfect example. They were far too big and had their tentacles in too many areas to allow the firm to fail. Same goes for the Fannie - Freddie story.
As part of getting back on track, these issues must be addressed when Congress looks at what changes in financial laws as well as new regulations are needed. I don't like regulation, but the past 8 years proves the need to have a set of rules that protects consumers, investors.... and minimizes the chances for major disruptions.
If you are a long term investor (5 to 10 year time frame) and the the next great depression does not materialize, this could be a good day to invest. I'll be watching it closely. Bank of America is playing "Potter from a Wonderful Life" and will be a great buy in the near term.
Still I share your concerns about "Ground Hog Day all over again".
Fortis reshaped by government bailout
AMSTERDAM, Netherlands - Fortis NV said Monday it will become a smaller but financially stable bank after three European governments agreed on an 11.2 billion euro ($16.4 billion) bailout package.
Belgium, the Netherlands and Luxembourg agreed late Sunday to the cash injection to avert a run on Fortis, taking a 49 percent stake in exchange and demanding Fortis resell the share of ABN Amro it bought a year ago — the very decision that brought about all its troubles.
Fortis, with headquarters in Brussels, Belgium, and Utrecht, Netherlands, is Belgium's largest retail bank, while ABN Amro is the largest in the Netherlands.
The bailout orchestrated by the three neighboring countries and European Central Bank chief Jean-Claude Trichet was meant to restore confidence in the bank before the reopening of markets on Monday after a tumultuous week of imploding share values at Fortis.
Insolvency fears caused the company's shares to tumble more than 20 percent Friday to their lowest level in 15 years. After a brief rally at the open Monday they fell 20 percent again, dipping below euro4.00 ($5.78) in Amsterdam — less than a fifth of what they were worth before the ABN buy.
Fortis paid 24 billion euros for its share of ABN in October 2007, and said prior to Sunday's bailout it needed to raise around 5 billion euros ($7.3 billion) in cash to maintain financial ratios as it integrated ABN's Dutch retail operations next year.
Fortis had insisted it could meet that shortfall by selling other assets, but analysts were increasingly skeptical as there are few buyers in the market and many sellers.
http://news.yahoo.com/s/ap/20080929/ap_on_bi_ge/eu_netherlands_fortis;_y...