We're At 3 Trillion Now (TARP, TALF, BANK RESCUE & Stim) - We'll Be At 4 W/in A Month

Discussion in 'Economics' started by ByLoSellHi, Feb 10, 2009.

  1. Do I hear 4?


    Geithner Says Bank-Rescue Plans May Reach $2 Trillion (Update1)
    Email | Print | A A A

    By Rebecca Christie

    Feb. 10 (Bloomberg) --
    Treasury Secretary Timothy Geithner pledged government financing for as much as $2 trillion of efforts to spur new lending and address banks’ toxic assets, seeking to end the credit crunch hobbling the economy.

    “Instead of catalyzing recovery, the financial system is working against recovery,” Geithner said in unveiling the Obama administration’s overhaul of the government’s financial-bailout plans in Washington today. “At the same time, the recession is putting greater pressure on banks. This is a dangerous dynamic, and we need to arrest it.”

    The main components of the Treasury’s package today are a joint public- and private-sector fund to buy as much as $1 trillion of illiquid assets and a $1 trillion program to supply new credit to consumers and businesses. The administration also will inject additional taxpayer funds into banks, imposing tighter restrictions that will include limits on dividend payments, acquisitions and executive pay.

    “I want to be candid: this strategy will cost money, involve risk, and take time,” Geithner said today. The initial bailout effort, which he helped administer in his previous job as head of the Federal Reserve Bank of New York, was “essential” while “inadequate” to support the financial system and the secondary-lending market, he said.

    Stocks Slide

    Stocks dropped as investors expressed concern about a lack of specifics on plans for addressing toxic assets. The Standard & Poor’s 500 Stock Index slumped 3.8 percent to 837.09 at 11:40 a.m. in New York. The S&P 500 Bank index fell 10 percent, with Bank of America Corp. down 17 percent. Regional lender Huntington Bancshares Inc., based in Columbus, Ohio, slid 19 percent to $2.11.

    Today’s overhaul of the Treasury’s $700 billion financial- rescue fund is aimed at addressing the failures of the first phase of the program, which has yet to spur a wave of new lending to companies and consumers. Geithner’s warning about the cost of the effort followed signals yesterday by President Barack Obama that the administration is open to seeking more money.

    “We don’t know yet whether we’re going to need additional money or how much additional money we’ll need until we’ve seen how successful we are at restoring a sense of confidence in the marketplace,” Obama said in his news conference last night in Washington.

    Deciding on Plan

    Officials debated the financial-recovery plan for weeks, and encountered the same issues that former Treasury Secretary Henry Paulson did in trying to deal with the toxic assets.

    Paulson abandoned an effort to buy the securities after failing to find a quick mechanism for pricing them. He opted for buying stakes in banks as the centerpiece of the first $350 billion of the financial-bailout program.

    Geithner today outlined the Public-Private Investment Fund, with an initial capacity of $500 billion that could grow to $1 trillion, to provide financing for private investors to buy distressed securities.

    “We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it,” the Treasury chief said today. This fund will be targeted to the legacy loans and assets that are now burdening many financial institutions.”

    Fear at Banks

    The illiquid securities, mainly tied to mortgages, have spooked investors away from putting new money into banks and made lenders loath to extend new credit. Rather than borrow at the Fed’s target rate for overnight funds -- now as low as zero percent -- to lend, banks have instead parked a surplus of $793 billion of cash at the central bank itself.

    The Treasury will also work with the Federal Reserve to finance as much as $1 trillion in new consumer and business loans. The newly established Consumer and Business Lending Initiative is modeled on an earlier program to support new credit.

    Under today’s plan, regulators will subject banks to new tests to determine whether they have enough capital. The Treasury, Fed and other supervisors in the President’s Working Group on financial markets will develop guidelines for the examinations, which are aimed at ensuring that the country’s largest banks can withstand a worsening economy.

    Banks that don’t have sufficient capital will be given additional taxpayer funds in the form of convertible preferred securities. Participants will have their dividends and political lobbying efforts restricted, along with limits on stock buybacks, acquisitions, executive compensation and so-called golden parachutes. Luxury spending provisions must also be disclosed.

    The Treasury’s new investments in banks will be placed in a new entity called the Financial Stability Trust, Geithner said.

    Today’s package includes $50 billion for measures to stem mortgage foreclosures. Banks receiving federal funds will be required to participate in efforts to mitigate foreclosures. The Treasury and Fed will work to reduce monthly payments and establish loan-modification guidelines.

    To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net;
  2. BTW, if you believe stock_trd3r still plays with 'Star Wars: Revenge of the Siths' action figures, please rate this thread 5 stars. Thanks.
  3. Trillion is the new billion.
  4. lrm21


    We are so far gone, we don't know where to stand.

    It's a joke. The whole thing is one sick, demented joke.

    These people are truly just committing outright thievery, they're behavior is signaling that they don't believe in any viable future of this country or the people, or in the free market.

    And so its a power grab, a complete raping of the gold before the house burns.

    I mean, when the Head CFO of the United States, doesn't feel it necessary to pay his taxes and is still appointed it means there is pure corruption.

    We are a third world country where people now only obey the law when you might get caught,

    and to some extent I don't blame them the law is know becoming, not a tool for a better society, but its simply a tool to oppress the masses.

    The elites do whatever they want.

    I mean fucking congress is upset because a baseball player didnt snitch on his friends, but they aren't upset that some dipshit kleptocrat got a free ride on his taxes.

    I tell you what, if a terrorist ever hits DC again, I wont shed a fucking tear. The place is a cesspool top to bottom.
  5. For all the bashing some do of Ron Paul on here, he is not only particularly bright and wise, he's a true patriot.

    There are a select few worthy people in government; the American people just have to feel max pain before they heed their call, I guess.

    The question du jour is what is max pain?
  6. lrm21


    I think we are getting rapidly to that point where saying there is a few good guys in government is like saying, hey not everyone in the Nazi Party hates jews, maybe we can work to change from within.

    There is a point of no return.