Posted on 02/15/2009 5:23:36 PM PST by Lorianne
Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking. ___ A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.
None of the experts’ research focuses on individual banks, and there are certainly exceptions among the 50 largest banks in the country. Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves.
But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger, as banks cannot resume the ample lending needed to restart the wheels of commerce. The answer, say the economists and experts, is a larger, more direct government role than in the Treasury Department’s plan outlined this week.
The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.
(Excerpt) Read more at nytimes.com ...
So, wonder which Bambi staff member fed this article to the Times....
These big banke/Wall Street types supported Obama overwhelmingly.
Eff ‘em. I hope any and every Obama voter gets what’s coming to them. I hope every one of them loses their jobs and savings.
This Ad brought to you by the Secretary of the Treasury...
Let them go bankrupt!
Well..except it’s going to effect US, too! Probably less, but, still there will be negative effects for everyone, except the politicians.
Sort of like being stuck in a dingy with a madman. Your first instinct is to sink the boat and drown him. But then you give it a little more thought.
Frustrating!
Tim Geithner must nationalise some of America's biggest banks and take the total toll of the US bail-out to around $2 trillion, according to one of the world's most prominent economists.
By James Quinn Wall Street Correspondent
Last Updated: 1:12AM GMT 16 Feb 2009
Nouriel Roubini – the man feted with having foreseen the financial crisis before almost any of his peers – has warned that the US Treasury Secretary must go significantly further than his detail-light bail-out plan delivered last week, and argues that the Obama administration should move swiftly to take public ownership of those major US banks which are failing.
Professor Roubini, who worked with Mr Geithner in the Clinton administration, told The Daily Telegraph: "Many US banks are insolvent, even the major ones." While nationalisation is "a politically- charged decision" which needs to handled carefully, he said it needs to take place "sooner rather than later" for the sake of the wider economy.
Professor Roubini calculated that, on top of the existing $700bn (£491bn) of American taxpayers' money allocated to solving the banking crisis, Mr Geithner may need to ask the US Congress for between $1,000bn and $1,250bn in extra funds. "Sooner rather than later, they'll need more money," he added.
Prof Roubini, professor of economics and international business at NYU Stern, New York University's business school, is highly critical of Mr Geithner's bail-out plan, which he unveiled to much market chagrin last Tuesday.
The New York-based academic believes that although his former boss e_SEmD the two worked together when Mr Geithner was under-secretary of international affairs at the Treasury in the dying days of the Clinton era e_SEnD is moving in the right direction, he is either unwilling or unable to be direct enough when it comes to taking the tough decisions.
Prof Roubini also has some stern advice for the British government, itself facing yet another banking crisis this week as it considers whether to increase its ownership of Lloyds Banking Group.
"In the UK, the government has taken over those banks in distress through a number of measures. But the question now is whether they want to go from de facto ownership to de jure?
"It's necessary and I think that's the way we're going in the UK," he continues, saying he would be "supportive" of such a decision. Politicians "might not want it," he adds "but it is strong in action," before going on to explain that it is better for markets that governments nationalise banks quickly, resolve problems whilst in public ownership, before returning them to the market.
Prof Roubini argues that the UK is very similar to the US in terms of its economic position due to its analogous problems – both suffered housing and consumer credit bubbles – but is even more concerned about Germany, which produced dismal gross domestic product figures at the end of last week.
"Germany did not have the same excesses as the UK, but even the German banks had significant exposure to other types of excesses in lending, and they're weak," he says.
Barney Frank...BARNEY, your friends need another trillion dollars, don’t stop now...we need to keep stimulatin’ Like we need some REAL Viagra for the economy.
B/S. Let the weaker banks fail and be gobbled up by the stronger ones. Keep the government out! They caused the mess anyway and can’t fix it.
“Thats strange. All the banks at the House hearing last week said they need no more money and will pay back all the funds shortly.”
6 months ago, they all said everything was great. Nothing strange here, they are LIARS...and no one believes a word of what they say anymore.
here it comes...here it comes
I read it. Good info
If the Federal Reserve wasn’t interfering with interest rates, the banks would raise their rates on deposits and attract more money. Yes, that would cause the mortgage interest rates to go up, but that is the nature of the free market.
LET THEM FAIL!!!! It is far cheaper for the taxpayer to fund the FDIC insured deposits than it is to keep funneling $billions to be frittered away hiding more bad assets.
And so the Obama answer is to reward bad behavior, behavior that was encouraged by liberal Democrats in the House and Senate!!! They are THE SOLE cause of this mess!!
Mark my words: as soon as the banks are nationalized, people will stop paying their bills in droves. They will figure the Government won’t foreclose or repossess their stuff. Everyone will want their own personal bail out. We will drop the pretense and become a society of cannabals.
One of the scariest posts I have ever seen. All the more so because of our decadent society.
Is this a surprise? Obama is talking about mortgage and debt forgiveness. People see trillions being thrown at the banks & Wall Street with no accountability. If the Elites aren’t accountable, why should Joe/Jane Six Pack be?
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