Free Republic

The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.

WASHINGTON -- The U.S. Treasury said it would provide capital as needed to Fannie Mae and Freddie Mac over the next three years, effectively opening its checkbook to the government-controlled companies in a bid to reassure investors in their debt. Treasury also will end its purchases of the companies' mortgage-backed securities and terminate a never-used short-term liquidity facility set up for the firms and the Federal Home Loan Banks. And it moved to allow the companies to shrink their giant portfolios of mortgage securities more slowly, though it said it was still "committed to the principle" of reducing the portfolios....

For many years the President and his Administration have not only warned of the systemic consequences of financial turmoil at a housing government-sponsored enterprise (GSE) but also put forward thoughtful plans to reduce the risk that either Fannie Mae or Freddie Mac would encounter such difficulties. President Bush publicly called for GSE reform 17 times in 2008 alone before Congress acted. Unfortunately, these warnings went unheeded, as the President's repeated attempts to reform the supervision of these entities were thwarted by the legislative maneuvering of those who emphatically denied there were problems. The White House released this list of attempts...

I was down in Washington on a business trip. That ended at four and I headed for a bar. I found a spot between Pennsylvania and Kentucky Avenues. Nice place. Two barkeeps, me and another guy who looked like he had been drinking gin for the past few hours. Quiet, just the way I like it. Sure enough, at five the place fills up. It’s a young crowd. Good looking. Well dressed. This looked like an Ivy League group. I was thinking that they could be DOJ, possibly IRS (they looked too happy, but who knows). They could have been...

Last week we flagged an interesting announcement from The Treasury regarding a proposed invesment from China in a gold mine in Nevada. In announcing its intention to block the deal, the Treasury cited national security issues. Well this is music to the ears of Molycorp -- a company engaged in the mining of rare earth metals -- which has received subsidies from the government, as well as a major investment from Goldman Sachs (GS). The company has made a big deal out of the fact that that China is expanding its global mining share, and thus it should be eligible...

In A Case for the Inflation Camp Robert P. Murphy asks When Will the Inflation Genie Get Out of the Bottle? Murphy's concern is over "excess reserves". My reason for expecting large-scale price inflation is fairly straightforward: I see no coherent strategy for Bernanke to remove the excess reserves from the banking system. ... After reviewing the evidence and the theories offered by the two camps, I still believe that Bernanke's unprecedented infusions of new reserves will lead to rapid price increases. These increases may not show up in the price of US financial assets, but they will rear their...

Dollar mini rally to end soon, look forward to low interest rates and mega monetization, we dont buy into the claimed recovery, Fed and Wall street cover up their problems, 124 banks failed this year to date, tax break for bailed out Citigroup, Banks manipulating their own books, an economic situation created by design As we look back and this year comes to an end we find two plus years of failure. Even government admits to 1-1/2 years of negative growth - a sorry record after having poured trillions of dollars into the economy. The recent 3rd quarter results supposedly...

Interesting announcement from small gold miner Firstgold. A unit of the Treasury department has informed it that it will seek to block a a planned investment from China.: ---- Firstgold Corp. (TSX: FGD) (PINKSHEETS: FGOC) ("Firstgold" or "the Company") has been advised by The Committee on Foreign Investment in the United States ("CFIUS") that they will, on Dec 21st, recommend to President Obama that he reject the proposed investment by the China-based company Northwest Non Ferrous International Investment Company Ltd. ("Northwest") in Firstgold. CFIUS has determined through their investigation that serious, significant and consequential national security issues existed. In particular...

Could the next black/green/dark gray swan be so obvious that it has avoided everyone? Well, except for the deputy governor of the Bank of China, who just gave the world a startling reminder of economics 101, when he said that it is "getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing the supply of dollars overseas." Oops. The funny thing about natural (and economic) systems: they can only be pushed so far before they snap back to default state. With the entire world embarking on an unprecedented spree of domestic bubble blowing...

Leaders are considering a hike of roughly $300 billion to the nation's $12.1 trillion deficit, though the final figure has not been nailed down, congressional aides said on condition of anonymity. Democratic leaders had previously hoped to raise the limit by at least $1.8 trillion, enough to take care of the government's debt needs through the November 2010 congressional elections. What was your first hint the former $1.8 trillion increase attempt was a bad idea? Perhaps this? Or was it China buying a literal zero of Treasury debt in October? Or was it the TIC report this morning (which I'm...

This week, the administration has been trumpeting [1] the news that the $700 billion TARP [2] is likely to ultimately cost much less than early estimates. That’s true, but far from the whole story. The government’s best estimate, released Wednesday [3], is that the bailouts of AIG and the auto companies will ultimately cost taxpayers about $61 billion. It also forecast that other parts of the TARP will end up making taxpayers money. Put it all together, and the final estimated loss from the bailout’s first full year (thru September 2009) is about $41.6 billion. (See our table below.)simple-tab.table{border:thin...

I'd give the 30 year auction today a big fat stinking "F"... The so-called yield curve touched 373 basis points, the most in at least 29 years, as the bonds drew a yield of 4.52 percent, compared with an average forecast of 4.483 percent in a Bloomberg News survey of five of the Federal Reserve’s 18 primary dealers. Mediocre demand Bloomberg goes on to say..... Uhhhhh... no. That might have something to with this from Politico: In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New...

The financial reform bill working its way through the House of Representatives, that includes Ron Paul's "Audit the Fed" provision, has gotten so morphed and horrific that Ron Paul is not even going to vote for it. The evil bastards have added an amendment to the Bill that will allow the Fed to pump any amounts of money it so chooses to "financial holding" companies deemed TBTF, without approval from anyone. William Greider explains: The sales pitch for financial-reform legislation pending in the House claims it would put a stop to “too big to fail” bailouts for the leading banks....

The sad state of affairs in gold land: the premium for the 1 ounce Gold Eagle coins has expanded from $59 to $99, Krugerrands are not available for sale in most places, and this most recent development just out of the US Mint: the one-tenth ounce American Eagle inventory at the mint has been depleted, almost instantaneously after the coin was made available for purchase. This occurred the day after the mint announced the release of fractional Eagle Gold Bullion Coins in one-half ounce, one-quarter ounce, and one-tenth ounce weights. As Coin News reports: The Mint sold 345,000 coins to...

U.S. sitting on $17 billion in unclaimed war bonds MANY REQUESTS FOR REPAYMENT Matching claimants to certificates a mighty task By David Cho Washington Post Staff Writer Saturday, November 28, 2009 The seemingly endless stacks of filing cabinets inside a West Virginia warehouse could hold the answer to an unsolved mystery: Who owns nearly $17 billion in lost government bonds? The unclaimed treasure represents the amount of U.S. bonds that have matured but not been redeemed. Many of these outstanding bonds date to World War II, but over the years the certificates were forgotten in cellars, lost in fires or...

Wow, this is a really amusing report from the New York Post. Apparently, some people are pushing for JP Morgan CEO Jamie Dimon to replace Timothy Geithner as Treasury Secretary. And he might want the job. This is unlikely on so many levels that I hardly know where to begin. First, here's what the Post says: As support for Treasury Secretary Timothy Geithner wanes on Capitol Hill amid frustration with the Obama administration's handling of the economy, JPMorgan Chase CEO Jamie Dimon is emerging as a potential replacement. Sources tell The Post that a number of policy makers have begun...

I have said before, I think it will be pretty difficult to replace Geithner, but now we have President Obama's "favorite banker" being named as a possible replacement. NyPo reports As support for Treasury Secretary Timothy Geithner wanes on Capitol Hill amid frustration with the Obama administration's handling of the economy, JPMorgan Chase CEO Jamie Dimon is emerging as a potential replacement. Sources tell The Post that a number of policy makers have begun mentioning Dimon as a successor to Geithner, whose standing in Washington has suffered because of the country's high unemployment rate, the weakness of the dollar, the...

What was expected to be a boring congressional hearing erupted into high drama yesterday as an unnerved Treasury Secretary Tim Geithner sparred with frustrated lawmakers calling for his head over his handling of the economy. Clearly rattled by a fusillade of attacks from Republican members of the Joint Economic Committee, the usually reserved Geithner lashed out, laying blame for the current economic mess at the feet of the GOP and rejecting suggestions that he resign. Republicans "gave this president an economy falling off the cliff," Geithner fired back at Rep. Kevin Brady (R-Texas), one of the Treasury secretary's harshest critics...

Political frustration over the rescue of Wall Street and high unemployment erupted in the House Thursday, with one committee threatening to impose tighter scrutiny on the Federal Reserve and another trading verbal insults with Treasury Secretary Timothy Geithner. The House Financial Services Committee voted, 43-26, to approve a measure sponsored by Texas Republican Ron Paul, vociferously opposed by the Fed, that would direct the congressional Government Accountability Office to expand its audits of the Fed to include decisions about interest rates and lending to individual banks. The Fed says the provision threatens its ability to make monetary policy without political...

The criticism came largely from House Republicans, who have long been critics of the Treasury secretary. Mr. Geithner's job status doesn't appear to be in serious jeopardy and several Democrats at a congressional hearing leapt to his defense.

During his testimony today, two Republican Congressmen urged Tim Geithner to resign, or said he should be fired. The commentariat seemed shocked that something like this would come up during an official Congressional hearing. And yet, now they're discussing it on CNBC, as a serious question, which is exactly what the Congressmen hoped. It's like when that one Congressman screamed "you lie" during Obama's speech about healthcare. Everyone was scandalized, but it accomplished the goal of getting people to talk about whether or not illegal immigrants would be covered by new healthcare reforms (which is what the shout was in...

WASHINGTON (AP) - President Barack Obama's choice for a top job with the Treasury Department is having tax problems. A congressional report says Obama's nominee for undersecretary of the Treasury for international affairs, Lael Brainard, was late in paying real estate taxes in 2005, 2006 and 2007. The report by the Senate Finance Committee staff also challenges the accuracy of a deduction Brainard claimed for running an office from her home.

The government’s watchdog over the bank bailout program is criticizing Treasury Secretary Timothy Geithner’s handling of one of the most sensitive moments of last year’s financial meltdown, questioning decisions he made while heading up the New York Federal Reserve Bank. The new report criticizes the New York Fed’s decision in the fall of 2008 to bail out insurance giant AIG by covering its clients’ losses, sending tens of billions in taxpayer dollars to overseas banks.

Barack My Science Mag Bethany Stotts, November 13, 2009 Do political leaders who alienate other nations increase the probability of a terrorist attack against their homeland? Recent research conducted by then- Princeton University professor Alan Krueger and Czech professor Jitka Male�ková suggests that it does. (Prof. Krueger joined the Obama Administration as the Assistant Secretary of Economic Policy in May of this year). In their Science study, Krueger et al. compared Gallup public opinion polls with the National Counterterrorism Center (NCTC) database, finding that a 20% increase in “the disapproval rate of a country’s leaders” (one standard deviation) correlated with...

Want to know what the Treasury Department is doing? Fork over $522,886 and they'll tell you... maybe. At least that is what Noah Wood has found with a Treasury Dept. reply to his FOIA request. In 1966 president Lyndon B. Johnson signed into law the Freedom of Information Act (FOIA), a law that requires the federal government to provide information on its inner workings to citizens that request it. Of course, these FOIA requests aren't free. Oh, there is no fee for the request, mind you, but there are fees for the copies and the administrative time necessary to conduct...

Now there’s a real decoupling. Friday’s unemployment figures came out in America. They showed that 8.2 million Americans have lost their job since the GFC began in 2007. The official unemployment rate (the one that under-measures actual unemployment) is at 10.2% and growing. Stocks rallied on this news. Employment is said to be a lagging indicator. Economists tell you it’s the last thing to recover from a recession. Businesses don’t begin hiring until after they are sure the worm has turned in the economy. But right now, there is a pretty big decoupling between the stock market’s verdict on the...

As Zero Hedge speculated recently, the latest participant on the gold bandwagon is now officially Russia, which last month was said to be considering a sale of up to 25 tons of gold. That posturing did not last too long. Not only that, but Russia is now also actively participating in the dollar intervention market, buying more than $1 billion of dollars to keep the ruble low. Due to moderating inflation and a rapidly appreciating ruble, the country is now considering diversification in the same way that India and China presumable are: by shifting into dollars. Look for much more...

Treasury Blocks the Sale of Tax Credits by Fannie By NICK TIMIRAOS The U.S. Treasury blocked Fannie Mae's proposed sale of nearly $3 billion in low-income housing tax credits to Goldman Sachs Group Inc. and Berkshire Hathaway Inc. on Friday after concluding that the deal was too costly for taxpayers. The extraordinary move was the latest sign of tensions within the Obama administration over how to balance political and financial pressures resulting from the housing crisis. Fannie Mae had agreed to sell roughly half of its $5.2 billion tax-credit portfolio and had received approval to proceed with the sale from...

So the Treasury threw a party, or a press conference or something, and I was not invited. Geez, it's not like I am against covering Treasury officials. I did, for example, breakdown Phil Swagel's skills as Deputy Secretary of the Treasury. And, it is not like I am not curious about the Treasury. I do want to know how many times Treasury Secretary Geithner's father me with President Obama's mother in Indonesia. I do want to know if Geithner's father was a CIA operative working Asia and if his influence helps in keeping Geithner in a position where he is...

When two months ago we discussed the IMF's selling of one eighth of its gold reserves of which as most know by know half was recently acquired by India, we came to the conclusion that the IMF's proposed naive and subjective purpose for this disposition which was framed as "safeguarding against disruption in the gold market" would instead end up with "rioting in goldbugland." Based on gold price action over the past 3 days, we have been so far correct. And the concern for the IMF (and all Central Banks as well) is that India's example will be promptly followed...

The Treasury announced on Monday: •During the January - March quarter, Treasury expects to issue $478 billion in net marketable debt, assuming an end-of-March cash balance of $45 billion, which includes $15 billion for the Supplementary Financing Program (SFP). •These estimates do not include any incremental borrowing needs that would result from a potential increase in issuance under the SFP Got that? $478 billion! There is no sane reason to own Treasury paper, at some point this baby explodes.

<p>The Treasury has been announcing record debt auctions, and yet we see little in the form of increasing interest rates to attract buyers to these securities that are still somehow gobbled up. The Fed's balance sheet, of late, doesn't seem to account for it, as any buying they are doing seems to be sterilized. Are the Chinese so insane that they are buying up anything the Treasury throws up in the air? It appears not.</p>

Asked repeatedly on NBC's "Meet the Press" whether this means taxes will rise, Geithner avoided giving specifics.

The Federal Reserve joined the Treasury Department on Thursday in imposing new limits on executive pay, extending the government's control over compensation at taxpayer-owned companies to institutions that are merely government regulated. {snip} However, the Fed's proposed rules have wiggle room: The guidelines would let banks set their own compensation but give the Fed veto power over pay practices that it determines could threaten the safety and soundness of a bank. They would extends the regulators' reach into pay practices affecting tens of thousands of bank employees, from senior executives to traders of complex securities.

WASHINGTON – The Treasury Department and a senior House Democrat have decided against making financial firms pay upfront the costs of dismantling them if regulators decide they have grown "too big to fail," according to a House aide familiar with the plan. Instead, those companies would be allowed to borrow money from the government. The government would then recoup the costs by either seizing the firm's profits or seeking restitution from the entire industry, the aide said. The aide spoke on condition of anonymity because details had not been released. Rep. Barney Frank, the Massachusetts Democrat who chairs the House...

Treasury Secretary Timothy F. Geithner is trying to lead the U.S. economy out of its doldrums with - figuratively - one arm tied behind his back: Almost nine months after the Obama administration took power, more than half of the 33 highest-level Treasury Department posts are still vacant. The department oversees the $787 billion economic stimulus program, the $700 billion bank-bailout program and the administration's coordination with other nations on the global financial crisis. The department also has taken an active role in a legislative push to overhaul financial regulation - another Obama priority.

Mortgage Loan Modification is the only solution to save your home and stop foreclosure. As of last month, lenders had sent out more than 571,000 offers to reduce borrowers' monthly payments, the Treasury Department said Wednesday. Treasury says 48 mortgage companies are now involved in the program, up from 38 in July. The companies have requested financial information from almost two-thirds of eligible borrowers and say they are on track to have 500,000 loan modifications in place by Nov. 1. What is Obama's Mortgage Relief Program & How do you qualify?

What did Turbo Timmy and Bendover Bernanke think they were trying to pull? The Fed's "Quantitative Easing" is now basically defunct, with about $6 billion left out of the original $300. Of course the scam of buying Fannie and Freddie Paper (even though it is not full-faith-and-credit, as I have noted repeatedly) will continue through the first quarter of next year. But there looms a larger and more immediate problem for Treasury - their incessant "rolling down the curve" activity over the last few years has led to some real trouble, although Treasury has started to recognize this issue. Currently...

Dispute of Paulson, Bernanke testimony Court documents show that federal regulators were told about billions of dollars in bonuses awarded to Merrill Lynch executives during the company's takeover by Bank of America - contradicting statements to Congress by Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson Jr. The Securities Exchange Commission (SEC), in a brief filed in ongoing litigation with Bank of America Corp., said the bank informed the Treasury Department and the Federal Reserve of the Merrill Lynch bonuses as early as Dec. 17 - weeks before the government approved a $20 billion bailout...

I ran across this graph at CampaignForLiberty.com which I think every American should view. A picture is worth a thousand words and this one illustrates what the Federal Reserve System, aided and abetted by the Federal Government's deficit spending policies, have caused. There is good reason why this country has undergone another economic tsunami which will lead to eventual economic suicide. The only one way to prevent this from happening is to recognize the event that caused it and then attempt to reverse it. In 1913 the 16th Amendment to the Constitution abrogating the original words "no capitation, or other...

New revelations about Tim Geithner’s phone records show an appallingly small Wall Street circle. With a probe likely, Simon Johnson says the Treasury secretary needs a bailout—from Larry Summers.

As the federal government propped up the housing market and braced for the collapse of General Motors, Treasury Secretary Timothy F. Geithner capped a busy week this spring with phone conversations with three men. The first was Lloyd Blankfein, the chief executive of Goldman Sachs. The second was Jamie Dimon, the chief executive of J.P. Morgan Chase. The third was President Obama. Dimon and Blankfein are members of an exclusive club: Along with officials at Citigroup, they are among a cadre of Wall Street executives who have known Geithner for years, whose multibillion-dollar companies survived the economic crisis with his...

<p>WASHINGTON -- Treasury Secretary Timothy Geithner has kept in frequent contact with a small group of Wall Street firms since taking the helm at the Treasury, speaking most often with top officials from Citigroup Inc. and Goldman Sachs Group Inc.</p>

Barofsky, reviewing the first big bailouts to 9 firms, concludes that the government was too rosy to the public about the banks' health. WASHINGTON (CNNMoney.com) -- A government watchdog says federal officials weren't entirely honest with the public about the health of the first 9 financial firms that got federal bailouts, according to a report released Monday. Bailout special inspector general Neil Barofsky says in an audit that Treasury Department officials painted an overly rosy picture, creating "unrealistic expectations," when they called the first bailout banks "healthy" institutions that would be able to lend more with government help. "It is...

The fast-talking and well-dressed Texas customs broker has arrived at the Treasury Department twice in recent years with luggage stuffed with crusty, grimy greenbacks. The money was ruined, he said, and worth about $6.4 million. The broker wanted to exchange the soiled bills, unearthed in Mexico, for a U.S. government check. But the transactions raised alarms for authorities... Felhaber first came onto authorities' radar in August 2005, when he, his uncle and a female relative appeared at the Federal Reserve Bank in El Paso. They had $120,000 in water-damaged and ruined cash, just a small portion of millions of dollars...

The Administration’s proposal on the resolution of systemically-important financial institutions, if adopted, would lead to the creation of ‘zombie banks’ that can neither die nor restructure sufficiently to be viable.

US no longer insures your money-market fund, but that’s good news Withdrawing federal insurance is part of a broader exit strategy from the government's emergency supports for the economy, expected to gather steam this year. ### Savers take note: Your money-market fund is no longer insured by the US Treasury. These mutual funds, which earn interest for millions of Americans in brokerage or 401(k) accounts, rarely run into financial trouble. Almost always, they are able to maintain a reliable value of $1 per share. “Almost” is the key word, though. Last year, one of the original money-market funds, the Reserve...

A little over a year ago the collapse of Lehman Brothers sparked heavy redemptions from the dozen or so money market funds that held Lehman debt securities. The hit was particularly hard at The Reserve Fund, a money market fund that had a $785 million position in Lehman commercial paper. Soon The Reserve saw a run on its Primary Fund, spreading to other Reserve funds. Reserve tried to furiously sell its portfolio securities to satisfy redemptions, but this only depressed their values. Despite its best efforts, The Reserve Primary Fund couldn't find enough buyers and on Sept. 16 the unthinkable...

The UK's largest haul of Anglo-Saxon treasure has been discovered buried beneath a field in Staffordshire. Experts said the collection of 1,500 gold and silver pieces, which may date back to the 7th Century, was unparalleled in size. It has been declared treasure by South Staffordshire coroner Andrew Haigh, meaning it belongs to the Crown. Terry Herbert, who found it on farmland using a metal detector, said it "was what metal detectorists dream of". It may take more than a year for it to be valued. The collection contains about 5kg of gold and 2.5kg of silver, making it far...

Tim Geithner, the Goldman Sachs Secretary of the Treasury, has gone on record as saying that the government will withdraw its $3 trillion backstop guarantee from the money market fund industry, on schedule, today, September 18th. While I am for any reduction in the government's role in the economy, this decision is pretty interesting. Why would they do it now, when even a cursory examination of the real economy shows that things are shaky and rocking the boat on investor confidence seems a bit of a gamble? I will try to answer that question, but only after stepping back to...