Here Comes CRE - Lastest COP report

The latest report from the Congressional Oversight Panel is out and they are making no bones about another shoe to drop, Commercial Real Estate (the link goes to a post warning on CRE from last July). On their main page is this:

Nearly $1.4 trillion in commercial real estate loan debt will come due for refinancing in the next several years. The Panel's February report expresses concern that a wave of defaults and losses could jeopardize the stability of many banks and prolong an already painful recession.

Let's cut to the chase and say Congress and the Obama administration have blown off Commercial Real Estate generally. Here is COP's conclusion:

The Panel is concerned that until Treasury and bank supervisors take coordinated action to address forthrightly and transparently the state of the commercial real estate markets – and the potential impact that a breakdown in those markets could have on local communities, small businesses, and individuals – the financial crisis will not end.

SIGTARP January 2010 Report

The January 2010 SIGTARP report is released and if anything it's a validation of this sites many observations to date on TARP.

Despite the fact that the explicit goal of the Capital Purchase Program (“CPP”) was to increase financing to U.S. businesses and consumers, lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending — announced in March 2009 — has still not been implemented by Treasury.

Notwithstanding the fact that preserving home ownership and promoting jobs were explicit purposes of the Emergency Economic Stabilization Act of 2008 (“EESA”), the statute that created TARP, nearly 16 months later, home foreclosures remain at record levels, the TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation.

SIGTARP notes that we are nowhere with financial reforms.

  • To the extent that huge, interconnected, “too big to fail” institutions contributed to the crisis, those institutions are now even larger, in part because of the substantial subsidies provided by TARP and other bailout programs.

COP TARP Assessment Report for December 2009

The Congressional Oversight Panel has released their latest TARP report, Taking Stock: What Has the Troubled Asset Relief Program Achieved?

The Panel concluded that TARP was an important part of a broader government strategy that stabilized the U.S. financial system. It is apparent after 14 months, however, that significant underlying weaknesses in the financial system remain.

[TARP]created an implicit guarantee for major financial institutions that distorts pricing for capital and encourages excessive risk-taking. Unwinding this guarantee poses a difficult long-term challenge.

Some facts outlined in the overview:

  • 1 in 8 homes is in foreclosure
  • Unemployment is at the highest levels in 25 years
  • Banks still not lending
  • Small business & consumers not borrowing

New COP Report - Guarantees Created Significant Moral Hazard

On Friday you were probably bowled over by the unemployment rate. So astounded, we missed this major report release by COP, the Congressional Oversight Panel on TARP.

The Report, Guarantees and Contingent Payments in TARP and Related Programs is another damning condemnation on corporate socialism to the point of moral hazard. Yet, at the same time, the report says taxpayers will likely profit from the huge TARP gamble. Well, well, if the government is turning the world into a glorified casino with U.S. taxpayer money, all the while guaranteeing the bonuses profits of large banks, at least it looks like we won't take the loss.

Friday Movie Night - The Great American Bank Robbery

hot buttered popcorn It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!


Tonight's video is a lecture by Economist and Law Professor William K. Black, an expert on the 1980's S&L crisis. He minces no words, as one can see by the lecture title, on the current financial crisis.


Its time to kill off the zombies before they engulf us all.


WASHINGTON (Reuters) - Bank of America has been deemed to need an additional $34 billion in capital, according to the results of a government stress test, a source familiar with the results said on Tuesday.

A Bank of America spokesman declined comment.

The amount is far higher than published reports had speculated the largest bank might need. It is certain to increase the pressure on Chief Executive Kenneth Lewis, whom shareholders ousted as chairman last week.

BofA to need $34 billion in capital: source | Reuters

TARP COPs are back - Report Assesses Treasury Strategy & Actions on Financial Crisis

The Congressional Oversight Panel has released a new report, Assessing Treasury’s Strategy: Six Months of TARP. First, the $$$:

Over the last six months, Treasury has spent or committed $590.4 billion of the TARP funds. Treasury has also relied heavily on the use of the Federal Reserve’s balance sheet which has expanded by more than $1.5 trillion (not including expected TALF loans) in conjunction with the financial stabilization activities it has undertaken beyond its monetary policy operations. This has allowed Treasury to leverage TARP funds well beyond the funds appropriated by Congress.

More Big Bucks for Private Investors - Geithner "Plan" Leaked - TARP II

Here we go, once again trying to get something for worthless assets at the U.S. taxpayers expense. This time since Obama and Geithner know there is no way Congress is going to give them more money....so, they are going to raid the FDIC.

The plan, which will not be released until next week is now leaked all over the press.

In order to get $1 trillion of the estimated $2 trillion of "toxic assets" off of the banks books, now the plan is to offer private investors huge subsidies and loans and then auction off these various assets to these same investors. These "toxic assets" are assuredly really toxic for the banks get to choose which ones they will sell.

The New York Times:

The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.