More Cash for the Banks..... or the Economy Crashes?

The banks are saying that they need more cash or the economy gets it.

Banks have received $200 billion in fresh capital from the Treasury since last fall and have borrowed hundreds of billions of dollars more from the Fed. But in the meantime, the economy fell into a severe downturn last fall that is likely to continue until at least this summer.

Industry analysts estimate rising unemployment and business failures will lead to another $500 billion to $750 billion of losses in coming months. That could bring total losses from the credit crisis to $1.5 trillion to $1.8 trillion, twice as high as earlier estimates.....

“More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets,” Mr. Bernanke said in a speech to the London School of Economics.

Auto bailout has already helped GMAC and GM sales

Emptywheel has looked closely at the numbers for December auto sales, and reaches a startling conclusion:

While GM and Ford still lost more sales across the year than Toyota and Honda (because they also tanked during the gas price crash of the summer), their performance against Toyota and Honda more recently demonstrates the degree to which recent sales are a credit driven issue, and not what Richard Shelby likes to claim is a failed business model. . . .

Both the Prius and the Tundra had worse than average declines last month, with the Tundra down 52% and the Prius down 45%. This isn't about gas prices anymore--it's about money.

More Outrage - AIG Increasing Salaries by Double!

While America hits a record number for food stamps and the Auto industry goes beggin' and pleadin' to save their companies, AIG hands out massive executive bonuses and salaries!

Some executives in the group of 130 recipients will get more than $500,000 to stay through 2009, about 200 percent of their salaries.

The awards may equal 100 percent to 300 percent of an executive’s annual salary, and as much as 100 percent for the next round of payments for lower-paid employees, the person said. The retention payments are several times larger than year- end bonuses, which most of the 130 executives will still get in March, the person said.

Doing everything to avoid solving the real issue

Jim Kunstler of Cluster[bleep] Nation gets to the heart of the matter, as far as the Global Financial Calvinball approach to the banking/credit crisis goes:

Alas, the financial impairment is still on-going world-wide and has quite a ways to run before it's finished working its hoodoo on the so-called advanced economies. The lame duck US economic posse so far has done everything possible except the two things that really matter: allow the fraudulent securities at the heart of the problem to be exposed to the light of day to determine their actual value; and allow those companies who trafficked in them to suffer the full consequences by going out-of-business. For the moment, they're content to shovel cash into the truck-bed of every enterprise in America that shows up at the Treasury loading dock.

JP Morgan Chase Freezes Foreclosures & Will Refinance

This is actually some very good news and frankly also a no brainer. How hard is it to realize one has set terms so predatory and unrealistic that they send their customers to the poor house?  Maybe, just maybe it's a good idea to renegotiate reasonable terms so they actually make a little money after all instead of bankrupting their clientele?

Well, JP Morgan Chase gets it:

JPMorgan Chase & Co., the largest U.S. bank by market value, said it won't begin foreclosure proceedings for as long as the next 90 days while it finds ways to make payments easier on $110 billion of problem mortgages.

Paulson Picks Goldman Sachs "Underling" to Run Bail out!


The Washington Post reports that Kashkari is a former vice president at Goldman Sachs, where he led the firm's security investment banking practice. Apparently, Kashkari was still a student at Wharton in February, 2002, when the Philadelphia Inquirer reported on his participation in a leadership class exercise. That would put him at no more than six years out of school.

In 2006, Neel Tushar Kashkari of Stow Ohio was reported to be selected as one of the regional finalists for the White House Fellows Program. A final listing of the actual recipients for 2006-2007 does not include Kashkari.

That's only 5 years of experience and most in IT related areas!

A 35 year old recent MBA graduate with no expertise in the S&L crisis or any going to run the bail out!


Did the Irish just end Globalization?

Bailout legislation protecting domestic deposits in Irish national banks was signed into law by President Mary McAleese at 3:30 PM (Irish time).

President Mary McAleese has this evening signed legislation giving effect to the Government's €420 billion bank guarantee scheme.

A single-line statement from Áras an Uachtaráin just after 3.30pm said Mrs McAleese had signed the Credit Institutions (Financial Support) Bill 2008 into law.

Unlike the US FDIC or the British Financial Services Compensation Scheme, Ireland has had, until today, a deposit insurance scheme to protect only something like the first €20,000 deposited by individuals into banks.

Game of Chicken Against the Imaginary Clock - BailOut May "Drag" until Next Week

Oh isn't that awful? I guess they want that $1 trillion dollars right now.

CNBC reports on the details.

Supposedly Democrats have the gall to ask that these bastards leveraging their companies 40:1 and pocketing the cash not have their multi-million dollar golden parachutes and that is the sticking point.

Here is what Democrats want, which appear to be the shares and unless I'm reading this wrong, nothing about paying good money for worthless debt.

Limitation on Authority

1. In General

The Secretary may not purchase, or make any commitment to purchase, any troubled asset unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased.

2. Shares To Be Received

A.) Contingent Shares

i.) In General