bail out

Stimulus Plan Repeals Financial Sector Huge Tax Breaks

Well, this went sliding by. Obama's stimulus plan repeals tax breaks given to banks for mergers and acquisitions earlier this year. The repeal only affects future mergers and acquisitions.

To address the financial industry meltdown, the Treasury Department last fall issued a new tax rule to make it more attractive for healthy banks to buy troubled ones hit hard by the mortgage crisis. It allowed healthy banks to avoid billions of dollars in taxes by offsetting their profits with the losses of the banks they acquire.

Before, the merged bank could write off only a limited amount of the losses. Removing much of the restrictions enabled the acquiring banks to make huge reductions in their tax liabilities.

BoA Gets $20 Billion Because They Bought a Turkey

Make a bad acquisition? No problem. The treasury department is now giving BoA $20 Billion to absorb losses from it's acquisition of Merill Lynch. BoA has already received $25 billion. Oh yes, they get loan guarantees too.

The loan guarantees will cover about $118 billion in loans and other holdings such as securities backed by residential and commercial real estate loans. The bulk of these holdings were obtained by Bank of America in its acquisition of Merrill Lynch, a deal which closed earlier this yea

If anyone recalls, no one was twisting BoA's arm to acquire Merrill Lynch.

BoA promptly fired 35,000 workers upon the acquisition.

Bail Out Senate Fight

Well, this will be a key test of our new Senators. There appears to be a Republican lead vow to stop the second $350 Billion of TARP money released.

Obama has vowed to veto this resolution to stop the additional money from being released.

So, that said one question I have is how many newly minted Freshman Democrats will stand by their campaigns and also vote no release?

Under the bailout legislation approved by Congress in October, unless Congress passes a joint resolution rejecting the request within 15 days, Treasury can begin tapping the funds. Obama has vowed he would veto a resolution denying him the funds.

What a political football too. If Congress does the right thing and doesn't allow the other $350 Billion to be given to banks, they hand Obama a very crappy inauguration gift.

Bloomberg Blasts Paulson on Bail Out Terms for Taxpayers

Way to go Bloomberg! In the article Paulson Bailout Didn’t Give Taxpayers What Goldman Gave Buffett , Bloomberg just really spells it out on how Paulson has sold U.S. taxpayers down the river on the bail out terms.

The Treasury secretary has made 174 purchases of banks’ preferred shares that include certificates to buy stock at a later date. He invested $10 billion in Goldman Sachs in October, twice as much as Buffett did the month before, yet gained warrants worth one-fourth as much as the billionaire, according to data compiled by Bloomberg. The Goldman Sachs terms were repeated in most of the other bank bailouts.

What's in a Name? Fed Approves GMAC to become "bank"

It's all the rage to turn your corporate entity into a bank in order to get access to the TARP financial bail out money.

Fed Approves GMAC Request to Become a Bank:

In a 4 to 1 vote, the Federal Reserve Board approved GMAC’s application to transform itself into a bank holding company “in light of the unusual and exigent circumstances” affecting the financial markets. The move will allow GMAC to tap as much as $6 billion in government bailout money. The approval came as GMAC bondholders were facing a Friday deadline to vote to approve a complex transaction that would significantly reduce the company’s outstanding debt.

American Express Nabs $3.39 Billion in Government Bail Out Money

Now who here thinks credit cards are just too big to fail or that the U.S. taxpayer should be supplementing companies who charge rates and fees which are akin to loan sharking?

Yet, without even a whimper, American Express just hauled in $3.39 Billion of taxpayer dollars in exchange for preferred shares.

American Express joins more than 190 regional banks, commercial lenders, insurers and card issuers seeking at least $75 billion from the second phase of the Treasury’s bailout program for financial firms. Rival Capital One Financial Corp. has preliminary approval for $3.6 billion from the U.S. and Discover Financial Services asked for $1.2 billion.

Note who is in there, one of the worse credit card companies of all time, Capital One and they are approved for $3.6 billion!

$1.68 Billion for Bailed Out Bank Executives

Aren't you glad your elected Congress took action and voted for a $700 Billion dollar financial bail out?

The AP has released a study. Of the 116 banks who has received $188 Billion in taxpayer money:

_The average paid to each of the banks' top executives was $2.6 million in salary, bonuses and benefits.

_Lloyd Blankfein, president and chief executive officer of Goldman Sachs, took home nearly $54 million in compensation last year. The company's top five executives received a total of $242 million.

Bush Now Says Big 3 Auto Can Get Some of the $700 Billion Bail out money

Now why could through all of that hell, have the Senate crush hope, only to turn around and say the Big 3 U.S. auto manufacturers can get some of the bail out money already approved?

The Bush administration dropped its opposition to using the $700 billion bank bailout fund to provide financing for U.S. automakers after the Senate yesterday failed to approve emergency loans

Senator Chris Dodd Calls for GM CEO's Firing

Off with His Head! That's what Senator Chris Dodd is now saying.

Senate Banking Committee Chairman Chris Dodd said General Motors Corp. Chief Executive Richard Wagoner should be replaced as a condition of federal aid and Chrysler LLC may have to merge to survive.

“You’ve got to consider new leadership,” Dodd said on CBS’s “Face the Nation.” Wagoner, he said, “has to move on.”

Asked if a change in leadership should be a condition of a bailout, Dodd who is helping to write the legislation, said, “I think it is going to have to be part of it.”

“Chrysler, is, I think, basically gone, probably ought to be merged,” Dodd said. Ford Motor Co. is the healthiest domestic automaker, he said.

Below is the Face the Nation video clip with Dodd.

Citigroup Stock Pounded? No Problem, Government to the Rescue!

Is this unbelievable or what? Millions of jobs on the line and Congress puts the auto industry through hell yet Citigroup stock drops and the Government immediately comes to their rescue.

Citigroup in Talks with Government for Rescue:

One option being considered is taking some of the risky assets held by Citigroup off its balance sheet, a move that would give the company more breathing room and put it in a better position to raise capital. It was unclear, however, exactly how that option might be structured, the people said. Another option would be for the government to make another cash injection into the company.