Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

And as the holiday season approaches, Washington's very own Santa just can't stop giving. And giving. And giving. Or is he actually just making charitable donations...:rolleyes:

Paulson May Ask for Remaining $350 Billion of TARP

Nov. 24 (Bloomberg) -- Treasury Secretary Henry Paulson, less than a week after indicating he would let the Obama administration decide how to use the second half of the $700 billion financial fund, is considering asking for the money...

...Six days ago, Paulson told Congress “it was only prudent to reserve our TARP capacity, maintaining not only our flexibility, but that of the next administration.” Since then, the collapse in Citigroup Inc. shares threatened a renewed bout of financial turmoil, and forced the Treasury to mount a rescue of the bank late yesterday...

In the dying days of this Administration, and the US economy, this is still alive...:p...

From the WSJ:

DECEMBER 3, 2008
Paulson Debates Second Infusion

Hostile Lawmakers, Competing Bailout Demands and GAO Criticism Pose Dilemma

...If Mr. Paulson decides to request the next $350 billion, he is expected to do so next week. His hand may ultimately be forced if market conditions continue to deteriorate.

Political and practical concerns also color the debate. While Mr. Paulson wants to steer more funds to financial institutions, Congress has its own ideas, including aid for the auto industry and troubled homeowners -- two ideas Mr. Paulson has resisted...

...Officials also have yet to address such critical issues as how to ensure that the injection of $250 billion into the banking system "is achieving its intended goals."

The report suggested Treasury has little ability to monitor potential conflicts of interest among independent contractors helping implement the program. As a result, there is a "heightened risk that the interests of the government and taxpayers may not be adequately protected and that the program objectives may not be achieved in an efficient and effective manner."...

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Here's a new form of government funded entitlement program...

Wall Street Won't Surrender on Bonuses, Veterans Say

By Christine Harper

Oct. 30 (Bloomberg) -- Wall Street's chief executives will hunker down and pay bonuses this year in the face of the worst financial crisis since the Great Depression, a taxpayer bailout and mounting political outcry, industry veterans say.

Odds that Wall Street will forgo the payouts are ``slim to none,'' said John Gutfreund, 79, president of New York-based Gutfreund & Co. and the former chief executive officer of Salomon Brothers Inc. ``They're going to have to be a little bit sensitive because politicians, whether they like it or not, are part of their lives now.''...

["...a little bit sensitive"...but not too sensitive I imagine ;)]

...For some bankers, a smaller payout would come as a surprise. More than one-third of Wall Street employees surveyed by a recruitment Web site between Oct. 13 and Oct. 21 said they expect a bigger bonus this year...

[Do you get the impression that bankers are human after all? Now exhibiting the exact same behaviour as a welfare recipient whose just had a benefits cut...:rolleyes:]

They weren't kidding, were they!

Government funded entitlement programs continue to proliferate :eek:. Are you getting your share??? Or just getting it in the ear [or someplace more painful]. Brings new meaning to having a "government job". :rolleyes:

"Retention" bonuses? Where the hell are they going to go? Bank of America?

Quite seriously, it's clear that there is no level of public disgust that is going to stop this now. And they want to hammer the UAW before they bail out GM and Chrysler. Have a Merry Christmas.

AIG Said to Offer Retention Payment to Bigger Group of Workers

Dec. 13 (Bloomberg) -- American International Group Inc., the insurer under fire for paying 168 executives not to quit after a government takeover, is giving retention awards to at least 2,000 more employees, according to a person familiar with the matter.

The “retention bonus” equals as much as a year’s salary and recipients were ordered to keep the payment secret, said the person, who declined to be named because the plan was labeled confidential. Awards were offered to as much as 10 percent of staff at businesses that are for sale, including plane-leasing and insurance units in the U.S. and overseas, the person said.

AIG said in September that 130 executives will get awards, just days after the New York-based firm got a government rescue package that now totals $152.5 billion. AIG Chief Executive Officer Edward Liddy told Congress last week the payments will go to 168 people, with some getting as much as $4 million...

...The insurer requires recipients to keep the payments confidential, according to a contract obtained by Bloomberg News. Exceptions included financial and legal advisers, as well as immediate family. If awardees tell other outsiders about the existence of the program, they will forfeit future payments, the contract says.

“All of our efforts with respect to our retention program have been made in the light of day,” Liddy said in the Dec. 5 letter to Cummings, who serves on the House Committee on Oversight and Government Reform.

Cummings has criticized the retention pay, saying AIG misled taxpayers who now own most of the company...

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Someone else who's less than excited by Paulson's activities...

Former Vice-Chair of the Fed, Alan Blinder in the NYT today:

Economic View
Missing the Target With $700 Billion

By
ALAN S. BLINDER
Published: December 20, 2008

UNFORTUNATELY, Treasury Secretary Henry M. Paulson Jr. has turned this old song into the unofficial theme of the Troubled Assets Relief Program, the $700 billion bailout. His frequent changes of direction are not only embarrassing, they also upset the very markets this program was designed to calm...

...So here we are, looking at an all-too-familiar story. The administration that brought you the Iraq war and the Katrina response is locking in another disaster before it leaves town.

What to do?

Fortunately, the TARP legislation authorized a first tranche of $350 billion but wisely gave Congress a mechanism for blocking release of the second $350 billion. With the first tranche now committed, Mr. Paulson said he would soon request release of the second. Based on his performance to date, Congress should reject that request unless he agrees to spend most of the next installment on TARP’s two stated purposes.

Failing that, we can wait a month for the new Treasury secretary, Timothy Geithner...

[Uno]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Unless there is a big turnaround, the consensus in Washington (DEM and GOP) is to spend our way out. The argument is as to who get the money first (wall street or law street or big oil or military or unions or Al Gore)

To spend our way out we need about $1 trillion at least, given Washington's record it will probably take $3 trillion ($2 trillion in waste)

So I would say 2009 will see between $1 trillion and $3 trillion in US spending.

The question should be how best does a nobody position themselves in 2009 to benefit from the spending?

I sometimes think about getting in debt, hide my savings, borrow a million, and then apply for debt relief?

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

It just keeps getting better and better...

Banks: The More the Merrier


CIT Group received approval from the Fed to become a bank on the 22nd (WSJ1). The company was also approved to receive $2.33 bln in TARP funds. CIT applied to become a bank in November.

On the 23rd, American Express was given approval to receive $3.39 bln from TARP funds (AP). American Express received approval to convert to a bank holding company in November.

The on the 24th, GMAC received Federal Reserve approval to become a bank holding company (Bloomberg, WSJ2, Fed Press Release). This change allows GMAC to borrow from the discount window, to apply for TARP funds, and qualifies its depositors for FDIC insurance. GMAC did not meet the requirements to be a bank when it submitted its application in June, let alone now, so the Fed employed emergency powers to grant GMAC an exception. GM and Cerberus have to reduce their stakes to less than a controlling interest. Cerberus had to agree to distribute a percentage of its stake in GMAC to its fund investors. Cerberus direct and indirect voting control will be reduced to less than 15%, and its ownership stake must stay below 33%. GM has agreed to reduce its ownership position to 10%, and then transfer that to an independent trust within three years. The Fed hopes the plan will indirectly benefit GM by helping GMAC to fund loans for GM cars. GMAC also provides funding for 75% of dealer's auto inventory.

FRED: Why don't you apply to have iTulip converted to a bank holding company and get some TARP funds too. That way you won't have to go through with the subscription fee increase...:p

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Does anyone else think there is something slightly slimey about Paulson doling out billions to the firm he used to head? And there's that word "confidence" again...:p

Paulson Bailout Didn’t Give Taxpayers What Goldman Gave Buffett

Jan. 9 (Bloomberg) -- Henry Paulson may be the most powerful manager of money in the world and he still couldn’t do for taxpayers with the $700 billion bailout of American banks what Warren Buffett did for his shareholders in investing in Goldman Sachs Group Inc.

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...

...The transactions are “just egregious,” said Johnson, a fellow at the Peterson Institute for International Economics in Washington...

...“Paulson said he had to make it attractive to banks, which is code for ‘I’m going to give money away,’” said Joseph Stiglitz, who won a Nobel Prize in 2001 for his work on the economic value of information.

“The worst aspect of this is that they were designed not to do what they were supposed to do,” he said in a telephone interview from Paris Jan. 7. “In many ways, it’s not only a giveaway, but a giveaway that was designed not to work.”...

...“If Paulson was still an employee of Goldman Sachs and he’d done this deal, he would have been fired,” he said...

...“I halfway believed that the taxpayers would make money in September, but I really don’t believe it now,” Rep. Brad Miller, a North Carolina Democrat on the House Financial Services committee, said in a telephone interview last month.

“We have to have confidence in Treasury to run the program in a way that protects taxpayers, and there’s very little in the way they’ve run it that inspires confidence,” he said...

[Slimprofits]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Breaking news on Bloomberg television a deal has been reached, the Senate won't block the second $350b tranche of TARP funding.

Enter stage right:

David G. Dietze is President and Chief Investment Strategist of Point View Financial Services, Inc. (PVFS), an SEC registered investment advisor, which he founded in 1993... Point View website

Q: Is $350b going to be enough?

Dietze: That is not what people are saying now. I mean the latest reports out of Goldman Sachs and so forth are talking about ultimately the losses might be as much as $2 trillion, so we really don't have enough right now.

Q: Does it make sense though for the government, for the taxpayer to be pouring trillions of dollars into these banks? Would it make more sense to say we've got money in the big ones, we're basically just going to take them over?

Dietze: You know, no one likes that the taxpayers are in affect having to assist the banking system. But, I think we're kind of pragmatists right now and I think the question is that we're weighing is, how much is it going to cost the taxpayers now versus how much is it going to cost the taxpayers later on if they do nothing. Remember, the banks are really the circulatory system of the economy and if they're not there to lend, that is going to just increase the crisis in the economy, more people are out of work, more unemployment checks and so forth."

I wonder how long they'll keep using this same script to threaten Main Street with? Everyone knows the big banks are hoarding the first tranche. Even that gets MSM coverage.

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Could the outright theft of taxpayer's money get any more blatant than this? Is anybody going to put a stop to this nonsense? Ever?

[from Yves Smith's blog]

Merrill Execs Pay Selves Bonuses Ahead of Schedule (and Before BofA Closing)


Playing fast and loose seems to be the theme of the evening. First we have the credulity-stretching China fourth quarter GDP release, and now we have the eleventh hour stealing of the silver by Merrill's top executives as one of the firm's final acts.

Let us remember the fact set: Merrill managed to get Bank of America to agree to buy it in September, elbowing aside Lehman. The deal is subject to shareholder approval, however. BofA, realizing it has acquired a garbage barge, threatens to scuttle the deal unless Uncle Sam lends a helping hand. Negotiations proceed behind closed doors (and neither Merrill nor BofA shareholders are told prior to the shareholder vote that BofA has agreed to do the deal subject to some form of government support).

Now we learn that after it was evident that the US taxpayer was going to subsidize the Merrill acquisition, the Merrill compensation committee accelerated bonus payments by a month to make sure they were paid out before the BofA deal closed.

Efforts are being made to minimize the amount involved (it is claimed to be only $3-$4 billion, but the fact is amounts were reserved in prior quarters that are excessive in light of full year performance. So the fact that some of the amounts were allowed for in previous quarters is misleading).

Were Merrill bankrupt, the bonus payments could be deemed fraudulent conveyance and clawed back. But we don't do either financial firm bankruptcies or clawbacks in this country.

From the Financial Times:

Merrill Lynch took the unusual step of accelerating bonus payments by a month last year, doling out billions of dollars to employees just three days before the closing of its sale to Bank of America.

The timing is notable because the money was paid as Merrill’s losses were mounting and Ken Lewis, BofA’s chief executive, was seeking additional funds from the government’s troubled asset recovery programme to help close the deal.

Merrill and BofA shareholders voted to approve the takeover on December 5. Three days later, Merrill’s compensation committee approved the bonuses, which were paid on December 29. In past years, Merrill had paid bonuses later – usually late January or early February, according to company officials.

Within days of the compensation committee meeting, BofA officials said they became aware that Merrill’s fourth-quarter losses would be greater than expected and began talks with the US Treasury on securing additional Tarp money...

Despite the magnitude of the losses, Merrill had set aside $15bn for 2008 compensation, a sum that was only 6 per cent lower than the total in 2007, when the investment bank’s losses were smaller.

The bulk of $15bn in compensation was paid out as salary and benefits throughout the course of the year. A person familiar with the matter estimated that about $3bn to $4bn was paid out in bonuses in December.

Nancy Bush, an analyst with NAB Research, described the size of the 2008 Merrill bonus payments as “ridiculous”...

[Slimprofits]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Could the outright theft of taxpayer's money get any more blatant than this? Is anybody going to put a stop to this nonsense? Ever?

And if all of that didn't stink enough: BofA's Merrill Deal Exposes Myth of Transparency

Uncle Sam appears to have gone from matchmaker to Godfather.

Witness the perplexing tale of Bank of America and Merrill Lynch. The merger shows the rule of law becoming a rule of awe, with top government officials apparently fiddling with corporate transparency that is essential to a functioning market.

The action reached a climax in mid-December, when Bank of America Chief Executive Kenneth Lewis scrambled to handle billions in unexpected losses from the Merrill deal. He rushed to see Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. In a Dec. 17 meeting, Messrs. Paulson and Bernanke suggested it was in BofA's own interest, and also the nation's, to stay the course. They ultimately offered Mr. Lewis a $138 billion package of taxpayer-funded incentives not to scrap the deal.

Mr. Lewis kept his mouth shut. The deal closed Jan. 1, valued at $24 billion. Last week, the bank came clean. In the past five trading days, Bank of America's market capitalization has dropped 45%, wiping away a sum greater than the Merrill transaction itself.

Much criticism has been heaped on Mr. Lewis for failing to disclose the loss once it was revealed, soon after the Dec. 5 shareholder vote. Had they known of the problems, shareholders might have pressed to recut or kill it before it closed. "It's extremely disappointing," said Bill Shaw, who holds 300,000 BofA shares at Mavrix Fund Management in Toronto.

Both federal and Delaware state laws require companies to disclose important news, especially in the periods around a big takeover deal. By most any reasonable measure, if the Merrill losses were concrete enough to seek a government lifeline, they were concrete enough to report immediately to the company's owners, its shareholders.

[..]

Did Mr. Lewis stay quiet on his own or at the request -- subtle or explicit -- of Messrs. Bernanke and Paulson? A person close to the Fed said no such request was made. Divining the government's intentions, however, still are murky. In a conference call last week Mr. Lewis said that "we spoke to and were in close coordination with officials from both the Treasury and the Federal Reserve," adding that "the government was firmly of the view that terminating or delaying the closing...could result in serious systemic harm."

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

And if all of that didn't stink enough: BofA's Merrill Deal Exposes Myth of Transparency

It just never ends...

JANUARY 22, 2009
Political Interference Seen in Bank Bailout Decisions

Barney Frank Goes to Bat for Lender, and It Gets an Infusion


Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection...

[c1ue]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

And One United wasn't even in the top list of contributors to his last election.

Maybe Mr. Frank is doing his civic FIRE duty...

http://www.opensecrets.org/politicia...&cid=N00000275

Contributor	Total
State Street Corp	$20,000
UBS Americas	$14,100
FMR Corp	$13,750
JP Morgan Chase & Co	$13,500
UBS AG	$13,500
Nixon Peabody LLP	$12,670
Ernst & Young	$11,750
Citigroup Inc	$11,250
Human Rights Campaign	$11,250
Washington Mutual	$11,000
PricewaterhouseCoopers	$10,250
American Assn for Justice	$10,000
American Land Title Assn	$10,000
Credit Union National Assn	$10,000
KPMG LLP	$10,000
Massachusetts Mutual Life Insurance	$10,000
Mortgage Bankers Assn	$10,000
National Assn of Home Builders	$10,000
National Assn of Mortgage Brokers	$10,000
Natl Assn Real Estate Investment Trusts	$10,000
Natl Assn/Insurance & Financial Advisors	$10,000
New York Life Insurance	$10,000

[vinoveri]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Could the outright theft of taxpayer's money get any more blatant than this? Is anybody going to put a stop to this nonsense? Ever?

GRG55,
Unfortunately, I don't think it will stop until there's no more $ to loot - our "leader" seem to be of the same mentality back in sep - we have to let these smart financial types do whatever they want or else the world will end. Very very frustrating and really shows transparently the corruption inherent in our system.

and thanks for the outrage; it makes me feel a little better that I'm not alone in being dumbfounded at what has been and is unfolding while every "expert" says the same thing, i.e., "Yes it's not good and we don't want to do these things, but in times like this its necessary.." - as if fraud, and theft are ever necessary as they are ever present

[strittmatter]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

And One United wasn't even in the top list of contributors to his last election.

Maybe Mr. Frank is doing his civic FIRE duty...

http://www.opensecrets.org/politicia...&cid=N00000275

Several weeks back when I saw Bawny giving his bailout rant on the bill mahr show, I looked up his list of employers. Makes me curious to know the weight his retirement package(s)?

[World Traveler]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Note the timing of when the bonuses to Merril Lynch executives were paid...late December, when the norm is late January or early February.

While Bush and Paulson were still in charge. My guess is they figured it would be easier to get their loot NOW (December) because the Obama Administration has been signaling it wants more accountability and transparency.

From everything I have seen, the Bush Administration seemed to think it had little accountability to its "subjects", whereas the Obama Administration seems to realize the home folks are mad as hell about the banks and so it might have raised a stink.

Also note the Merril Lynch bonus story broke in London. The sorry state of American journalism...don't get me started...

[GRG55]

Re: Paulson Starts Virtual Soup Kitchen; Starving Bankers Grateful...

Could the outright theft of taxpayer's money get any more blatant than this? Is anybody going to put a stop to this nonsense? Ever?

[from Yves Smith's blog]

Merrill Execs Pay Selves Bonuses Ahead of Schedule (and Before BofA Closing)


Playing fast and loose seems to be the theme of the evening. First we have the credulity-stretching China fourth quarter GDP release, and now we have the eleventh hour stealing of the silver by Merrill's top executives as one of the firm's final acts...

Ken Lewis finally did something sensible. Unfortunately for BAC shareholders it's far too little, far too late. Their equity, down another 11% today, is headed to zero. Anybody want to make a guess how much severance BAC [read: US taxpayers] had to pay Thain for less than a month of work? [We can hope that the "resignation" was engineered to save face for Thain and save the severance cost for the company ].

Merrill Ex-CEO Thain Agrees to Leave Bank of America

Jan. 22 (Bloomberg) -- John Thain, who engineered the sale of 95-year-old Merrill Lynch & Co. to Bank of America Corp. in September, was ousted after Merrill’s $15.4 billion loss forced the lender to seek more money from the U.S. government.

Thain, 53, “agreed his situation was not working out and that he should resign,” Bank of America spokesman Robert Stickler said in an e-mail today. His exit ends Thain’s tenure with the Charlotte, North Carolina-based bank less than a month after Merrill’s takeover was completed.

Thain negotiated the sale with Bank of America Chief Executive Officer Kenneth Lewis, 61, whose credibility was undercut when the brokerage reported a record fourth-quarter deficit. Lewis, who considered backing out of the deal when he learned of the extent of Merrill’s losses last month, went ahead at the insistence of U.S. regulators who provided a new $138 billion aid package...

...Thain this year spent $1.2 million to redecorate his office at New York-based Merrill, CNBC reported today...

Now if the Board of Bank of America was to be suddenly seized with equally good judgment they would first fire Lewis, and then each and every one of them would resign forthwith. A collection of dimwits such as this, foolish enough to not only buy Countrywide after the subprime market was well along the implosion path, but to follow that up with a re-entry into investment banking after being so recently burned in that same sector, deserves nothing less than to end up on the dole.