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Wednesday, August 27, 2008
Is the financial crisis really missing from the conventions?
· 8/27/2008 07:46:00 PM ET · Link
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Bloomberg is ripping both parties today for their lack of specifics on the current financial crisis. I appreciate what Bloomberg is saying but I also agree with Senator Schumer that a convention may not be the place to discuss the specifics of something as detailed as SEC governance. Obama and the rest of the Democrats have hardly shied away from hammering away on the failed policies that led to this crisis, something that Bloomberg ignores in their story. To suggest that "the worst financial crisis since the Depression" merely "occurred on their [GOP] watch" is missing a major point. It didn't just occur on the GOP watch, it was created with deliberate intention on their watch. Phil Gramm anyone?
Either way, Bloomberg has a point in that the next President will be facing expensive problems such as the loss of over $1 trillion thanks to the GOP credit crisis, continuing failures by Detroit who also want a bailout despite a clear record of management incompetence and job cuts in the tens of thousands, the housing bailout and don't forget the ongoing cost of the war in Iraq. And to think we haven't even heard from the airlines come back for their third bailout since Bush arrived.
Each issue on its own is an expensive problem. Combined, we're looking at breaking the bank yet again. If anyone has a clue as to where we're going to find the money to fund all of this, I'm all ears. The ongoing Iraq costs will cause obstacles to the bailout fever gripping Washington as well as any plans for new initiatives for the future such as alternative energy or even education.
We may not be hearing too many specifics this week or next, but we will surely hear much more substance on the credit crisis in the coming weeks. Neither candidate can afford to ignore the issue and voters won't allow the crisis to be ignored.
Labels: bailout, credit crisis, Iraq, Republican economy
Wednesday, July 30, 2008
Fed extends Wall Street "emergency borrowing" scheme
· 7/30/2008 10:50:00 PM ET · Link
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So the policy remains the same. Bail out the biggest gamblers for their own stupidity. OK, I think I get it now.
The Federal Reserve said it is extending its emergency borrowing program to Wall Street firms and is taking other steps to ease a severe credit crunch that has hobbled the national economy.
The Fed said the program, where investment houses can tap the central bank for a quick source of cash, will now be available through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.
Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said.
And, it also will let commercial banks, in a separate program, be able to bid on cash loans that last longer—for 84 days, besides the 28-day loans now available.
The Fed said the program, where investment houses can tap the central bank for a quick source of cash, will now be available through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.
Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said.
And, it also will let commercial banks, in a separate program, be able to bid on cash loans that last longer—for 84 days, besides the 28-day loans now available.
Labels: bailout, credit crisis, Federal Reserve, Wall Street
Tuesday, July 29, 2008
McCain doesn't have a damned clue about the economy
· 7/29/2008 08:28:00 AM ET · Link
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His comments yesterday were so far off the mark and once again prove how little he understands what is happening. Did excessive spending by Republicans cause problem? Well, duh. Of course they did. Was spending the key issue? Hardly, but don't tell that to the guy who worships Gramm-O-Nomics. Good grief, how far removed from planet earth is this guy? Meanwhile, Obama is talking to some heavy hitters who know a few things about the economy. He's said this before but now more than ever they deserve to be repeated.
"It was not an accident or a normal part of the business cycle that led us to this situation," Obama said. "There were some irresponsible decisions that were made on Wall Street and in Washington."
Obama said the economy needs both short- and long-term fixes, including another round of "stimulus" measures from Congress to revive the economy and a longer-term focus on renewable energy to curb high gas prices and on universal health care to trim costs. He said he would move "rapidly and vigorously" to respond.
"We are also going to have to provide some short-term relief," Obama said. "People are hurting right now. We need to respond rapidly and vigorously to problems, and to anticipate the problems that may be on the horizon."
Present at the meeting were AFL-CIO President John Sweeney, former treasury secretary Paul ONeill, former Federal Reserve chairman Paul Volcker, former New Jersey Sen. Bill Bradley, Google chairman and CEO Eric Schmidt and New Jersey Gov. Jon Corzine, the former head of Wall street investment firm Goldman Sachs. Billionaire investor Warren Buffett joined via speaker phone.
Republican John McCain said the culprit for the deficit was the administration's wasteful spending.
"There is no more striking reminder of the need to reverse the profligate spending that has characterized this administration's fiscal policy," McCain said in a statement issued Monday.
And? AND? I almost thought McCain was going to continue and talk about the credit crunch that his old pal Phil Gramm orchestrated in Congress, but no, that would make too much sense.
Obama said the economy needs both short- and long-term fixes, including another round of "stimulus" measures from Congress to revive the economy and a longer-term focus on renewable energy to curb high gas prices and on universal health care to trim costs. He said he would move "rapidly and vigorously" to respond.
"We are also going to have to provide some short-term relief," Obama said. "People are hurting right now. We need to respond rapidly and vigorously to problems, and to anticipate the problems that may be on the horizon."
Present at the meeting were AFL-CIO President John Sweeney, former treasury secretary Paul ONeill, former Federal Reserve chairman Paul Volcker, former New Jersey Sen. Bill Bradley, Google chairman and CEO Eric Schmidt and New Jersey Gov. Jon Corzine, the former head of Wall street investment firm Goldman Sachs. Billionaire investor Warren Buffett joined via speaker phone.
Republican John McCain said the culprit for the deficit was the administration's wasteful spending.
"There is no more striking reminder of the need to reverse the profligate spending that has characterized this administration's fiscal policy," McCain said in a statement issued Monday.
Labels: barack obama, credit crisis, john mccain, Republican economy
Wednesday, July 23, 2008
Freddie & Fannie bailout could cost $25 billion
· 7/23/2008 04:59:00 AM ET · Link
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Republican economics continues to show America how costly it is to ignore the basics. Failure to properly regulate and letting financial institutions do pretty much anything they liked is going to cost the US much more than any regulation would have cost. So now that we're in an economic downturn and funding two costly wars, where are we supposed to find the cash for this?
Congressional budget analysts put a $25 billion cost estimate on a Bush administration plan to bolster mortgage finance giants Fannie Mae and Freddie Mac, but raised questions about a key assumption underlying the plan.
The Congressional Budget Office said the estimated cost to taxpayers would be incurred over 2009 and 2010, if Congress approves the plan proposed by Treasury Secretary Henry Paulson amid a deep slump in the U.S. housing market.
The Congressional Budget Office said the estimated cost to taxpayers would be incurred over 2009 and 2010, if Congress approves the plan proposed by Treasury Secretary Henry Paulson amid a deep slump in the U.S. housing market.
Labels: bailout, credit crisis, Republican economy
Tuesday, July 22, 2008
American Express customers falling behind
· 7/22/2008 02:46:00 PM ET · Link
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This is predictable but still a bad sign for the economy. The tough times are spreading even to wealthier Americans.
Late Monday, New York-based American Express reported a 38% drop in second-quarter earnings and warned that it won't be able to meet long-term financial targets until the economy improves.
American Express shares, which are part of the Dow Jones Industrial Average fell to $37.12 in morning trading.
The company said that even its most creditworthy, long-standing customers felt the effects of the economic slowdown currently sweeping the U.S.
Without giving specifics, AmEx said it plans to cut staff and reduce other costs, noting that the resulting charges will hit results in the second half of 2008.
"With bad debt occurring even in the superprime card segment, AmEx's earnings clearly show that the credit crisis is going upscale, which does not bode well for the U.S. economy," Red Gillen, senior analyst at consulting firm Celent, commented via email.
American Express shares, which are part of the Dow Jones Industrial Average fell to $37.12 in morning trading.
The company said that even its most creditworthy, long-standing customers felt the effects of the economic slowdown currently sweeping the U.S.
Without giving specifics, AmEx said it plans to cut staff and reduce other costs, noting that the resulting charges will hit results in the second half of 2008.
"With bad debt occurring even in the superprime card segment, AmEx's earnings clearly show that the credit crisis is going upscale, which does not bode well for the U.S. economy," Red Gillen, senior analyst at consulting firm Celent, commented via email.
Labels: credit crisis, Republican economy
Free market phonies on the march again
· 7/22/2008 04:05:00 AM ET · Link
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I may not have any love for short sellers on Wall Street, but really, where was this interest in propping up bad stocks during the last recession or any other recession? Like many investors I was picked to pieces by short sellers in 2001 and surprise, surprise, no SEC, no Treasury Department, nobody stepped in to stop it. Now that our precious banks are getting their comeuppance everybody is stepping up to protect them. I'm getting tired of hearing the old "we can't let the banks fail" routine, especially from the free market phonies who could never stop talking about the benefits of the free market. Fine, let the free market work for banks just as it has done for other industries. Let bankers tell us about the virtues of limited unemployment benefits when it's bankers who are unemployed and losing their houses.
Step back and look at what's going on here and who is getting a helping hand versus a kick in the butt. Rewarding greedy bankers who have already made record profits (and record bonuses, which they still own) courtesy of selling worthless loans is no better than rewarding greedy individuals who were flipping houses though look at who is getting the VIP treatment. Political leadership in Washington can't move quickly enough to rescue those least in need. For home buyers who were bamboozled by Big Finance, good luck. The NY Times has a late, but still great article on the credit crisis. It's abundantly clear by recent actions (and inactions) that unless you're a bank, you're a chump.
Labels: bailout, credit crisis, free market phony, Republican economy, SEC
Monday, July 21, 2008
British bank fails to raise capital after credit crisis losses
· 7/21/2008 05:16:00 PM ET · Link
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Almost every bank and mortgage related company in the US and Europe is trying to round up new money so it's no surprise that Britain's HBOS failed in its attempt to raise billions to replenish its coffers. Objectively, who would want to throw these gamblers any more cash considering how poorly they've managed money in recent years? As the credit crisis continue in the US, we will be seeing more cautious investing in this dodgy business. To give them anything will only encourage more of the same risky behavior, including bonuses for selling more trash. This industry still thinks that its 2004 or 2005 when money was no object.
An attempt by British bank HBOS to raise 5.0 billion euros from shareholders to bolster finances hit by the credit crisis flopped on Monday, and underwriting banks were set to pick up the tab.
The country's biggest mortgage lender, seeking to boost its capital after heavy credit squeeze writedowns, said investors had agreed to buy just 8.29 percent of its 4.0-billion-pound or 7.9-billion-dollar rights issue.
A bank spokesman blamed the poor take-up on a "fierce financial storm" that has battered the financial sector amid fallout from the collapsed US subprime housing market and the related credit crunch.
The country's biggest mortgage lender, seeking to boost its capital after heavy credit squeeze writedowns, said investors had agreed to buy just 8.29 percent of its 4.0-billion-pound or 7.9-billion-dollar rights issue.
A bank spokesman blamed the poor take-up on a "fierce financial storm" that has battered the financial sector amid fallout from the collapsed US subprime housing market and the related credit crunch.
Labels: credit crisis, economy, UK
Friday, July 18, 2008
McCain & Phil Gramm: Happy Together, again
· 7/18/2008 03:09:00 PM ET · Link
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You didn't actually think that McCain would ditch his best friend who called Americans "whiners", did you? You didn't really think that the media would question the Phil Gramm failed economic policies that McCain preaches every day on the campaign trail. If they did that, they might not get a good seat on the plane and then what would happen? Who would hand out the Dunkin Donuts, with sprinkles and coffee? From Robert Novak:
After Sen. John McCain publicly repudiated his close friend and adviser Phil Gramm's comments about a "nation of whiners" and a "mental recession," the two old political comrades patched up their relationship.
Gramm apologized to McCain for his remarks that gave Democrats an opening against the Republican presidential candidate and provided several days of ammunition for blogs, cable television and radio talk shows. McCain told Gramm not to worry about the expected pitfalls of a campaign surrogate. Gramm will continue as an adviser and surrogate.
Gramm remained a steadfast supporter last year when it appeared that McCain's campaign had collapsed. McCain was a loyal backer of Gramm's failed 1988 campaign for president and did not leave until the candidate dropped out of the race.
Gramm apologized to McCain for his remarks that gave Democrats an opening against the Republican presidential candidate and provided several days of ammunition for blogs, cable television and radio talk shows. McCain told Gramm not to worry about the expected pitfalls of a campaign surrogate. Gramm will continue as an adviser and surrogate.
Gramm remained a steadfast supporter last year when it appeared that McCain's campaign had collapsed. McCain was a loyal backer of Gramm's failed 1988 campaign for president and did not leave until the candidate dropped out of the race.
Labels: credit crisis, john mccain, phil gramm, Republican economy
Thursday, July 17, 2008
Taxpayer risk for Freddie and Fannie?
· 7/17/2008 09:17:00 PM ET · Link
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How much do you have?
A proposal outlined by Treasury Secretary Henry Paulson - if approved by Congress - would offer explicit backing for the two government-sponsored enterprises (GSEs). It has three main elements.
* Increase each company's $2.25 billion line of credit with the Treasury by an unlimited amount for the next 18 months.
* Let the Treasury have the option of buying an unlimited amount of Fannie and Freddie stock over the next 18 months.
* Give the Federal Reserve a consultative role with the GSEs' regulator to assess the companies' capital requirements.
In any rescue, Treasury would likely have to borrow billions of dollars. Exactly how much it would cost taxpayers is impossible to gauge because of several unknowns. Among them are extreme volatility in the companies' stock prices coupled with falling home values and rising mortgage default rates, which affect the value of the GSEs' assets and debt.
* Increase each company's $2.25 billion line of credit with the Treasury by an unlimited amount for the next 18 months.
* Let the Treasury have the option of buying an unlimited amount of Fannie and Freddie stock over the next 18 months.
* Give the Federal Reserve a consultative role with the GSEs' regulator to assess the companies' capital requirements.
In any rescue, Treasury would likely have to borrow billions of dollars. Exactly how much it would cost taxpayers is impossible to gauge because of several unknowns. Among them are extreme volatility in the companies' stock prices coupled with falling home values and rising mortgage default rates, which affect the value of the GSEs' assets and debt.
Labels: credit crisis, Republican economy, taxes
What everyone should know about FDIC insurance
· 7/17/2008 05:00:00 PM ET · Link
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With the failure at IndyMac and rumors of more banks who may be in trouble, you definitely want to read the following link and make the appropriate changes, if necessary. If you have money in a bank that is insured under the FDIC, read on. I don't want to copy and paste and miss any important details so take a couple of minutes and read the entire article. More from Suze Orman.
Labels: bailout, consumer protection, credit crisis
Wednesday, July 16, 2008
Failed IndyMac under investigation by FBI
· 7/16/2008 10:28:00 PM ET · Link
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Doesn't this seem to be a bit too late? Are they really saying that only now they're investigating fishy lending practices? Where the heck was the oversight when we needed it?
Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans made to risky borrowers, The Associated Press has learned.
It was not immediately clear how long the FBI's probe of the bank has been ongoing.
The investigation is focused on the company — which was taken over last Friday by the FDIC — and not individuals who ran it, a law enforcement official said Wednesday. The official spoke on the condition of anonymity because he was not authorized to speak publicly about the investigation.
IndyMac Bank's assets were seized by federal regulators after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.
It was not immediately clear how long the FBI's probe of the bank has been ongoing.
The investigation is focused on the company — which was taken over last Friday by the FDIC — and not individuals who ran it, a law enforcement official said Wednesday. The official spoke on the condition of anonymity because he was not authorized to speak publicly about the investigation.
IndyMac Bank's assets were seized by federal regulators after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.
Labels: credit crisis, regulation, Republican economy
Confidence in Bush-McCain economy drops
· 7/16/2008 09:03:00 PM ET · Link
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There are no significant differences between the Bush model and the McCain economic model, though perhaps due to Phil Gramm's radical influence, McCain's may be even riskier. The polling for radical right economics looks bad for the GOP and in all likelihood it will get worse as the situation deteriorates.
Public confidence in U.S. economic policy dipped this month as unstable markets and shaky financial institutions left Americans uneasy about the future, according to a Reuters/Zogby poll released on Wednesday.
The Reuters/Zogby Index, which measures the mood of the country, dropped to 88.7 from 90.4 in June as five of the 10 measures of public opinion used in the index fell at least slightly and three remained steady.
The index fell to near its record low of 87.7, recorded in March, as optimism about personal finances waned and approval ratings for the Bush administration's economic and foreign policies dropped.
The Reuters/Zogby Index, which measures the mood of the country, dropped to 88.7 from 90.4 in June as five of the 10 measures of public opinion used in the index fell at least slightly and three remained steady.
The index fell to near its record low of 87.7, recorded in March, as optimism about personal finances waned and approval ratings for the Bush administration's economic and foreign policies dropped.
Labels: credit crisis, john mccain, recession, Republican economy
Tuesday, July 15, 2008
Bernanke tells Congress: economy in trouble for a while
· 7/15/2008 09:12:00 PM ET · Link
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What a whiner. At least he's coming around to what many said months ago that inflation needs to be tamed. Earlier in this cycle many said that the Fed was too focused on Wall Street at the expense of everyone else. Bailing out Wall Street and throwing wads of cash at them was only delaying the inevitable and probably feeding inflation. It's clear now that he ignored inflation and it's coming back in a big way. It certainly didn't help us avoid a meltdown, which looks like our future in the near term.
The problem for many of us is that his policies reflected the same old coddling of Wall Street - who benefited tremendously from the subprime policies - and left the problem for everyone else. For once it would be nice if the Fed stopped being an arm of Wall Street and looked out for everyone else. Even now Bernanke is propping up the banks - which of course he needs to do - but the high rollers still are getting a much easier ride compared to the middle class. I don't care what his term is, he needs to go very early on after the election. We need a break from the old ways that have ceased working for the country as a whole.
In long-awaited testimony at the Senate Banking Committee, Mr. Bernanke avoided the word “recession†in characterizing the current economy, noting instead that consumer spending and exports were keeping growth “at a sluggish pace†while the housing sector “continues to weaken.â€
“The economy has continued to expand, but at a subdued pace,†Mr. Bernanke said. But he added that spending for personal goods had “advanced at a modest pace so far this year, generally holding up somewhat better than might have been expected given the array of forces weighing on household finances and attitudes.â€
He said that while the risks to the overall economy were still “skewed to the downside,†inflation “seems likely to move temporarily higher in the near term.†The Fed, Mr. Bernanke said, needed to guard against higher prices spreading throughout the economy.
“The economy has continued to expand, but at a subdued pace,†Mr. Bernanke said. But he added that spending for personal goods had “advanced at a modest pace so far this year, generally holding up somewhat better than might have been expected given the array of forces weighing on household finances and attitudes.â€
He said that while the risks to the overall economy were still “skewed to the downside,†inflation “seems likely to move temporarily higher in the near term.†The Fed, Mr. Bernanke said, needed to guard against higher prices spreading throughout the economy.
Labels: Bernanke, credit crisis, Republican economy
Is it the 1970s all over again?
· 7/15/2008 04:24:00 AM ET · Link
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Similarities are there such as the belief that this could end up being a long, drawn out period instead of the usual 10 month recession. In the 1970s the Dow trudged along with peaks and valleys (thanks to the energy crisis) but it took ten years for the Dow to bounce above its 1972 peak of 1,000. Last July the Dow hit 14,000 and everyone celebrated the new era and wondered how soon before 15,000 and 20,000. At the moment we are sitting just above 11,000 and in all likelihood we're about to drop again thanks to weak banks and years of pathetic regulation. For the sake of everyone's retirement I hope the Dow doesn't wait until 2017 to hit 14,000 again but we're certainly not going to be there by 2010.
It's obvious to anyone who wants to live in the real world that the economy is bad. Very bad. To think that more of the same Republican economics that brought us here will somehow miraculously trigger a u-turn is at best wishful thinking. Their friends (and themselves) have all profited from this model yet for the bulk of Americans, job security is less, pay is stagnant, costs for everything are going up and now everyone has to worry about whether their bank can stay afloat. Notice the silence from those who thought it was a great idea in the past? And then, of course, we have the Phil Gramm/John McCain model where we're kicked and then insulted because have the nerve to complain about this half-baked theory. Glad to see they get it.
Labels: credit crisis, recession, Republican economy
Monday, July 14, 2008
Hideous day on Wall Street for regional banks
· 7/14/2008 10:27:00 PM ET · Link
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But Phil Gramm and Republicans know economics. Decades of work by the GOP has led us right to this point. Their friends are long gone, living well off of the profits based on pure bullshit. Charles Prince, Stanley O'Neal and Angelo Mozilo are all doing just fine, thank you very much. Too bad everyone else is stuck with this mess, but the little people really don't count now, do they? Go ahead and tell me who the goddamn elitists are now. Like many Americans, I want to vomit looking at this GOP handy work. The people who led us down this path are nowhere to be seen because they're all a bunch of cowards.
Regional-banking shares led the decline in the financial-services sector on Monday. Among the biggest losers were National City Corp., Washington Mutual Inc., Zions Bancorp Inc., Sovereign Bancorp Inc., KeyCorp, First Horizon National Corp., M&T Bank Corp. and Regions Financial Corp.
Washington Mutual shares closed the session off nearly 35%. Lehman Brothers analysts in a report Monday said WaMu could be forced to "substantially" boost its reserves to cover an estimated $28 billion of losses on the balance sheet, with $21 billion coming from mortgages. They said home prices and mortgage credit are showing no signs of stabilizing.
Meanwhile, National City shares were briefly halted Monday amid a panic-driven plunge before the company in a statement tried to quell what it labeled market rumors. "National City is experiencing no unusual depositor or creditor activity," the Cleveland-based bank said. The stock rebounded from a low of $2.99 but still finished the day down almost 15%.
Washington Mutual shares closed the session off nearly 35%. Lehman Brothers analysts in a report Monday said WaMu could be forced to "substantially" boost its reserves to cover an estimated $28 billion of losses on the balance sheet, with $21 billion coming from mortgages. They said home prices and mortgage credit are showing no signs of stabilizing.
Meanwhile, National City shares were briefly halted Monday amid a panic-driven plunge before the company in a statement tried to quell what it labeled market rumors. "National City is experiencing no unusual depositor or creditor activity," the Cleveland-based bank said. The stock rebounded from a low of $2.99 but still finished the day down almost 15%.
Labels: credit crisis, Republican economy, Wall Street
Did Senator Schumer cause a bank failure? Uh, no.
· 7/14/2008 03:57:00 AM ET · Link
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Not unless you are a complete buffoon like Larry Kudlow's Mini Me. This is the same guy who just informed us all how the current economic problems are completely unrelated to the credit crisis that began last year. According to this rather unique theory, our current problems are directly linked to Obama's positive showing in the polls. Yes, that's right. Mini Me is detailing how the economic recession is all Obama's fault and it has nothing to do with too much debt and too little money on hand. It's a small school of thought that is limited to the cheerleaders of yesterday who promoted the dimwitted policy changes that opened us up to today's credit crisis. Sounds like this guy comes from the Phil Gramm school of economic theory. You know, the theory that dragged us into this financial quicksand.
Are Republicans ever going to accept any responsibility for their catastrophic failures? Responsibility is only an important issue for them when they're talking about the poor and disadvantaged.
Labels: credit crisis, media bias, recession, Republican economy, Wall Street
Sunday, July 13, 2008
The $5 trillion dollar problem
· 7/13/2008 10:51:00 AM ET · Link
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Friday was a terrifying warning as stock prices for Freddie Mac and Fannie Mae plunged up to 50% before staging a recovery based on words of support out of Washington. That may have kept the wolves at bay for a day but this is going to be a big worry in the coming days. Words of concern or words of support may impact timing, but ultimately they don't impact the market fundamentals which are bad. Freddie Mac and Fannie Mae have been a topic of concern for quite a long time.
We had Depression era banking laws in place for a reason and just because Phil Gramm wanted to gain favor with UBS for a job, the rest of Congress shouldn't have gone along with his failed logic. Modernizing bank regulations is a start, but we do not need nor should we allow financial institutions to become too big to fail. That's where we are today and we don't have a spare few trillion sitting around to bail everybody out.
Labels: bailout, credit crisis, phil gramm, Republican economy
Debate over US AAA rating
· 7/13/2008 03:27:00 AM ET · Link
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I can't even believe things have dropped so low that this discussion is out there. I would like to be more confident in our ability to maintain AAA status but there are some painful days still to come. Losing AAA status means even more costly loans for our debt. But remember, Republicans know the economy. They're the experts, so they say.
The U.S. would retain its top AAA credit ratings even if the government was forced to rescue mortgage lenders Fannie Mae and Freddie Mac, according to Moody's Investors Service Inc. and Standard & Poor's.
U.S. debt is ``well within'' the guidelines for an Aaa rating, said Steven Hess, vice president and senior credit officer at Moody's in New York. The U.S.'s AAA rating is not at risk, said Nikola Swann, S&P's primary U.S. credit analyst.
``Even under a real stress scenario, the amount of money the government would have to come up with is not that large,'' Moody's Hess said. ``The amount of money required would not be so large that it would make us worry about the U.S. credit rating.''
U.S. debt is ``well within'' the guidelines for an Aaa rating, said Steven Hess, vice president and senior credit officer at Moody's in New York. The U.S.'s AAA rating is not at risk, said Nikola Swann, S&P's primary U.S. credit analyst.
``Even under a real stress scenario, the amount of money the government would have to come up with is not that large,'' Moody's Hess said. ``The amount of money required would not be so large that it would make us worry about the U.S. credit rating.''
Labels: bailout, credit crisis, Republican economy
Saturday, July 12, 2008
IndyMac failure could cost taxpayers $4-8 billion
· 7/12/2008 08:02:00 PM ET · Link
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The credit crisis is alive and well regardless of what banking lobbyist and McCain co-chair Phil Gramm says. This "mental" problem that we're all whining about is sounding like it could possibly be the most expensive in US hisroty. To be fair to Phil Gramm and McCain, this has to be difficult. They were relying on Gramm's model to be a winner, the cutting edge of right wing economic theory. Of course he can't recognize that an entire life's work is falling apart for the world to see. It has to be embarrassing if not humiliating to see the work of a lifetime fall apart so rapidly. Unfortunately for everyone else, we're stuck with the consequences of Gramm's poor theory.
About 95% of the $19 billion in deposits in the bank are insured, but that leaves $1 billion that was not covered by FDIC guarantees. According to the agency, 10,000 IndyMac customers could lose as much as half of that amount, or $500 million. The agency says the failure will cost the Deposit Insurance Fund between $4 billion and $8 billion, based on preliminary estimates.
"This will certainly be a costly failure. Whether it's the costliest, we just don't know at this point," FDIC Chairman Sheila Bair said on a conference call late Friday night. The failure could also affect premiums paid by all banks for deposit insurance, she added.
"This will certainly be a costly failure. Whether it's the costliest, we just don't know at this point," FDIC Chairman Sheila Bair said on a conference call late Friday night. The failure could also affect premiums paid by all banks for deposit insurance, she added.
Labels: bailout, credit crisis, Republican economy
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