Posts Tagged ‘Treasury’

Do Only Complete Failures Qualify?

Wednesday, June 8th, 2011

For jobs in the Administration:

Now, it’s Ryan Crocker to Afghanistan, yet another man who could not tell the truth to anyone in power and got a Medal of Freedom for it!

And it’s Mueller of the FBI, who failed America completely at 9/11, but must have another 2 years because ???

And it’s Geithner at Treasury, a corrupted and unconvincing clown apologist for Wall Street, who doesn’t give a damn about unemployed Americans?

And it’s Bernanke at the Fed, misser of the housing bubble, who’s shocked, shocked to find that his fellow Republicans are batshit crazy, but doesn’t want to rock their boat by saying they are?

Why is it not possible to find qualified people for these jobs who are not discredited Republican remnants or demonstrably incompetent?

Gorilla answers: “Because failure is a feature, not a bug, in Washington!”

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A Good Start, But…

Friday, February 11th, 2011

The Treasury’s had a good go at trying to understand and perhaps fix the housing mess.

The difficulty comes not in the analysis of the past, which is very straightforward and clear, but in the lessons to be learned, both in the present and in the future.

At present, the government guarantees virtually all the mortgages in the country. The cost of doing so is very high: more than $150 billion so far doled out to save Fannie and Freddie.

Clearly, the long-term objective should be to get the government out of the mortgage guarantee business, except in times of national emergency.

Equally important is to change the way Americans view housing: a home needs to be a place to live, not a savings and investment vehicle.

On the other hand, there’s no evidence that the private mortgage industry will take over all of the government’s business without some form of guarantee. Treasury proposes to fix this by setting up a reinsurance fund with contributions from the mortgage industry.

Whichever way the government eventually decides to go, the cost of mortgages will go up significantly and it will be more difficult for middle class Americans to qualify for a mortgage (lower income and poor Americans would continue to receive a subsidy, either for buying or renting).

On the other hand, if these ideas also included the end of the mortgage interest deduction (an excellent idea), it’s likely the price of houses will fall substantially (Gorilla’s guess is 20-30% from whatever today’s as yet unachieved bottom will be) and therefore future mortgages would be much smaller (and therefore more affordable).

Alas, this will all be a tough sell presently when 25% of Americans are already underwater on their mortgages and it’s extremely likely that prices will fall another 10-20% until supply and demand reach a more sustainable equilibrium.

It’s also the case that the banking industry and the mortgage industry will fight this tooth and nail. They want to continue securitizing mortgages for fun and profit, they don’t want to pay anything for creating idiotic levels of risk, and of course they expect the government to bail them out when the next bubble bursts.

So the guess is that there’ll be lots of sound and fury about Fannie and Freddie, but nobody in either party will do very much except tinker at the margins for at least another 5 years.

Gorilla says: “The unraveling is good, but at the moment the unraveling has just begun!”

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The Odds Of Mods

Friday, January 22nd, 2010

Having a failed home loan modification program means never having to get it right…

The Treasury’s now fooling around with allowing homeowners to postpone payments and/or allowing less documentation for loan modifications.

The easiest solution, namely allowing bankruptcy court judges to reduce principal or forcing loan servicers to do the same, has been defeated twice in Congress and there’s no evidence that the Administration, despite its recently found zeal to punish the banksters, is interested.

Gorilla says: “Extend and pretend is now less paper, loan escaper!”

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The Fed Passes The Cash

Tuesday, November 17th, 2009

What a surprise!

Taxpayers weren’t served very well by the Fed during the AIG bailout, according to the special inspector general.

Haircuts just couldn’t be taken, that would have meant disaster, so several hundred billion were cobbled together and handed over to AIG’s counterparties. So Goldman Sachs got richer, the Fed became a structured investment vehicle of the US Treasury, and Wall Street got a flashing green light on all future moral hazard.

And of course these are the same folks doing such a bang-up job with the economy today!

Gorilla says: “Regulators who spoon feed crooks shouldn’t be surprised when the spoons go missing!”

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The al-Qaeda Telethon

Tuesday, October 13th, 2009

al-Qaeda’s not got as much cash as it used to, according to the US Treasury.

Several fundraising appeals have been made this year. The Taliban’s apparently doing better, mainly because they have direct access to the narcotics trade.

What isn’t mentioned in the Treasury report, of course, are the trillions of dollars being spent by the US in Iraq and Afghanistan to rid the planet of these very small time outfits. So far, all that cash hasn’t had much effect on either al-Qaeda or the Taliban.

You don’t need much money to unleash havoc, as we know from our experiences in Goingbackwardville. 9/11 likely cost less than a million dollars to plan and execute. The Madrid and London bombings cost a few thousand each.

One might conclude therefore that it’s a waste of time and resources for the Pentagon to be leading the anti-terror campaign, when economic development in backward lands, combined with better law enforcement and intelligence gathering at home and abroad, could do the job at least as ineffectively for far less moolah.

But that’s not a debate anyone in Movingforwardville wants to have, much better for the Treasury to claim they’ve succeeded in reducing financial resources for insurgent and terrorist groups. Victory is mine, sayeth the Geithner!

Gorilla says: “If only we’d gotten Wells Fargo to do Option ARMS in Afghanistan and Pakistan, we’d have wiped these guys out by now!”

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So What’s New?

Monday, October 5th, 2009

The Treasury misled the public last year in describing the banks who received bailouts as being “healthy”, according to the Treasury’s own Inspector General.

Not exactly news, and still going on!

Bank of America and Citibank remain walking zombies, we still have no idea about the losses to come, and the Federal Reserve continues as a structured investment vehicle for the Treasury, taking trillions in assets but not disclosing what they are.

Gorilla says: “Why not mix metaphors? You can’t hide the spoons in the can you’re kicking down the road!”

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Clear As The Driven Slushfund

Thursday, September 24th, 2009

The Treasury Department Inspector General says it’s unlikely the taxpayer will recover all the money spent so far on the Troubled Assets Relief Program (TARP).

More ominously, the IG criticizes Treasury for a lack of transparency in disclosing just how the funds have been spent by recipients.

“We remain puzzled as to why Treasury refuses to adopt our recommendations to report on each TARP recipient’s use of TARP funds.”

Barofsky also said that Treasury also has refused to adopt regular disclosures of borrowers that fail to repay loans obtained through a Federal Reserve securities lending program aimed at easing pressures in consumer credit markets.

He also said the Treasury does not intend to disclose trading activities, holdings and asset valuations in so-called public-private investment partnerships that are being created to buy troubled assets. About three quarters of the $40 billion in nine funds will be supplied by the Treasury.

Gorilla says: “These are the known unknowns of our lives!”

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X Ratings

Wednesday, August 5th, 2009

It seems the Administration thinks that regulating the credit rating agencies is a bad idea.

“To do so would put the government in the position of validating private sector actors and would likely exacerbate over-reliance on ratings,” the Treasury’s assistant secretary for financial institutions Michael Barr said.

Gorilla sees the logic in this: “Having the government guarantee trillions in Triple A-rated toxic assets is clearly the best way to validate private sector actors. We may not be able to define moral hazard, but we remove it when we see it”.

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No More Shovel Ready Strip Malls, Please

Thursday, July 9th, 2009

The next big shoe to drop in the US economy is commercial real estate. It’s going to be as bad or worse than residential, and many of the same suckers/bankers/taxpayers will be on the hook big time.

And of course Treasury is working on it, so we better hide the spoons…

About the only good news to come out of the G-8 summit is the certainty that most of the assembled leaders’ bodies will be 2 degrees centigrade or more colder by 2050.

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Click For Special Price? A 404 From Treasury

Thursday, July 9th, 2009

Uncle Sam’s decided on the firms that will be paid by the taxpayers to buy some toxic assets from our great Wall Street subsidiaries, who are also being paid by the taxpayers.

But apparently, there’s a 404 error when it comes to disclosing what prices are being paid for all this junk. The banks who are selling don’t want to say how much the assets have been marked down. The Treasury doesn’t want to say whether the subsidies will be used to pay a higher price to the banks.

So, yet again, an Administration that says it believes in transparency doesn’t practice what it preaches.

Gorilla says: “If we knew what this stuff is actually worth, then we’d have some idea as to how much we’ll be continuing to bankroll Wall Street. If the toxic asset banks aren’t in fact zombies, then we might be able to say something good about the prospects for economic recovery.”

Far better, says Treasury, if we whisper quietly among ourselves, click our heels together three times, and imagine we’re meeting Professor Marvel for the very first time.

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