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Federal Reserve Chairman Ben S. Bernanke said the central bank is trying to counter “widening credit spreads” that are blunting efforts to pump cash into the economy after the Fed cut the main interest rate almost to zero.
I keep hearing if we didn't bail out the banks then "x" would happen. Every week it is starting to look like "x" is going to happen anyway and it is going to be way worse than if we would have done nothing.
So hey better get ready and keep some of the Ole dollars they may become a collectible item some day.
More to follow...
Georgia's FirstCity Bank becomes 18th failure of 2009
www.marketwatch.com...
SAN FRANCISCO (MarketWatch) -- Stockbridge, Ga.-based FirstCity Bank was closed by regulators Friday, marking the 18th U.S. bank failure of 2009. The Federal Deposit Insurance Corporation said in a statement that it will mail checks to insured depositors Monday morning, and that FirstCity's direct deposits from the federal government such as Social Security and Veterans' payments will be transferred to SunTrust Banks Inc. FirstCity had $297 million in assets and $278 million in deposits as of March 18, the FDIC said.
Originally posted by Hastobemoretolife
reply to post by Donny 4 million
It also helps that the government is pumping billions into AIG.
FDIC Approves the Payout of Insured Deposits of FirstCity Bank, Stockbridge, Georgia
www.fdic.gov...
Press Releases
--------------------------------------------------------------------------------
FDIC Approves the Payout of Insured Deposits of FirstCity Bank, Stockbridge, Georgia
FOR IMMEDIATE RELEASE
March 20, 2009 Media Contact:
David Barr
Office: (202) 898-6992
Cell: (703) 622-4790
E-mail: [email protected]
The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of FirstCity Bank, Stockbridge, Georgia. The bank was closed today by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver.
The FDIC will provide payment to insured depositors by mailing checks for their insured funds on Monday morning. Direct deposits from the federal government, such as Social Security and Veterans' payments, will be transferred to SunTrust Bank (for the specific SunTrust branches, depositors should call the toll-free telephone number below).
Customers of FirstCity Bank with brokered deposits should contact their brokers about the status of their accounts. The FDIC will provide payment for insured brokered deposits once brokers provide the FDIC with the necessary documents to identify customers and permit a determination of their insured deposit.
As of March 18, 2009, FirstCity had total assets of $297 million and total deposits of $278 million. At the time of closing, the bank had approximately $778,000 in deposits that exceeded the insurance limits. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers.
Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-877-367-2719 to set up an appointment to discuss their deposits. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties can also visit the FDIC's Web site at www.fdic.gov...
Beginning Monday, depositors of FirstCity with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at www2.fdic.gov...
The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $100 million. FirstCity Bank is the eighteenth FDIC-insured institution to fail this year. The last bank to fail in Georgia was Freedom Bank of Georgia, Commerce, on March 6, 2009.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,305 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars–insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-44-2009
I'll be damned. Watch this clip: www.cnbc.com...
This is amazing; Brad Sherman is for taxing the hell out of bonuses for the explicit purpose of getting the government out of these firms. His view is simple: If you're working for Geithner, why should you make more than Geithner?
I like it.
You don't like having people working for $250,000 a year in total compensation or less? Fine - give back the damn money and run the firm any way you like.
If you, on the other hand, are such poor managers that you require the US Taxpayer to subsidize your operation then you cannot claim to have the "brightest and best"; you've proved you're wrong! So shut the hell up and accept both the money AND restrictions.
EXACTLY.
We need more Representatives like the HONORABLE Brad Sherman.
Many more.
The argument that "Congress made a mistake originally" is in fact an argument in SUPPORT of what they are doing here, not one against it. For if Congress made a mistake then correcting that mistake is required.
I love the whining about "contract law". Where were those complaining about this when AIG wrote CDS against no capital? Contract law calls that fraud folks - intentionally inducing someone into an agreement that you have no intention or ability to perform on. Further, we can do fraudulent concealment too, which is what the law calls it when you hide the fact that you're functionally insolvent for more than six months as it becomes apparent to you that you won't be able to perform, and while you know this, you draft "retention bonuses" for the very people that put your company in this position.
Never mind Goldman disclosing that they got 100% payouts on the AIG "contracts" that had no prayer in hell of being any good under the terms of that contract, because nowhere in that contract was a US Government guarantee!
All this whining is not only outrageous it is CRIMINAL and I for one am tired of it.
If "The Street" wants to throw a hissy fit and crash the markets over the fact that their fraud is now being met with outrage and punitive action then have at it.
They're lucky that the "punitive action" isn't coming in the form of 100 year prison terms or worse, angry mobs of citizens performing an 1873-style "banker hanging" on the lampposts, and might want to consider that if they keep this crap up the government and citizen response might morph into one of those other two possibilities.
I've long advocated for #1 but I'm getting darn close to where I'd cheer on those engaged in #2.
Goldman Sachs Group rejected overtures from American International Group to settle trades with the troubled insurer at a discount, instead holding the company to the letter of its contracts, the investment bank's chief financial officer said Friday.
CFO David Viniar also said that Chief Executive Lloyd Blankfein had no meetings with former Treasury Secretary Henry Paulson about AIG.
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AIG 1.26, -0.36, -22.2%) have come under criticism in recent weeks because a lot of the government money that was initially loaned to the insurer was paid back out to these trading partners. See full story.
AIG almost collapsed in September after credit rating downgrades made it impossible for the insurer to meet obligations on derivative-based contracts it had sold to protect against losses on complex mortgage-related securities known as collateralized debt obligations, or CDOs.
The government gave AIG an emergency $85 billion loan and the bailout has since ballooned to more than $170 billion.
Goldman was one of AIG's largest counterparties partly because it had purchased protection against losses on CDOs from the insurer.
Speaking on a conference call with reporters Friday, Viniar said that Goldman began to significantly mark down its Super Senior CDO risk in July 2007, resulting in valuation disputes with AIG.
The investment bank demanded that the insurer post more and more collateral over the following year. "Over subsequent weeks and months, we continued to make calls as the market deteriorated," he added.
Viniar was asked if Goldman Sachs felt any guilt about its possible contribution to AIG's collapse.
"All we did was call for what was due to us under the contracts. So you know, I don't think there's any guilt whatsoever," he said.
U.S. economic and federal budget outlook for the next two years is significantly worse than it was two months ago, the nonpartisan Congressional Budget Office said Friday.
The latest forecast shows the economy contracting 1.5% this year, with the unemployment rate rising to 9.4% later in the year. The economy will bounce back next year, growing at a 4.1% pace, in part because of the economic stimulus approved last month and "very aggressive actions by the Federal Reserve and the Treasury" to revive the financial system, the agency said. Read more.
The $787 billion economic stimulus will likely boost gross domestic product by between 1.1 percentage points and 3.4 percentage points, and create between 1.2 million and 3.6 million, the CBO said.
"The current recession, which began in December 2007, took a sudden and severe turn for the worst late last year," the CBO said. The output gap -- the difference between what the economy produces and what it could produce -- will widen an average 7% over the next two years. The output will persist through 2014 despite above-trend growth in 2010 and 2011.
That wide output gap would mean unemployment will stay high and inflation will remain low for years. And it would mean more red ink for the federal government.
The latest baseline forecast [assuming current law] shows a deficit of $1.7 trillion this year, or 11.9% of gross domestic product, and $1.14 trillion in 2010, or 7.9% of GDP.
If President Barack Obama's budget proposals are adopted, the deficit would rise to $1.8 trillion, or 13.1% of GDP, this year and $1.4 trillion, or 9.6% of GDP, in 2010. Over the next 10 years, the president's budget plans would add about $4.8 trillion to the total debt.
White House Budget Director Peter Orszag said the new forecast wouldn't change the administration's budget priorities or tactics. He said the Obama administration still hopes to spend money in the coming years on health care, education clean energy to boost long-term productivity.
Republicans said Obama's budget is unaffordable.
"Our debt will increase to shocking levels that are simply unsustainable and will devastate future economic opportunities for our children and grandchildren," said Sen. Judd Gregg, R-N.H., the leading Republican on the budget committee, who accepted and then backed out of Obama's nomination as commerce secretary.
Citigroup Inc. Chief Executive Vikram Pandit on Friday criticized legislation that would tax bonuses at many financial companies heavily. "The work we have all done to try to stabilize the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees," Pandit wrote in a memo to employees on Friday. "It would affect countless number of people who will find it difficult, if not impossible, to pay back the bonuses that they earned." The House of Representatives passed legislation Thursday that would impose a 90% tax on bonuses given to employees who earn more than $250,000 a year at companies that have received at least $5 billion from the government's Trouble Asset Relief Program.
Originally posted by HimWhoHathAnEar
The really nasty part of hyperinflation is what it does to ALL business. Even if a company looks like they're not involved with the gov't bailout it doesn't mean they can survive hyperinflation. Actually, it can be just the opposite. In past instances it was the gov't lackeys that were 'allowed' to survive while the free market was being ripped apart. Because in an environment where raw materials are rising more by the day than the amount of profit made for that day a free market doesn't exist.