Smaller Banks to Fed. "We Don't Want your Money"

Smaller Banks to Fed. "We Don't Want your Money"

www.washingtonpost.com

Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes.

But regulators said some banks will be pressed to take the taxpayer dollars anyway. Others banks judged too sick to save will be allowed to fail.

The government also said yesterday that it will guarantee up to $1.4 trillion of private investment in banks. The combination of public and private investment is intended to refill coffers emptied by losses on real estate lending. With the additional money, the government expects, banks would be able to start making additional loans, boosting the economy.
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President Bush, in introducing the plan, described the interventions as "limited and temporary."

(visit the link for the full news article)



[edit on 15-10-2008 by grover]

I don't think I have ever heard of a banker saying that they didn't want your money.

What I find interesting is this:

some banks will be pressed to take the taxpayer dollars anyway.

I also find this claim highly suspect:

President Bush, in introducing the plan, described the interventions as "limited and temporary."

I don't believe that one for a minute. The federal government rarely relinquishes power anywhere once it gains it and over time they will find that owning shares in banks is far too lucrative to let go.

This is the end of our current economic system but I am not sure we are at what will replace it yet.

www.washingtonpost.com
(visit the link for the full news article)

I heard Sen Bob Corker on the radio this morning with Ralph Bristol and he was swearing up and down that they were keeping an eye on the Treasury and that they weren't taking over the banks.

Funny, I don't believe him. I think once they get in there they won't let go. I can give you the link to his website, but they don't have the interview up yet

www.ralphbristol.com...

If anyone in this administration told me the sky was blue and grass was green I would check for myself.

No once the fed. has its foot in the door of banking it will never leave willingly.

flagged as i read the title

i hope that this small players that will go for an unconditional no have good body guards or can manage their business from remote hidden place because they will be on the officious "terrorist list"

they are really working hard to take over everything as yesterday it was the central bank of other countries...

i'm awfully scared with what comes next

Federal regulators said they did expect some banks to volunteer, though none stepped forward yesterday. But they added that they would not rely on volunteers. Treasury will set standards for deciding which banks can be helped, and the regulatory agencies will triage the banks they oversee:

reminds of the militray bringing thier own brand of freedom and democracy weather the country/people want it or not

i found these interesting...of course i understand that you may have already read these...but i felt they were worth posting.


Full-Spectrum Breakdown

ECONOMY-US: Bush Plan Down but Not Out

I have questions about what I have highlighted below....

"We will encourage institutions to apply," said John C. Dugan, the comptroller of the currency, who oversees most of the nation's largest banks.

In return for its investments, Treasury will receive preferred shares of bank stock that pay 5 percent interest for up to five years. After that, if the companies haven't repaid the government's initial investment, the interest rate goes up to 9 percent.

Participating banks cannot increase the dividends they pay to shareholders without federal permission, they must accept some limitations on compensation for their executives, and Paulson said the government would press companies to limit mortgage foreclosures.

The government decided not to impose an explicit requirement that banks use their taxpayer dollars to increase lending. But regulators said they will watch banks closely. They also noted that banks have less reason to hoard money now that they can borrow more easily. Most important, however, they said, banks want to make money.

"And the way that banks make money is by lending," Dugan said.

Also yesterday, the Federal Deposit Insurance Corp. said it will create, essentially, two new insurance programs.

The basic insurance program still guarantees all bank deposits up to $250,000. A new supplemental program guarantees all deposits above $250,000 in accounts that don't pay interest. The program basically covers accounts used by small businesses.

...

The FDIC estimates that this new guarantee could cover up to $500 billion in deposits. Banks that sign up for the insurance -- and bankers agree that everyone will participate, for fear of ceding an advantage to rivals -- will pay a premium of 10 cents on every $100 in deposits.

If the comptroller of 'currency' oversees 'MOST' of the nations largest banks; which of the nation's largest banks doesn't he 'oversee'?

So the banks are getting a fixed interest rate.... 5%. And they have 5 years to pay this back or it jumps to 9%? Considering bank profits run into the thousands of percent by some counts; isn't this a little 'too kind'? Or is bank profit sacrosanct?

Exactly what does Paulson's assurance that "the government would press companies to limit mortgage foreclosures." mean in terms of quid pro quo?
"Pressing" doesn't sound very solid to me.

So banks were 'Hording" money? Couldn't that be considered a financial terrorist activity given the circumstances?

BANKS MAKE MONEY BY LENDING.

I don't know. There's something irritating about this statement; in particular, BANKS MAKE MONEY BY LENDING MONEY THEY DON'T HAVE would have been more accurate. Or perhaps simply, BANKS "MAKE" MONEY might have been more realistic.

Why does the media never 'complete' the statement "[FDIC] guarantees all bank deposits up to $250,000." - UNTIL 2009 when the increase in coverage lapses per legislation

Now the taxpaying public is responsible for guaranteeing the 'infusion' of 1/2 trillion dollars into commercial banks, that profit from keeping us in debt? How can the author be so matter-of-fact on this and not reference to 'irony'?

read something interesting today - the USA is investing the lowest amount in this exercise - with europe the most at $2.3 trillion with the UK themselves pumping in $1 trillion.

so its seems europe is bailing out the USA.

reply to post by Harlequin


Yeah why should bush minor exert himself he'll be out of there in 3 months. Actually it doesn't surprise me one bit given the tenor of this administration mind you the big imputus as you point out came from Europe and Britain not the US... our 700 trillion is a smidgen compared to what they are doing... still partially nationalizing banks is a huge deal for this country.

Originally posted by Maxmars
I have questions about what I have highlighted below....

If the comptroller of 'currency' oversees 'MOST' of the nations largest banks; which of the nation's largest banks doesn't he 'oversee'?

the ones that arnt going bankrupt and begging for bail outs from the looks of it

So the banks are getting a fixed interest rate.... 5%. And they have 5 years to pay this back or it jumps to 9%? Considering bank profits run into the thousands of percent by some counts; isn't this a little 'too kind'? Or is bank profit sacrosanct?

we are bailing them out from thier screw ups trying to squeeze yet more profit from a system where money from nothing was common place, and selling stuff you dont have was also common

Exactly what does Paulson's assurance that "the government would press companies to limit mortgage foreclosures." mean in terms of quid pro quo?
"Pressing" doesn't sound very solid to me.

it means he wont say please and will have a stern look on his face when he says it, as they talk about it over a thousand dollar lunch payed for by the tax payers

So banks were 'Hording" money? Couldn't that be considered a financial terrorist activity given the circumstances?

dont be silly only people who own things we want in other countries are terrorists

it just so happen my goverment (UK) thinks iceland is a terrorist state as it has over 1 billion of our money in failed banks

BANKS MAKE MONEY BY LENDING.

I don't know. There's something irritating about this statement; in particular, BANKS MAKE MONEY BY LENDING MONEY THEY DON'T HAVE would have been more accurate. Or perhaps simply, BANKS "MAKE" MONEY might have been more realistic.

yes but why spoil a perfectly good deception with a little truth

I don't think I have ever heard of a banker saying that they didn't want your money.

Its not that they wouldn't like more money to finance their operations, its that they are seething mad that the big boys' asses got saved by the government.

Boutique banks like Lazard and Greenhill were diligent enough not to piss around with their investor's money, while the bulge bracket firms were cocksure in the knowledge that they were "too big to fail".

In the aftermath of Lehman, the boutiques have been mopping up the clean assets of the fallen giant. They hate this bailout bill because it means that they can no longer get firesale prices on arms of fallen bulge bracket banks.

reply to post by noobfun


Thanks!

Question: How is it that Iceland has all this UK money? Is it in paper form? or are we talking about something 'virtual?'

Excellent find and yes the small banks have a RIGHT to be ticked off. The fact is in a free market society the big banks would go under and the small banks that did things right would grow into big banks. That is how this works. Instead we have let the incompetent big banks stay around while the little banks are still stuck even though they have done the right things. Star and Flag.

I personally am deeply opposed to corporations... like the 18th and 19th century Americans and Europeans I distrust them on a multitude of grounds and feel like they do that their charters should be limited. When they get too big they become dangerously incompetent as recent events have shown and like the founding fathers I beleive that they are a way of avoiding responsiblity for their actions... people will do things for their company that they as individuals would never do.

Let them fail and learn from their corruption is my suggestion.

reply to post by Maxmars


local goverments, police forces, charities and peoples general savings were shoved into icelandic banks as they had pretty big interest rate and seemed pretty secure

the banks went under literally over night, and as the icelandic goverment wouldnt gurantee the british money back we used terrorist laws to sieze icelandic assests in the uk (worth 4 billion) and hold them hostage until we blackmailed iceland to give us our 1 billion back

My question would be if all this money the government is guaranteeing couldn't lead to banks lending out more bad loans?

I also share the concern that once government gets in it won't get out. Seems they might make some money off the interest and that interest could lead to a lot of pork barrel projects.

Originally posted by noobfun
reply to post by Maxmars

 

local goverments, police forces, charities and peoples general savings were shoved into icelandic banks as they had pretty big interest rate and seemed pretty secure

the banks went under literally over night, and as the icelandic goverment wouldnt gurantee the british money back we used terrorist laws to sieze icelandic assests in the uk (worth 4 billion) and hold them hostage until we blackmailed iceland to give us our 1 billion back

I just don't understand why we had to use terrorist laws to do it. Couldn't we just say "we're keeping this until you give us our stuff back" without calling them terrorists?

no becasue the laws we used to do it were part of the anti-terrorist laws package

the idea bieng if we find a big pile of terrorist money bieng shipped around we can freeze that money and the assets of any organisation helping shift it depriving said terrorists of a huge pile of money

we used anti terrorism laws designed to deny terrorists finance to sieze icelands finacial assets there by they are terrorists they have to be for us to us that law

then like i say after declaring them terrorists and hijacking thier money we sent goverment reps over to balckmail iceland into paying us back

www.abovetopsecret.com...
www.abovetopsecret.com...
couple of threads covering it here

reply to post by noobfun


then gave them £100 million (in a loan) in order to pay back what they stole from the british and become operational again.