Tyler Durden over at Zero Hedge points out the (not so) subtle campaign by Bloomberg to bash the TALF. Heads I win. Tails they lose. Thanks TALF!
Collection of anti-TALF banners after the jump.
Bloomberg’s Vendetta With Geithner/TALF Continues [Zero Hedge]
Tim The Safecracker Geithner
Is anyone else looking forward, really looking forward to The Safecracker’s Beijing trip next week? We certainly are. Reuters says this:
U.S. Treasury Secretary Timothy Geithner has a chance next week to persuade anxious Chinese authorities their investments in huge and growing volumes of U.S. debt securities are safe and sound.
His visit to Beijing must deal with tough economic realities: the United States is issuing new debt in record volumes as it seeks to finance an array of programs to right its economy, while China is growing nervous about whether its U.S. “nest egg” is secure.
Of course, much hinges on the Timster’s visit. A small error could spell big problems. So we’ve put together a little “DOs” and “DON’Ts” list. We know Tim reads us, so we’re confident this will smooth things over and keep things on the up and up.
DO: Make sure your visa is in order before getting on the government jet.
DON’T: Bring sunscreen. The smog takes care of that for you.
DO: Bring Treasury brochures and marketing materials. We are particularly partial to the “Safe Savings For Education” series.
DON’T: Try to avoid the VAT. We know it is tempting. Just trust us. They aren’t as forgiving as confirmation committees in the United States. And, no, Tim, there is no “TurboTax 2009: The Chinese VAT” software add-on.
DO: Bring enough lubricant. Xie Xuren will want some minions to try before he buys.
DON’T: Present a Publisher’s Clearing House sized check for “Six Dollars” marked “Paid In Full” at the bottom. Chinese humor can be difficult to manage and the consequences of failure are extreme.
DO: Beg. It works in the East.
DON’T: Bow when the cameras are rolling. Duh.
DO: Be polite to your secret-police minder.
DON’T: Ask him about the execution/organ harvesting vans unless you want a personal tour.
We are pretty confident that, if he follows our advice, Timmy will manage his way back just fine. (Though sitting on the plane for double digit hours on the way home might be a tad painful).
Geithner to Beijing: Keep buying our debt [Reuters]
I was talking to a lobbyist for Burger King the other day who assured me this entire fast food thing was overblown paranoia, there was absolutely nothing wrong with the environment, and I should consider nonsense like “Super Size Me” slanderous prattle. He then jumped into his Lincoln Navigator (the springs of which creaked loudly while straining to support his imperial asstonage) and proceeded to run over a family of chipmunks while screeching out of the parking lot in front of a blue-white cloud of exhaust. Oh, and The Safecracker had this to say:
U.S. Treasury Secretary Timothy Geithner Wednesday updated lawmakers on the Obama administration’s efforts to rescue financial markets, saying that recently-conducted stress tests have gone a long way to boost confidence in the financial system.
In prepared testimony to the Senate Banking Committee, he said the 19 large, stress-tested banks have raised more than $56 billion in funds to date, including $34 billion common equity capital. (Read the full remarks.)
“Of the $56 billion, about $48 billion has been planned or executed by banks” that government regulators found to have a capital shortfall, Mr. Geithner told the Senate panel, adding that banks without a shortfall have already started signaling their plans to repay government aid.
Geithner Says Stress Tests Helpful [The Wall Street Journal]
The Safecracker is in your little banks, cracking your safes. That is, Tim “The Safecracker” Geithner has apparently greenlighted the stampede of smaller banks that heretofore have unfairly been unable to avail themselves of sufficient government scrutiny and micromanagement. The changes will allow smaller institutions significant access to performance excuses and shareholder sympathy come quarterly report time and provide significant political cover for dismal results and the departure of senior talent that was edging out the door already.
Banks with assets of less than $500 million will be able to apply for capital injections from the Treasury’s financial rescue package, Treasury Secretary Timothy Geithner told a gathering of community bankers on Wednesday. Treasury has roughly $109.6 billion in funds left in its bank bailout package. However, Geithner said he expects to use funds repaid from large investment banks, in part, to pay for the new capital injections for smaller public and private community banks.
Asked about the prospects of TARP involvement, one regional bank CEO quipped “Why should regulatory uncertainty, contempt of Congress and political risk be just for the big guys in New York?”
Geithner: Small banks can apply for TARP funds [Marketwatch]
It looks like the week of bodies floating to the surface and drifting into the harbor. GMAC is only the latest. This is also only the beginning. Should GMAC become the government’s plaything, with the goal of returning lending to the state it was, will we just see an extended bubble? Before long every element of lending will be in centralized hands. America! Fuck yeah!
U.S. Treasury Secretary Timothy Geithner said on Friday that the Obama administration will provide “substantial support” to troubled lender GMAC, a vital provider of financing for the domestic auto industry.
“We’re going to provide substantial support to GMAC,” Geithner said in an interview with Reuters Television. “It’s likely, again, that GMAC will need to take additional capital from the government and we’ll be prepared to provide that.”
The Treasury and U.S. banking regulators said on Thursday that GMAC needs to raise $11.5 billion to fill a capital hole it could face if the economy were to deteriorate further.
Well, he’s not a banker.
“I’m a lawyer and you’re a banker,” Silvers said at one point during a disagreement over the way the public’s exposure to risk was being presented in a chart.
Geithner interrupted: “I’ve always been in public service,” he said. Silvers went on, “But you were a banker.”
“I’ve never been a banker,” Geithner said.
He’s not a lawyer.
I’m not an attorney, Congressman, so it would be hard for me to say.
He’s not a regulator.
Ron Paul: “Well…any way. Any time a regulator comes in and says you’re guilty of something Why doesn’t the government have to prove he’s guilty? Why can’t we assume…”
Geithner: “Is that a criminal violation… or?”
Ron Paul: “Civil or criminal. Why not? I mean that’s a principle that’s been around for more than 1000 years, at least 800 years.”
Geithner: “I’m not a regulator nor a lawyer unfortunately, so I’m not sure I can give you an adequate answer to that, but I’d be happy to think about it a little bit and get back to you.
So what the hell is he?
Geithner: I’ve Never Been a Banker [The Wall Street Journal]
Felix Salmon, citing self-evident, points out that repaying the TARP doesn’t seem to be something banks require permission to do:
Subject to consultation with the appropriate Federal banking agency (as that term is defined in section 3 of the Federal Deposit Insurance Act), if any, the Secretary shall permit a TARP recipient to repay any assistance previously provided under the TARP to such financial institution, without regard to whether the financial institution has replaced such funds from any other source or to any waiting period, and when such assistance is repaid, the Secretary shall liquidate warrants associated with such assistance at the current market price.
Looking to the FDIA we get:
(q) APPROPRIATE FEDERAL BANKING AGENCY.–The term “appropriate Federal banking agency” means–
(1) the Comptroller of the Currency, in the case of any national banking association, or any Federal branch or agency of a foreign bank;
(2) the Board of Governors of the Federal Reserve System, in the case of–
(A) any State member insured bank,
{{2-29-08 p.1071}}
(B) any branch or agency of a foreign bank with respect to any provision of the Federal Reserve Act which is made applicable under the International Banking Act of 1978,
(C) any foreign bank which does not operate an insured branch,
(D) any agency or commercial lending company other than a Federal agency,
(E) supervisory or regulatory proceedings arising from the authority given to the Board of Governors under section 7(c)(1) of the International Banking Act of 1978, including such proceedings under the Financial Institutions Supervisory Act of 1966, and
(F) any bank holding company and any subsidiary of a bank holding company (other than a bank);
(3) the Federal Deposit Insurance Corporation in the case of a State nonmember insured bank, or a foreign bank having an insured branch; and
(4) the Director of the Office of Thrift Supervision in the case of any savings association or any savings and loan holding company.
Under the rule set forth in this subsection, more than one agency may be an appropriate Federal banking agency with respect to any given institution.
So the “only” real impediment for former investment banks become bank holding companies appears to be the “consultation of” (2) the Board of Governors of the Federal Reserve System. I’m not sure that’s going to be a cakewalk, as there aren’t any particular criteria defining what constitutes “consultation.”
This will get more interesting before it gets boring. Could be that The Safecracker overstepped his bounds.
Can Geithner Stop Banks Withdrawing From TARP? [Felix Salmon]
Absolutely nothing at the Treasury is fucked. Understand? Nothing is fucked. And, you know what? Screw you for asking too.
“We have the resources to move forward implementing all aspects of our Financial Stability Plan,” Geithner said in a letter to the panel overseeing the bailout.
In fact, with the implementation of all aspects of the Financial Stability Plan using the resources allocated to move forward that we have, we will be leveraging said resources according to per usual best practices unless unforeseen fluid developments materialize and challenge liquidity. (i.e. Greenspan he’s not).
Treasury doesn’t need more bailout money: Geithner [Reuters]
Shouldn’t these people have their fortunes locked in a poorly administered blind trust before accepting office?
Lawrence Summers’ bullish economic sentiments helped send markets soaring at the end of last week. But even after assuming his role as the president’s top economic adviser in January, Summers seemed far more skeptical that the markets would recover any time soon, as evidenced by the only metric that really counts–his own personal cash. Specifically, in 2008 through early 2009, Summers stashed most of his liquid assets in tax-free municipal bonds–between $5 million and $25 million worth–leaving himself relatively little exposure to the stock market, a Daily Beast analysis of his recently released financial-disclosure report reveals.
Of course, it is entertaining to pit Summers against Geithner, as The Beast happily proceeds to do, but we think we can be forgiven for thinking both of these two should have all their money locked in an emerging markets ETF by a 20something analyst at a foreign firm. That would, after all, be fitting, no?
What Do They Know That We Don’t? [The Daily Beast]
A reader writes in, attaching photographic evidence: “Am I the only one who has noticed that Tim is increasingly bearing the tell-tale flushed cheeks of a witness who has been indulging in a bit of liquid courage before testifying? And he always seems to hit a wall after about 90 to 120 minutes, as if its time for another shot or two. Am I way off here? He never used to look this flushed. Not even when talking about his taxes.”
We remain unconvinced. Maxine Waters puts the color in our cheeks even when we are separated from her by a thousand miles and the thickness of glass on our flat panel.
What say you, Dealbreaker?
It strikes us that the PPIP plan requires a certain faith by the administration. Specifically, that balance sheets are not actually so underwater that even a 30% subsidy is a hollow gesture. What’s more, how sure is the administration that actual price discovery is something that any of these institutions actually want? Clearly, given the seller-financing leverage shell-game baked into the plan, the hope is that bids will buoy up. The problem, however, was perfectly highlighted on today’s FDIC call.
What, a banker effectively asked, if his participation were to “blow a hole in the capital?” Would capital requirements be waived or adjusted to keep the institution from running afoul? (Probably not). The meaning was somewhat veiled, but the broader implication was that actual price discovery would so impact the balance sheet and impact equity capital so negatively as to reveal this particular institution to be liver sausage.
What about bids or asks that resulted in no actual transaction? Would they, one voice trembled, constitute… (gulp, deep breath)… pricing data sufficient to trigger mark-to-market treatment? (Could be!)
As if on cue, another questioner wondered if the FDIC could force participation. (Probably not). You could almost feel the exhale of held breath.
Would participation exempt an institution from special examination? (Laughter). No exhale on this one.
Could it be that the biggest problem confronting the nation isn’t that Goldman Sachs might make money buying assets in the PPIP because Tim “The Safecracker” Geithner is in league with the devil? What if almost no one participated at all? One side of us thinks that we are reading too much into all this. Another thinks that if you can read between the lines you can almost hear the cracks widening.
