In New York this week, John Heileman repeats reports that Tim Geithner wants to resign as Treasury Secretary this year after the debt ceiling talks are resolved, and kind of surprisingly gives the nod to Facebook COO Sheryl Sandberg as the most likely successor, adding to talk of her shortlisting from earlier this month. His logic is here, and includes Sandberg’s growing national reputation (especially after this week’s New Yorker profile), her history as chief of staff to Larry Summers at Treasury, and her appeal to the business community without any Wall Street/GE-doesn’t-pay-taxes baggage for the, um, anti-business community.
It’s hard to argue with Sandberg’s timing so far – she joined Google pre-IPO, cashed out after their 2004 IPO, and jumped to Facebook in 2008. So the next sensible new-media thingy would seem to be Twitter, and the Obama administration has that covered as well. Continue reading »
Blanche Lincoln’s famed derivatives legislation, which would basically prevent any big bank from ever trading CDS again, has already been chastised by Barney Frank. Now, a senior Treasury official has essentially delivered another blow to the Lincoln legislation.
In a briefing for reporters today, Assistant Treasury Secretary Michael Barr said the derivatives rules were not part of the administration’s four “core objectives” for financial reform. Translation: The Lincoln legislation can die a slow death for all we care. Continue reading »
The Treasury Department said today it has lowered the projected cost of the Troubled Asset Relief Program by $11.4 billion to $105.4 billion. We’re still in the hole on the auto companies and AIG – and there’s that bailout of Fannie and Freddie – but we’ll take what we can get. Continue reading »
The United States may be hurtling headlong into a debt disaster, but that didn’t seem to bother creditors today.
Sure, the national debt now exceeds $12 trillion, and simply servicing that mountain of IOUs is going to cost almost $1 trillion a year in a decade. Still, bidders today drove down the yield on two-year Treasury notes to an all-time low, as though the U.S. isn’t facing a fiscal reckoning of seriously unpleasant proportions.
Continue reading »
The Acting Assistant Secretary for Financial Markets, Karthik Ramanathan, gave a bit of a pep talk yesterday regarding US debt issuance for 2009 and 2010. People should take comfort knowing that the US has funded nearly 80% of its total “expected borrowing needs” of $2 trillion to fund the fiscal deficit for this year and is “well situated” on its funding needs for next year. However, left out of this feel good speech was any guidance on the administration’s demand forecast for US debt that falls into the “unexpected borrowing needs category” on the off chance the government’s macroeconomic assumptions are a tad too optimistic.
US Treasury: Funding Needs Large But “Manageable” [Dow Jones via Nasdaq]
It is almost a foregone conclusion that the CMBS market is headed for some real pain over the next couple of years. The problem is so glaring that even the Treasury is aware of it and looking for ways to avoid a complete meltdown. A major issue confronting the market is the reluctance of CMBS servicers to even talk to investors or property owners before the underlying loans become delinquent due to tax considerations.
When CMBS offerings are created, the underlying mortgages are legally held by tax-free trusts. The trusts can be forced to pay taxes if the underlying loans are modified before they become delinquent, according to current CMBS rules.
The solution seems pretty clear- allow for loan modification while avoiding any negative tax consequences. But time is ticking and the Treasury’s record of avoiding major market meltdowns is disconcerting at best. Your move Timmy.
Relief for Commercial Real-Estate Debt? It Seems Possible [WSJ]
Jeb Mason, the Treasury’s liaison to businesses. [NYT]
Earlier: Treasury Porn
