The Wall Street Journal is reporting, Banks are trying to sell toxic assets to themselves.
Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program.
Banks want to sell themselves back their toxic assets (for a profit I will assume), via the PPIP program, which is (cough, cough) the gift that keeps on giving already. So, remember, the PPIP will have U.S. taxpayer subsidies available to clear the books from these worthless (i.e. toxic) assets many banks currently hold.
Hopefully the answer will be a resounding "NO". The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense.
Baseline Scenario repeats the details of the PPIP program, goes through examples, using the rules of PPIP, and gives us this conclusion:
Allowing banks to buy their own assets under the PPIP is a terrible idea. In short, it allows a bank to sell half of its toxic loans to Treasury – at a price set by the bank
I don't think I need a calculator to see how this idea adds up.
Read the entire baseline scenario post, it's the most detailed analysis to clearly spell out these 6 letters, RIP OFF.
FDIC's Bair responds:
Bair Says Banks Can't Buy Own Assets in PPIP Auction
Does Mr. Geithner agree with that statement?
RebelCapitalist.com - Financial Information for the Rest of Us.
But could financial conglomerates buy other
financial conglomerates "toxic assets"? It could be a good deal for JP Morgan Chase - downside protected with taxpayer money - to buy "toxic assets" of Wells Fargo.
What does Bair say to that?
RebelCapitalist.com - Financial Information for the Rest of Us.
I thought they were already doing it
After all, Citibank sold my mortgage to Chase, and the FDIC sold my bank (WAMU) to Chase.
Executive compensation is inversely proportional to morality and ethics.
Maximum jobs, not maximum profits.
And below an exerpt from a featured post by Rolfe Winkler of OptionARMageddon now displayed at naked capitalism:
"During a press conference today, FDIC Chairwoman Sheila Bair was asked about the Journal's report that banks are lobbying to buy assets under Geithner's toxic asset plan, the PPIP.
"She says banks will not be able to bid on their own assets, but clearly leaves open the possibility that they'd be allowed to buy the assets of other banks.
"This is highly problematic. If banks can act as buyers in any capacity, what's to prevent collusion? With just a sliver of equity and a pile of non-recourse federal loans, Citigroup could fund a special purpose vehicle to overpay for BofA's bad assets. In exchange BofA would overpay for Citi's assets. The beauty of using non-recourse debt is that you can walk away from it. The lender, in this case the taxpayer, is stuck eating the loss on the bombed-out asset."
Here any actual thievery would be so blatant that even a cadaver would know that someone had their hand in his pocket. And who could blame the banksters if this little number were acted upon? They'd just be filth doing what filth does: Acting filthy. But someone on the inside, Shiela Bair, is about to unlock the door and disarm the alarm for them. Bair, it is said, just won't rule out zombies buying the drek of other zombies. And this woman the one person in our lobby accomodating financial leadership that one reputedly could look to for a moral compass as the odor of the accumulating sewerage becomes paralyzing? Its like the baby killing Michelle Obama being seen as our First Mother. If this one goes down - and it likely will - all that will remain is Victory Gin and tracing out 2+2=5.
Welcome to EP Lavrenti Beria
Thanks for posting this update. I agree, they will act in concert to rig the game.
America Must Pull Out of NAFTA and the WTO to SURVIVE.
America Must Pull Out of NAFTA and the WTO to SURVIVE..
It seems none of President Obama's CFR Globalist appointments understands the real problem.
Yes, most of the American Banks are collapsing all around us because these Banks hold Mortgages on these Houses where the Values have fallen far below the amount of the Bank Mortgage.
Ouch.. That means most of these Banks are maybe holding $100K mortgages on millions of houses where the house values have fallen to maybe $50k.
President Obama and all his Globalist men are running around in circles trying to save all these Banks from defaulting because if these Banks are allowed to default the Federal Government will totally collapse and absolutely falls off into the abyss.
This is a big problem of course. But, this is merely a symptom of the real problem that caused this Humongous Financial Problem.
So, then what was the REAL THING that caused this Financial Problem?
This all started back in 1992 and 1993 when America joined NAFTA and the WTO.
That was the beginning of the end for America.
The Globalist had finally bought off most of our American politicians and the swishing sound you heard was all the highest paying American jobs was moved to Mexico and then later when China joined the WTO, they started to moving all the highest paying jobs off to China to hire slave Labor at $2/day.
Now you ask. How would NAFTA and the WTO cause so much Financial Problems?
Please tell me what happens when you have a $100k mortgage on a house and your job gets sent off to China.
You are forced to take a job flipping Hamburgers at McDonalds at minimal wages if you’re lucky.
You have taken a cut in pay of maybe $15/hour. But, you’re still on the hook to pay off that $100k house mortgage payment. So, you start using your Credit Card and before long you have maxed out your Credit Card.
Now what are your options?
You keep falling further and further behind then at some point you are forced to default on your house payment and the house goes back to the Bank to satisfy the Bank Mortgage.
Now, since this exact same thing is happening to millions of American Workers all across America from all these high paying jobs being moved off shore to Mexico and China.
The Banks are overwhelmed when all these house owners go into default on their mortgages, then all the Banks start to losing humongous amounts of money. Then the Federal Reserve gets involved trying to save all these Banks from default.
The next thing happens is that all these Real Estate Properties start to come on the market and the Property Values all across America start to falling big time.
Now, that creates another problem. What should a home owner do if he owes $100k mortgage on a house and the value of the house falls to $50k?
Of course if you’re laid-off because your Job was moved to China, you’re forced to default on the house mortgage. Default is totally understandable.
What about the guy who has a good job and can afford to make his monthly house payments?
Why should he agree to make payments on $100k mortgage, when the house is only worth $50k? So, he walks away from the huge $100k mortgage and lets the Bank eat it.
Some of these houses in Florida, two years ago was worth $150K and now can be purchased for $60K from the local Bank.
Now, let’s go back to the real problem.
If the Real Problem is never addressed and all those jobs that was sent off shore are not brought back to American, then all these Trillion Dollar Bailouts will just cause a false temporarily product demand for a short period of time.
Then America will be right back in the soup again.
Except this time the problem will be exponentially worse because we now owe all those Trillions of Dollars in Bailout loans from China plus the Interest Payments too.
You really do not have to worry because if all them jobs are not brought back to America from China soon. America will go into a total collapses.
Then at some point the American People will finally figure this out and get really p-i-s-s-e-d off at the Federal Government. I want a remind you they are all armed to the teeth and I promise you they will not give up their Personal rights and Freedom very easily.
So, that’s exactly where we are right now and where we are going to stay until all those highly intelligent Harvard graduates give up on this Globalize Free Trade and that great ONE WORLD ORDER and bring back all of them high paying jobs from Mexico and China.
What really makes all of this so sad is that all of Trillions Dollar Bailout is totally unnecessary. If American would pull out of NAFTA and the WTO right now everything would start to correct all by it’s self automatically.
Let me finalize my argument by saying.
World Globalization will never work like they planned because if all of the higher paying Jobs are moved off shore to China where the worker is paid slave labor of $2/day.
The Middle Class Workers of all the Industrialized Countries will be living on the street and the workers in China will not make enough money to purchase the vary products they produce.
Now, Please tell me who in the hell is left to purchase all those products being produced by $2/day slave labor in China?
U.S. International Trade in Goods and Services June 10, 2009
U.S. International Trade in Goods and Services Highlights
June 10, 2009
Goods and Services Deficit Increases in April 2009
The Nation's international deficit in goods and services increased to $29.2 billion in April from $28.5 billion (revised) in March, as exports decreased more than imports.
Goods and Services
• Exports decreased to $121.1 billion in April from $123.9 billion in March. Goods were $80.0 billion in April, down from $82.6 billion in March, and services were $41.1 billion in April, down from $41.4 billion in March.
• Imports decreased to $150.3 billion in April from $152.5 billion in March. Goods were $120.1 billion in April, down from $121.8 billion in March, and services were $30.2 billion in April, down from $30.7 billion in March.
• For goods, the deficit was $40.1 billion in April, up from $39.2 billion in March. For services, the surplus was $10.9 billion in April, up from $10.7 billion in March.
Let me explain what this Merchandise Trade Deficit means to AMERICANS.
First I must tell you that International Trade is a ZERO-SUM game meaning when any country gains one job another country will lose one job.
If your Country has an International Trade Deficit then your country is losing JOBS to the rest of the world.
If your Country has an International Trade Surplus then your country is gaining JOBS from the rest of the world.
America has the largest International Trade Deficit, greater than any other country in the entire world. In fact America has a Trade Deficit almost as large as the all the other countries of the world combined.
Based on the April 2009 Trade of: $29.2 times 12 = $350.4 Billion Dollars worth of American Jobs that will be sent off shore to other countries during the year of 2009.
Right now Americans are being Laid-Off, driven into bankruptcy and forced foreclosure of his home.
Why is Federal Government sending $350.4 Billion Dollars worth of Jobs off Shore?
This is total Insanity by our Federal Government.
I worked as Industrial Engineer for (30) years for Rockwell International one of largest Companies in America. I worked on production problems like this all my life, so trust me I know what I am talking about when it comes to Jobs.
If you were to ask me how to create enough American JOBS to get American out of this Depression as fast as possible there is only one answer:
I would tell you if I was President of America I would give the required (60) days notice to pull out of NAFTA and the WTO immediately.
Then watch all of them International Companies bust their butts to bring back all of them American JOBS that was moved off shore in the last 20 years.
Remember America still has the Largest Product Consumer Market base in the entire world.
Based on my calculations all I am saying is America is getting a royal screwing on International Trade Agreements.
So, I just want trade places with the rest of the world. Let them produce all of the American Exports and I will produce all of American Imports, Something we Americans have total control over.
Now, of course there will still be some Exports that other countries must buy from America, so the Jobs created will be ever greater than my calculations project.
America would pull out of this DEPRESSION almost over night. I am sure some other countries of the world would not like this very much, but they know the Presidents first job must be to look out for the American workers interest.
There President really has no other choice here because if WE did not pull out of NAFTA and the WTO soon, America will go into a total financial collapse from losing jobs to the rest of the world. That is exactly what is happening as I speak and in the end there can be no other choice.
America would start creating more jobs over night than we Americans can fill. That is not a maybe, that is an Absolute Promise.
Call your Congress-person in Washington D.C. and demand that America Pull out of NAFTA and the WTO immediately.