bail out

No PPIP for Pimco

Considering Pimco was an originator of the idea of PPIP and it was well documented the massive fees PPIP would generate, the news Pimco pulled out of PPIP is surprising.

The U.S. plan to help buy as much as $40 billion in assets from banks got started almost four months after it was proposed and without Pacific Investment Management Co., the world’s biggest bond manager and an early supporter.

The U.S. Treasury Department picked nine money managers yesterday for the Public-Private Investment Program, or PPIP, including BlackRock Inc. and Invesco Ltd. Pimco, which in March announced plans to apply, said it withdrew its application in June because of “uncertainties” about the plan’s design.

GM gets more money to declare bankruptcy and offshore outsource the jobs?

GM is getting yet another $4 billion of U.S. taxpayer money. This makes their bail out loan total $19.4 billion. This figure does not include the Canadian taxpayer money also given to GM.

Yet GM is heading towards bankruptcy at the end of the month. Supposedly the bankruptcy is a show down with GM bondholders and investors, but why pump more U.S. taxpayer money into a company that is planning to offshore outsource the jobs?

GM has already stated their intent to offshore outsource 98% of production, as part their (government approved) restructuring plans.

Do you want your taxpayer dollars going to a company who is busy squeezing workers and planning to offshore outsource their jobs?

Stress Test - What a Surprise, all the banks pass....yet need another round of bail out money

You're gonna love this one, according to the New York Times as the Treasury laboriously pours over banks books, all of the banks are passing their stress tests.

They are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.

That is the good news. The bad news is that many of the largest American lenders, despite all those bailouts, probably need to be bailed out again, either by private investors or, more likely, the federal government. After receiving many millions, and in some cases, many billions of taxpayer dollars, banks still need more capital, these officials say.

No Bail Out for GM & Chrysler - Bail Out Denied - Reporting Possible Death Sentence in 60 Days

I had to do a double take when I read this, amazed considering there are about 160,000 jobs directly with GM alone in the United States, but now multiple major press sites are reporting Obama Denies Bail Out for GM & Chrysler

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.

The Obama administration, however, has decided not to require the automakers to immediately repay government loan money they previously received, since that would force both companies into Chapter 11 bankruptcy.

AIG Used Fear to Get Latest Bail out

Bloomberg has a most interesting story on how AIG got the latest bail out:

American International Group Inc. appealed for its fourth U.S. rescue by telling regulators the company’s collapse could cripple money-market funds, force European banks to raise capital, cause competing life insurers to fail and wipe out the taxpayers’ stake in the firm.

AIG needed immediate help from the Federal Reserve and Treasury to prevent a “catastrophic” collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc., according to a 21-page draft AIG presentation dated Feb. 26, labeled as “strictly confidential” and circulated among federal and state regulators.

GM, Chrysler Say Bankruptcy Close without More Government Aid

Both GM and Chrysler say bankruptcy imminent without more aid.

U.S. auto sales continued their free fall into February, as big rebates and low-interest financing failed to lure people back into car dealerships and showrooms.

Today General Motors reported that its sales slid 53 percent in February compared with the same month a year ago, and Chrysler sales dropped 44 percent.

Ford's sales tumbled 48 percent, despite distinguishing itself from cross-town rivals in recent months by keeping the company afloat without federal aid.

"The economic and competitive environment remains challenging," said Ken Czubay, Ford vice president for sales and marketing, in a statement. "Ironically, these times provide the best opportunity to distance Ford from the competition."

Throwing Good Money After Bad - AIG gets another $30 billion

AIG may get another $30 Billion.

AIG has already received $150 billion to back $300 billion in derivatives contracts.

The Wall Street Journal gives a little more detail:

The new funding is intended to support AIG as it absorbs $60 billion in quarterly losses and operational and competitive upheaval. Under the plan, the insurer will repay much of the $40 billion it owes the Federal Reserve loan with equity stakes in two AIG units overseas -- Asia-based American International Assurance Co. and American Life Insurance Co, which operates in 50 countries.

Repayment was originally supposed to be in cash with interest. In addition, AIG will securitize $5-$10 billion in debt, backed with life insurance assets, to further reduce its debt burden.

$275 Billion on Foreclosures

The Obama administration today released a plan to stem foreclosures.


U.S. President Barack Obama pledged $275 billion to a program that includes cutting mortgage payments for as many as 9 million struggling homeowners and expanding the role of Fannie Mae and Freddie Mac in curbing foreclosures.

The plan will help as many as 5 million homeowners refinance loans owned or guaranteed by Fannie and Freddie, the president said. Treasury will buy as much as $200 billion of preferred stock in the two mortgage companies, twice as much as previously promised, he said.

CBS Market Watch:

TARP Won't Work - Bank of America

Well, gee wiz Bank of America, could you have said this before you accepted $35 billion dollars of U.S. taxpayer money.

Bloomberg reports:

The U.S. Treasury’s bank-rescue plan won’t repair the financial system or revive credit markets, Bank of America Corp. strategist Richard Bernstein said as he recommended avoiding the industry’s shares

On the other hand, it appears Bank of America is pushing for more acquisitions...

ya know if it's too big to fail maybe it's a grand idea to not make it bigger.

Geithner's New TARP Plan - BARF

The Treasury Secretary has issued a new plan (small pdf) for TARP management.

Yglesias believes there is a window in this fact sheet for nationalization of the banks.

What is most amusing is Krugman is calling the plan a Rorschach test.

I heartily agree and wonder if a public relations, marketing master wrote up this plan for one can project what one wants to believe within the text.

But I have a funny feeling investors aren't too hip to projecting their beliefs into a nebulous bullet point page.