Hundreds of Billions of Taxpayers’ Dollars Gone in Bailout to No Where

$180 billion of taxpayers’ money later into AIG and regulators are now saying there are huge gaps allowing capital risks to exist and to continue to exist.


Couldn’t Paulson, Bernanke, Cox (former SEC Chairman) and now Geithner have figured that out prior to putting $180 billion into something they clearly do not understand?


I appreciate the historical significance of President Obama, but “this” kind of history is something entirely different.  If President Obama’s administration does not understand then what makes them so adamant about the solutions they are pursuing?


Here’s an excerpt from the White House website:



“…It means preventing the catastrophic failure of financial institutions whose collapse could endanger the entire economy, but only with maximum protections for taxpayers and a clear understanding that government support for any company is an extraordinary action that must come with significant restrictions on the firms that receive support. And it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors, and businesses from the reckless greed and risk-taking that must never endanger our prosperity again…”


It is my personal opinion that although a lot of money has been given to these financial institutions, it has not come close to achieving the badly needed results.  It is clear that our government leaders do not understand the workings of these financial institutions nor how the badly needed capital flows from the US Treasury and Federal Reserve to Main St and non-financial firms through these financial intermediaries.  It is also clear that taxpayer accountability is still weak and there has been no regulatory reform whatsoever.  It’s nice to tar and feather CEO’s before Congress on CSPAN or Rep. (MA) Barney Frank writing threatening letters regarding corporate retreats and jets, but with $180 billion, I rather that Congress dispense with the theater and get the job done right and fast.


How Hard Is It for Geithner & Bernanke to Figure It Out?

It’s great that President Obama has put someone in charge of accountability on how the stimulus money will be spent at the state and local levels.  In addition, President Obama warned Governors and Mayors across the nation that they will be called out if they waste the stimulus money outside of its original intent.

However, who is watching Tim Geithner, US Treasury Secretary, Ben Bernanke, Federal Reserve Chairman and the US banks on TARP money?

Americans owe a total of $17.4 trillion in debt.  $14.8 trillion in mortgages and the rest in consumer credit such as credit cards.


How hard is it to figure this out?  The government and the banks know exactly who owes what and where.

How can the banks blame the American consumers in one hand and be asking for bailout and tell Congress to arrest defaults in the other?  In other words, banks and banking policies have no need to change?

If default rate is at 10% of debt value, that’s only $1.7 trillion that is at risk in principal.  TARP is allocating $0.7 trillion so the difference is only $1.0 trillion.  Why don’t we just put the $1.0 trillion of assets into bankruptcy courts and public auctions?  Also, make it mandatory for all loans to convert all ARMs to Fixed.  Toxic asset gone!  Confidence restored!  Unless there are more US banks are not telling on the commercial side as it relates to businesses and other toxic paper arrangements.  If so, shame on the banks and further prove the current players need to be removed and further regulatory change is necessary.

All those in Washington and media are just making a simple problem more complicated than it needs to be so they can keep the same people in the banking industry in power.
The Federal Reserve have the exact numbers.  Look at this pretty map:

Looking at the Fed’s own sampling data:

the “A” Pool of debt has the following:

ARM mortgages:

60+ days late = 12%

In Foreclosure Proceedings = 10%

Foreclosed = 5%

Fixed mortgages:

60+ days late = 5%

In Foreclosure Proceedings = 4%

Foreclosed = 2%

the “Subprime Pool”:

ARM mortgages:

60+ days late = 22 %

In Foreclosure Proceedings = 16%

Foreclosed = 10%

Fixed mortgages:

60+ days late = 12 %

In Foreclosure Proceedings = 4%

Foreclosed = 2%


Why Treasury Secretary Geithner Is the Most Dangerous Man in America

There are a couple of passages from the article below that terrifies me.  One, taxpayers will be forced along with other private money to buy assets that nobody wants and to hold indefinitely without any indicators that these “sour assets” will ever yield a return on investment.  Second, the idea that banks are unwilling to sell troubled assets at a loss therefore implying that the government should buy these properties at inflated values.  Let’s keep in mind taxpayers have lost $78 billion already in Paulson’s first round of TARP money issued to banks and nothing has been changed with regards to better regulation in the banking, mortgage and lending industry.

No matter how Geithner is going to spin his plan, it reads to me that trillions of dollars of taxpayers’ money is about to go out the door and pay bankers and its shareholders for bad decisions and take these “sour assets” off their hands.  This is worse than any bank bonuses paid in 2008.

Source:  NY Times

February 10, 2009

Geithner Said to Have Prevailed on the Bailout


…It intends to call for the creation of a joint Treasury and Federal Reserve program, at an initial cost of $250 billion to $500 billion, to encourage investors to acquire soured mortgage-related assets from banks…

…There is no market value for most of those troubled assets because they are not trading. Investors want to buy them at the lowest price possible, but banks want to avoid selling them at rock-bottom prices and realizing huge losses.

The impasse is particularly serious for whole mortgages, which are loans that banks have kept on their own books instead of selling them to Wall Street firms, which bundle them into pools and resell them as mortgage-backed securities…

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