Yep, They Did
“Punked” is a contemporary phrase meaning that someone took advantage of you.
Growing up, I can remember using far more colorful language to describe “punked” victims, but that was kid trash talk.
However, to me “punked” certainly describes what the large commercial banks did to the Obama Administration once the financial institutions loaded up on their federal TARP slice.
As documented by recent Treasury Department reports, the banks neither lent it to small businesses, mortgage seekers, or very many others. In the main, the large banks have arbitraged the funds, invested it overnight at the Fed, making 25 basis points, or in Treasury securities which are as safe as the US government.
Yes, some banks somewhere have made loans but not enough to make an economic difference.
The big guys have hoarded their money and pleaded there is a lot of market risk, still. But, that hording stifled any hope of a US economic resurgence.
Now, the Federal Reserve is going to start generating even more bank working capital when it begins a major securities buy from those banks. The only question according to the Fed Chairman is “how much should the Fed buy?”
The Fed purchases will increase the money supply (just as the reverse does the opposite), lowering already low rates and offering banks the chance to help stimulate the economy by lending that money to commercial and personal borrowers.
But this time, the Fed and the nation needs those banks to cooperate, especially since they didn’t last time.
Where are the Fed’s and Obama’s in-house ass kickers to urgently bring home this point to the bankers? Can we get Rahm back for a few weeks after he runs for Mayor?
Can We Bank on the Big Bankers?
If the Fed gives “Big Bank America” even more money, after they did “bupkis” (nothing) with TARP’s first $500 or $600 Billion, who is going to insure that the second round is any more effective than the first.
Current robust bank earnings are not coming from active bank lending, which is a bank’s traditional role.
Yes, the Fed is “independent” and charts its own course but I hope people aren’t naïve enough to think that Geithner and Barr don’t speak daily with Bernanke and Yellen. But, the White House doesn’t have to keep hands off.
Even though “punked” may be a new term for standard behavior, “Fool me once, shame on you. Fool me twice, shame on Me,” still applies. President Obama and the Federal Reserve should not let themselves be duped a second time.
If Bernanke and Geithner are not up to the job, maybe being “ bad cop” will fall to Congress, Barney Frank (D-Mass), Tim Johnson (D-SD), Chuck Schumer (D-NY), Alabama Republican Senator Dick Shelby (Ha!) and others,
Washington used to be a place where you find some “cajones.”
Will our elected and appointed officials find theirs in this situation?
Hooray for the Chileans!!!
With no connection to Chile other than humanity, I got teary eyed seeing those miners brought out safely from their underground trap. I was so happy for them and proud of how that country’s officials responded to that horrible accident and the Chilean rescue efforts of their brave miners.
I am sure that we will hear a dozen stories that might tarnish some of the individuals and events, but for now, we should applaud the efforts of everyone involved and join the Chileans in their national pride and joy at their returning family members and countrymen.
(Was I the only one who noticed that someone in that crowd surrounding the safety capsule carried a sign urging the House not to destroy the GSEs? Kid must have a relative working at Freddie Mac.)
Who’s in Charge or Who Wants to be in Charge??
Let me return to an earlier theme, this time with the subject being straightening out the nation’s defaulted mortgage mess.
The latest debacle has been horribly mismanaged both by the federal government and the lenders that made, bought, or wound up owning all of those bad loans.
Let me make clear that this next thought is based on nothing but “gut.”
But, I believe that most lenders slow walked the remediation process because they were hoping that the federal government will come in and offer them far more for their dead mortgages than the banks could generate through normal market procedures. Yes, now there are important “new issues” about who owns what and what documents are legal or not, further clouding future as well as past mortgage settlements.
But that—in my opinion—is not the major bottleneck. Once again, it’s avarice on the part of those slow to fix their own problems and slow to fix the systemic problem, with equal blame for the federal government—largely the Obama Administration—for putting forward some soggy “fix it” plans with few teeth to bite mortgage restructuring procrastinators.
Voters, upset over this development, should remember which Senators and Members opposed “cram down legislation,” which would have required some banks to reduce the debt they were owed and allow borrowers to pay back less. The bill passed the House but wilted in the Senate with opposition from the American Bankers Association and it functional subsidiary The Mortgage Bankers Association.
Banks balked and the associations claimed it would drive up mortgage rates with no real evidence of that. Their true position was the legislation might cost them some revenue. But that’s what is happening today, they are losing money on failed assets which they are paying to “carry” and now face more losses as the bank regulators (just like the stock market) see possible greater industry red ink.
But, we can fix this mess, if we get the cooperation of all those with “skin in the game” plus have a singularly leader.
Having said that the question I have for whatever becomes the latest federal amelioration plan is, “Who will lead it; who is in charge? Who will make it work?”
Really, who is in charge? Unlike earlier unsuccessful efforts, on whose desk does the buck stop and does he or she have broad muscle to succeed?
Ideally, it would be a tough Treasury Secretary telling the banks what they must do—under penalty of huge Treasury anger—to get their financial butts in gear.
Or, it would be a fearsome Fed Chairman telling the banks about how he will implement their “worst nightmare,” if they fail to carry out exactly his orders on fixing foreclosure problems.
Maybe it would be President Obama, with those two officials at his side—indicating their total support--saying that the Treasury and Fed will bring down hellfire on any business or industry that doesn’t follow exactly his Administration’s or the Fed’s regulatory instructions to fix the greatest part of the mortgage foreclosure mess.
Nobody else matters in Washington or else they easily can be ignored, so forget like the Secretary of HUD or head of the VA mortgage operations, Fannie or Freddie’s regulatory head, or the Consumer Protection Agency’s Elizabeth Warren (although her work here, loudly backed by the WH, Fed and Treasury, might be very refreshing). And even Attorney General Eric Holder has too many other things on his plate and using the courts is too slow.
A fire breathing, “take no prisoners” top official from the Treasury or the Fed might do, if there was no mistake that he/she was backed up by the agency heads and the President.
Tim Geithner could make himself a folk hero if he took on this important mission and worked it daily, but—if done properly—he would have to anger the big financial institutions! (Oh, darn, haff kaff, harrumph, I shouldn’t want to do that!)