"Perhaps it's time for acceptance: Yes, the banks have used our weakness against us, and they have won." —This story, ostensibly about the insane proliferation of bank branches around New York City, turns out to be about quite a bit more.
Bloomberg News finally emerged victorious from an absolutely absurd legal battle with, essentially, bank lobbyists, and has published the summary of its review of documents from America' Big Secret Bank Bailout. It reveals just how much money they all borrowed when they were pretty much all about to go out of business. Here's the meat of the matter: "Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year."
Apart from the absolute madness of the big boys like JP Morgan and Bank of [...]
Eliot Spitzer is back on Slate, with a very exciting diatribe about how General Electric made significant gains from the New York Fed's liquidity incentives to the commercial paper market last year, even though the chairman of GE is the only real "people's representative" on the board of the Fed! If only anyone in America knew what any of these words meant, there would be trouble!
"The Federal Housing Administration, which has played a crucial role in stabilizing the housing market, said it ended September with $16.3 billion in projected losses—a possible prelude to a taxpayer bailout…. The FHA does not lend money, but guarantees loans made by banks in exchange for insurance premiums. The agency's role has expanded since the crash of the subprime mortgage market, and it now insures about $1.1 trillion in loans." —Well, well, well. Look, we found the one thing no one wants to privatize! And let's hear it for the free market! "The report blamed the fund’s losses largely on loans in which sellers were allowed to [...]
"The interchange fees that banks now charge stores for debit transactions are economically and functionally identical to the check interchange fees prohibited by the Fed almost a century ago." —Retail banking is a business almost entirely built on fees—and business is real good I mean, reallll good. Even the class action settlements don't offset the profit.
Today's Goldman Sachs report on the U.S. banking industry has an amusing section where they have quite a number of graphs to prove that we're not going to end up like Japan. They write: "The collapse of an enormous asset bubble, a banking and credit crisis, zero interest rates, central bank balance sheet expansion, and massive fiscal stimulus have caused some people to question whether the scenario here could continue to play out like Japan, where loans declined for eight years after the peak and interest rates remained near zero." Loan shrinkage has indeed been trending just like Japan-but the U.S. cut interest rates and addressed a looming crisis much [...]
"Even the supporters of our existing financial structure – men like former Treasury Secretary Henry M. Paulson Jr… the White House economic adviser, Lawrence H. Summers… and JPMorgan Chase's chief executive, Jamie Dimon – concede that big crises occur every five years or so. What hit us in 2008-9 was not a "once per century" event. Rather it was the latest, and scariest, in a series of regular global crises going back at least to the 1970s." -MIT's Simon Johnson takes a stab at explaining why huge financial institutions are self-serving and a menace to those of us who aren't them.
Citigroup CEO Vikram Pandit suddenly resigned this morning, which is a very big shock to the people who follow this kind of thing. But how does this affect you, the Citi consumer account holder? You still have to pay your credit card bills, sorry.
What did you do this weekend? Were you among the couple of thousand people protesting Bank of America in Boston? If so, YOU ARE AWESOME. (Although I have no idea why the Boston Herald referred to the 24 arrested at that protest as a "rogue's gallery." Isn't that… odd?) Bank of America should have people protesting outside every branch, every day. Also apparently there were some other protests, in New York, I guess? It only made page A18 of the Sunday New York Times national edition, where it said that only 500 people were arrested, not 700, so, must not have been that big a deal. (To [...]
I jumped the gun a little bit on August 27, when I very nearly believed for real that Citigroup stock would hit $5. And on April 14, when I hoped it would maybe happen that quarter. BUT GUESS WHAT! After announcing they'd sell off their hedge fund biz, the stock is hopping around at $4.94 to $4.99 this morning. Who's too big to fail? Whoooo is? Who let the banks out! Who? Who who who? AND THEN, at about 10:05 a.m., it hit $5! And then went down to $4.99. And then it hit $5.05, after a spike in volume! WHERE IT IS SORT OF HOLDING [...]
Remember how we talked about commercial debt and default? AKA the "coming crisis? Well here is the slow beginning: The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 percent from 1.6 percent a year earlier, the New York-based real estate research firm said yesterday in a report. The default rate for loans on apartment buildings climbed to 4.4 percent from 1.8 percent.