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Mega-Banks Which Received Bailouts Slashed Lending More, Gave Higher Bonuses, and Reduced Costs Less Than Banks Which Didn't Get Bailed Out
USA Today points out:
Banks
that received federal assistance during the financial crisis reduced
lending more aggressively and gave bigger pay raises to employees than
institutions that didn't get aid, a USA TODAY/American University
review found.
***
• Lending fell. The
amount of loans outstanding to businesses and individuals fell 9.1% for
the 12 months ending Sept. 30, 2009, at banks that participated in TARP
compared with a 6.2% drop at banks that didn't.
• Employee pay rose. Average pay at banks getting aid rose 9.4% in the program's first year. By contrast, non-TARP banks increased salaries 1.8%.
• Cost-cutting limited. Banks
in TARP cut costs less than those outside the program. Government-aided
banks increased branches by 2.7% while non-TARP banks cut branches by
1.2%.
This helps to confirm what I've been saying for many months: breaking up the too mega-banks will actually increase lending to small businesses and individuals.
Breaking up the giant banks is also required before derivatives can be made transparent. See this, this and this, and to stop the big banks' domination of American politics.
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moved
Why is it illegal to sell something dangerous to eat, no matter if you claim you didn't know what it was, and perhaps especially if you claim that, but perfectly legal to sell financial instruments withouth understanding them? Toys too for that matter, or medicine, or beauty products, or machinery...you can't say "whoops that toy helicopter really can take someone's head off and we just didn't know. Sorry."
Subsidize failure, you just get more of it. They'll be back for more, it is now a business model.
** Edited for Content **
Welcome to the future.
Democrats, Republicans, Bush people, Obama people ... all the same.
The US Government is owned by the banks and multinational corporations. They've been instructed to destroy private enterprise and to tax families into oblivion. They want the big companies controlled by Washington to control 100% of the economy. That's why big companies don't have to pay taxes while small entrepreneurial firms struggle to comply with onerous regulations designed to squash innovation. The central-planning power grab is breath-taking.
If there's a silver lining to economic collapse, it will be the eradication of the criminal activity that has taken root in Washington and New York and Brussels and London over the last 50 years.
30 years of bankruptcies, liquidations, foreclosures, lawsuits, special prosecutors ... This ends in military court where senior government officials and financial industry professionals and regulators are tried for TREASON.
Irreductibility here. Bush people, Obama people are only the same to a third party. They can never be the same to themselves.
Going to tell that the candidate of the republican/democrat political sides.
His perspective is simple: if both sides are the same, no matter what, he will end as the big chief. Of course, that is not true. The vietnam hero (cant remember his name right now) is not the president.
It is not the same for people close to this war hero as they would enjoy side effects of power exercize.
What people say is that no matter who is elected, they finish in the losers' side. They can vote for this or that candidate, even when it comes on top, they lose.
In other words, they have lost the capability of being winners.
The next step is assessment of non participation. Non participation matters only when people have still the option of winning in their hand. When they no longer have, denouncing the game is too late.
Just like a guy who joins a trashing your opponent game. At first, this guy thinks of himself as a winner, a guy who will deliver more beatings than he will receive. Does not unfold as expected and pretty soon, he receives beatings over beatings. Denouncing the unfairness of the game rules is out of date at this point.
Don't worry if you can't remember the guy's name, he has forgotten everything else about himself. Years of enemy imprisonment and torture couldn't break his will but back home, partisan politics finally accomplished that. Sorry if this seems off topic but it speaks to the effectiveness with which the system protects itself from any potentially serious threat.
FYI all on taxes going up in 2011...http://www.cnbc.com/id/36736921
We're number one!
Just learned that my home state of Illinois lead the nation with 7 bank closings on friday. We're also first in the number of former governors/secs of state who end their careers in prison. It was nip and tuck with New Jersey for years, but we've pulled ahead, and Blago's a slam dunk. Take that Joisy! Stick wit yo kawfee! Can't hang wit da boyz.
In related happy news, my home town is almost certain to go belly up. A town of fewer than 20,000 souls has annexed surrounding farmland in a desparate attempt to make ends meet. It now occupies 125 square miles, roughly the area of Detroit, so I guess they'll be getting an NFL franchise any day now. On the other hand, if the team plays like the Lions, skip it.
Oh yes, there are plenty of green shoots. It's dandelion season.
From Propublica
Michael Greenberger had to have felt the slightest tinge of vindication last weekend, when former President Bill Clinton admitted he’d been wrong about derivatives when he was in office.
Greenberger, then a regulator at the Commodity Futures Trading Commission, worked under the leadership of CFTC Chairman Brooksley Born [1], who’s now on the Financial Crisis Inquiry Commission. Together they pressed for regulation of derivatives, and faced some pretty stiff resistance.
“We were advocating regulation of these products back then, and Summers, Rubin, and Greenspan all opposed it,” Greenberger told me.
Instead, Clinton went with the advice of Treasury Secretaries Robert Rubin and Larry Summers, and in retrospect, he told ABC’s “This Week,” felt the decision was a mistake [2].
The Consensus on Big Banks Starts To Move
Posted: 23 Apr 2010 03:43 AM PDT
By Simon Johnson, co-author of 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown
The ideology of unfettered finance is crumbling. Whatever you think of the merits of the Goldman case from a legal or short-term perspective, the SEC’s allegation – and Goldman’s response – have further moved the mainstream consensus away from “finance is generally good” to “big banks are frequently scary.”
Senator Ted Kaufman should get a great deal of credit for his well timed charge on this issue – as I argue in BusinessWeek/Bloomberg. But Lloyd Blankfein also gets an inadvertent assist, quoted in the Financial Times yesterday as saying that the SEC case against Goldman would “hurt America.”
Mr. Blankfein is starting to sound – and act – a lot like Nicolas Biddle, head of the Second Bank of the United States (by far the most powerful commercial bank of the day), during his confrontation with President Andrew Jackson in the early 1830s.
When Jackson first challenged the Second Bank, many people thought his concerns about the bank’s powers were excessive. But then Biddle started to fight back, spending money freely to buy congressional affection (and even leading orators) and attempting to contract credit in order to demonstrate that Jackson was hurting America.
At that point, people understood that Jackson was essentially right. The Second Bank had become so powerful that it could challenge elected executive authority and, if Biddle won, the consequences for democracy would be dire.
We are now in the phase when the most dangerous of our banks – and the people behind them – will go to any lengths to distort the realities and completely mislead people. The only way to deal with this is to do what Andrew Jackson would have done – attack, in no uncertain terms, misrepresentation wherever we find it.
Some friends of ours produced an ad yesterday, which is now on YouTube, which cuts direct to the heart of the matter. Review it and, if you agree with the message, send it to others. Tell them to pass it on – and urge them also to understand why they should call their Senators and the Senate Democratic leadership and insist – firmly but politely – that the Brown-Kaufman SAFE banking act should receive an up-or-down vote on the Senate floor (my post on that issue, from yesterday, has been updated with a link to make these calls easier for everyone).
We should now view Goldman Sachs and our other five megabanks in the same terms that Andrew Jackson’s secretary used for the Second Bank of the United States, “Independently of its misdeeds, the mere power, – the bare existence of such a power – is a thing irreconcilable with the nature and spirit of our institutions” (see p.19 of 13 Bankers).
Couldn't agree more.
Just look at how relatively smoothly the S&L crisis went late 80's/early 90's. Government stepped in, set up the Resolution Trust Co., bad banks fell into it's arms and were dismantled, economy eventually recovered and the RT Co. actually made a small profit.
o0o0o looky looky looky, another Goldman scheme, get in between the different bits of a troubled bank (43% UK Government owned) and broke both sides with each other and call it something else! heh, nice work if you can get it!
http://www.dailymail.co.uk/news/article-1268378/Goldman-Sachs-conflict-inflated-Lloyds-bail-costs.html
Now you know who's Daddy.
Tyler... please post this. How the hell does JOE BIDEN know this or predict it? There is no real job growth! What world is this? http://www.thepittsburghchannel.com/politics/23242815/detail.html
either Joe's settin up the Democrats for an epic fail of disappointment come election season or they got somethin up their sleeve. if it's option #2, go back and read the comments above about inflation. either way, we are about to leave the crossroads in one direction or the other.
Nice link WW:
Vice President Joe Biden Visits Pittsburgh, Predicts Job Growth"...sometime in the next couple of months, we're going to be creating between 250,000 jobs a month and 500,000 jobs a month," Biden said..."
Joe means he can guarantee the BLS will create 250k to 500k phony, nonexistent jobs via the Birth/Death model in the next couple of months...
I would have to agree with Joe on that one...
Wow - half a million new census workers every month! That should get the job done quick.
Oh, drat! Ole Joe went off the prompter again:
That "planning" would be central planning a la old Russia and the 5-year plans? The U. S. is now on the 5-month plan with BLS cooked numbers.
See, proof that Larry ("the Hut") Summers has his snarf together when he says that there's No F-ing Reason to break up the TBTF's as there'll never ever be an Incidence of the Law of Unintended Consequences, viz; if youse gots a safety net, youse is more ricky-ticky prone to more risky behavior. Plus ya don't get a corner office on West Street till youse done the Mercantilist's Bidding.
And these people wonder why there's folks identifying with whatever that T-Party might be?
"This helps to confirm what I've been saying for many months: breaking up the too mega-banks will actually increase lending to small businesses and individuals."
This is what I have been saying too. Guess what else I have been saying? If this happens it triggers hyperinflation.
+1
The main thing keeping Fed policy from destroying the currency domestically is that the insane amounts of liquidity aren't flowing down to Main Street.
Partly this is because consumers and businesses are trying to deleverage; partly this is because securitization outside agency RMBS has been all but dead, so originators have to think very carefully about the loans they make; they don't know when they'll be able to recycle the cash, and how long they'll have to hold the credit exposure on their books.
The market meltup and the artificially low dollar yield is a side-effect of record amounts of investment capital chasing relatively few real assets. With consumers gaining confidence and private label securitization making a tentative comeback, the Fed is going to have to withdraw fast to prevent some bad outcomes....
"The market meltup and the artificially low dollar yield is a side-effect of record amounts of investment capital chasing relatively few real assets" = inflation = bubble = enourmous pop = collapse = omgwtf
Whocouldanode?
tries to remember when liquidity = interest repaid by borrowers and nothing more :)
+1 right back atcha.
Look at that. We actually agree on something!
The only thing stopping hyper-inflation is that the velocity of money plummeted due to 1) the collapse in lending, or 2) the desire to hold cash (if you are Austrian). If lending increases, unless Bernanke rapidly reduces the volume of money (unlikely at best), inflation will soar (not unlike Superman, since I have to insert the obligatory reference to a cartoon 8^) ).
I bet we agree on more than just this. I think it was that one thing that was obvious for you. And that was fine.
Maybe you do not like gold? That would be another. But if we agree on this than we most likely agree on a lot. The last thing you said was, "I am interested in your other theories". That was cool.
Just look at Goldman Sachs and the rest, those massive bonuses and still saying that to much regulation will force banks overseas and/or the best and brightest will not work for us etc. etc.. I say so what, if they where the best and brightest and brought into being the Greatest Depression in recorded history, then we don't want them. There will always be others that will take the place of the dynasty banks that are still around.
the sherman anti-trust legislation must be exercised judiciously but liberally - every bank which received tax payer funding in any form must be driven out of business or broken up into safer and more easily managed companies....
as their ceos have repeatedly admitted that their companies were involved in products too complex for them to understand, such ceos should be assigned to work at a manager / director level rather than executive. they were clearly in over their heads lacking the sagacity and technical abilities to manage such complexity and risk.
their educations did not begin to serve them well and proof that education is not a solution to business or technical management....
this speaks poorly for regulators too - who also lack the iq and understanding to regulate. incompetence and low iq are on parade and the dumber voter and tax payer lets it continue.
of course we should not overlook old fashioned criminality in understanding the rape of the tax payer..
"as their ceos have repeatedly admitted that their companies were involved in products too complex for them to understand, such ceos should be assigned to work at a manager / director level rather than executive"
This is called the 'Peter Principle.'
Great book.
Exactly. The Fed, SEC, FDIC, and all the rest "didn't have the regulatory tools" to prevent the melt-down. As you imply, the laws and regulations on the books already would have been plenty. Everyone wanted to murder Glass-Steagall but in doing so they removed the best tool in the box. Ooops!