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Tag >> bailout
Jul 01

AIG vs. Goldman reveals the flaw in financial reform

Posted by Ron F in RiskRegulationGoldman SachsGAAPfinancial reform billfinancial market reformfinancial crisisFASBderivativescredit default swapsCongresscomplianceBanksbanking reformBankingbank failuresbailoutAIGAccounting

Ron F

The latest revelations  concerning the dispute between AIG and Goldman over collateral show how weak the new financial reform package really is.

After all, Goldman's demands for collateral from AIG as it was failing ended up costing taxpayers billions of dollars. Yet according to the testimony today during the crisis panel's latest hearings, the whole question hinged on what constituted fair value.

May 17

French, German banks most exposed to Greek crisis

Posted by mcole in RiskIMFGreeceEuropean UniondebtBanksbailout


Large French and German banks appear to be the largest creditors to Greece and therefore stand to benefit the most from the 110 billion euros rescue package to Greece, at least indirectly since Greece won't default on its debt.

French financial institutions have the largest exposure in the world to Greek debt, holding about 50 billion euros of Greek debt, both from the private and public sectors.

May 10

Lumbering EU giant awakes

Posted by dbedell in RiskliquidityIMFeurozoneEuropean Unioneconomybailout


The European Union has finally stepped up to the plate with a bailout package for member states - after months and months of hemming and hawing - and it only took the potential bottoming out of the euro and fears of another global panic to light a fire. Never mind troubles in Greece since last November, never mind Ireland, or the UK, or Portugal or Spain.

The bailout package agreed by EU finance ministers early this morning will supply countries in the region with up to $560 billion in newly-minted loans and $76 billion available through a current lending program. The IMF will also front up to $321 billion – making a total of $957 billion in loans available to help shore up ailing European economies.

May 06

Treasury votes to keep KPMG as Citi’s auditor

Posted by Going Concern in treasury, KPMG, complianceCitigroupbailoutaudit

Going Concern

Submitted by Francine McKenna, republished from Going Concern, Accounting News for Accountants and CFOs.

The US Treasury recently decided to vote its proportionate ownership interest in Citigroup to affirm reappointment of KPMG as Citi's auditor for the 41st consecutive year.

Maybe Treasury married KPMG all over again because they're cheap compared to what Goldman and AIG are paying PwC.

Maybe KPMG knows this client best - a dubious honor. KPMG has been on the scene of Citi's crimes and misdemeanors all over the world for 41 years.

Maybe Treasury feels like a mother who puts up with a gold digging daughter-in-law because daughter-in-law saw mom kissing the tennis pro and mom knows her son has slept with the baby-sitter...

From Citigroup's most recent proxy:

Apr 23

Financial innovation inevitably leads to crisis, says new research

Posted by Ron F in WorldcomTroubled Asset Relief ProgramRiskRegulationinnovationGoldman SachsFedEnroncomplianceBanksbanking reformBankingbank failuresbailout

Ron F

Paul Krugman's column today called my attention to a paper that anyone interested in financial reform should check out.

The paper completely contradicts the conventional wisdom that innovation in finance is a good thing.

Apr 01

Fed’s Bear Stearns assets rotten in more than one way

Posted by mcole in Federal Reservecredit default swapBear Stearnsbailout


The New York Federal Reserve has finally disclosed the assets it holds as a result of its bailout of Bear Stearns' creditors. And, as expected, it's not a very pretty portfolio.

Most of Maiden Lane 1, the vehicle used to absorb the assets, is made of jumbo mortgages, collateralized debt obligations and commercial real estate assets, all of which are impairing the Fed's balance sheet -- and its reputation, as Bloomberg noted Thursday.

That's not to say the whole thing is worthless. In fact, the Fed stands to turn a profit on one particular group of assets: credit default swaps on bond insurers like Ambac Assurance.

However, while we all agree that the Fed making money for taxpayers is a good thing, one has to wonder if it's right for it to be doing so by capitalizing on the failure of US corporations.

Mar 12

Banks still gun shy when it comes to lending

Posted by MQuinn in RisklendingCreditCashBanksbailout


There have been many attempts to call a bottom to credit quality. Much time has been spent scouring through bank filings, combing over charge-off data. The thinking -- or hope, at least -- is that once credit quality stabilizes banks will fully get back into the business of banking.

But, as American Banker reports, executives at major banks are pretty comfortable with how their loan books are performing -- and they still don't plan to start doling out more money.

"All the ingredients are there for bankers to take a leap on lending....But banking executives sent a clear message Wednesday at a financial services conference hosted by Citigroup Inc. in New York: don't expect to see loan growth any time soon. The lenders said their customers are skittish - and so are they."

Mar 05

Citi continues to make nice

Posted by MQuinn in complianceCitigroupbailout


I wrote about it before, but it's worth mentioning again: Nobody plays nicer with the government than Citigroup.

While American International Group is just starting to fully appreciate all the nice things the US taxpayer has done for it, Citi, which is 27 percent owned by Uncle Sam, has always gotten it.

In testimony before a bailout oversight panel on Thursday, the bank's CEO, Vikram Pandit, voiced support for Obama administration financial reform goals, including a consumer protection authority and even said banks generally should not engage in trading for their own profit, Reuters reported.

Jan 28

AIG counterparties got more than 100 cents on the dollar

Posted by Ron F in Societe GeneraleRiskRegulationGoldman SachsFederal ReserveFedcomplianceBlackRockBanksBankingbailoutAIG

Ron F

Ever since the Federal Reserve bailed out AIG in late 2008, the true significance of the so-called Maiden Lane III component of the deal has escaped me.

For those new to my horribly "populist" interest in the Fed, the bank set up vehicles called Maiden Lane to hold the assets it bought from a number of bailed-out institutions, evidently thinking that parking dodgy assets in vehicles named after one of those dark and windy little streets in the downtown Manhattan shadows of the New York Fed was entirely appropriate.

Jan 27

Geithner gets to have it both ways

Posted by Ron F in Paul VolckerObama AdministrationGeithnerFederal ReserveFedBanksbailoutAIG

Ron F

Matt Quinn and I are struck by the contradiction at the heart of Tim Geithner's stated role in the bailout of AIG when he was president of the New York Fed.

On the one hand, Geithner claims he had very little to do with it, and so isn't responsible for the fact that the bank failed to use its leverage to negotiate better terms for taxpayers instead of paying Goldman Sachs and other AIG counterparties 100 cents on the dollar.

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