Showdown Seen Between Banks and Regulators

[Pirate Smile]

Source: The New York Times

WASHINGTON — As the Obama administration completes its examinations of the nation’s largest banks, industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages.
President Obama emerged from a meeting with his senior economic advisers on Friday to say “what you’re starting to see is glimmers of hope across the economy.” But there were also signs of growing tensions between the White House and the nation’s banks over the next phase of the financial rescue.

-snip-
Meanwhile, the Obama administration wants weaker banks to move more quickly to relieve their balance sheets of the toxic assets, the home loans and mortgage bonds that nobody wants to buy right now. But the banks are resisting because they would have to book big losses.

Finally, there is increasing anxiety in the industry that the administration could use the stress tests of the 19 biggest banks, due to be completed in the next three weeks, to insist on management changes, just as it did with General Motors when officials forced the resignation of its chief executive after examining that company’s books.
Senior officials, recognizing that the next few weeks could prove pivotal for both the industry and the bailout effort, are moving ahead with major plans.

-snip-
The tension between the industry and the administration is rising as the government’s bailout fund is dwindling, putting the administration in a bind. It is all but certain to need to seek more money from Congress, which wants to see results from existing programs first.
The fund is down to its final $134 billion, according to Treasury officials, and is expected to face new requests for money in the coming weeks to aid tottering banks, the auto industry and possibly insurance companies.

Read more: http://www.nytimes.com/2009/04/11/business/economy/11bank.html?hp

[williesgirl]

1. Fire them all, make them write off bad loans, and let's get moving. rec'd

[defendandprotect]

2. I second that --- !!!

[MannyGoldstein]

3. The Paulson/Summers/Geithner Plan Is Not Enough!!!

The banks want us to directly turn our tax payments over to them - the US Government's administrative fees are too damn high. Why, the other day I hear about a bank VP who has had to cut back to a single yacht! I can't be sure that it's true, but we really can't take a chance on this.

[FreakinDJ]

4. Restore faith in the Markets - Throw the Bums out

Every time they put another Madoff in Jail or fire a swindling CEO the markets respond positively.

If these bank CEOs want to stage a show down over the fact they are hiding $Billions in losses it is time they hit the unemployment lines

[girl gone mad]

5. The administration knows they can't go back to congress and ask for more money..

Geithner's PPIP program is designed to avoid the congressional approval obstacle. But there are some murmurs that congress may intervene and halt PPIP anyhow because of the risk it poses to the FDIC. Even if that doesn't happen, there have been protests from the hedge funds Geithner is hoping to attract into the Legacy Loans program because they see it as potentially dangerous in the long term. Plus there are questions about whether the banks will even go through with sales now that the FASB has said they can mark these assets to fiction.

The last thing the administration wants to do is nationalize, but they are running out of good options.