Seems the Banks Are Trying To Weather The Crisis WITHOUT Coming Clean....

[Blackhatjack]

The CEOs come to D.C. with their hands out, saying time is of the essence, and after they get billions of dollars in taxpayer $$ they still refuse to lend to small businesses and individuals. So where is the $$ going?

Think about this situation for a minute.... what do we really know about these 'too big to fail' financial corporations and their actual solvency?

Not much ... and what is becoming clear is that due to a shadow banking system where massive losses have been kept off the books, the billions of dollars have not changed the credit markets.

IF these guys had to come clean in public there would be a lot more worthless paper out there than suspected, and people would be taking action to recover what they could in assets. So that is the game... keep the truth hidden, but take the taxpayer money, buy time and hope things change for the better without having to make a full disclosure.

I hope that the Obama Administration has gotten a clearer picture of the bottom line on these Wallstreeters than the public has received to date. I fear that they have not been given all the information they need to properly evaluate the prosect of giving them more taxpayer money.

But under any scenario, over a trillion dollars in govt issued money should have changed things more than we are seeing, and there is no end in sight to the need for more taxpayer $$ ....

Somebody's pockets are stuffed and making out like a bandit ... let's hope the DOJ is taking notes.

[FrenchieCat]

1. Wagoner's exit puts BofA CEO Lewis in hotseat

NEW YORK (Reuters) - Bank of America Corp Chief Executive Kenneth Lewis may be the next corporate boss to feel the heat after the administration forced General Motors Corp Chief Executive Rick Wagoner to resign in return for further government assistance.

The second-largest U.S. bank has received $45 billion from the government, making it one of the biggest recipients of government bailout money in the banking system.

Big shareholders have been calling for Lewis to step down since Bank of America announced in January it took a $20 billion government bailout to secure the acquisition of troubled Merrill Lynch & Co, which lost almost $16 billion in the last quarter of 2008.

The government may now add to the pressure from shareholders, analysts said. The sudden departure of Wagoner after nine years in the top job at GM signals the Obama administration is looking for management changes at bailed-out companies.

"His longevity in the job is probably very much in question," said Keith Wirtz, chief investment officer of Fifth Third Asset Management and a former CIO at a Bank of America subsidiary. Fifth Third holds shares in the bank.
http://www.reuters.com/article/newsOne/idUSTRE52T6DP20090330?pageNumber=1&virtualBrandChannel=10112

[ProudToBeBlueInRhody]

7. I'd love to see him go

He was here a few weeks ago at the building I work in. He dodged the media, sneaking out a back door to avoid them. The BoA higher ups were swilling the kool-aid with a glazed look in their eye, saying what a smart man he was and tossing around their meaningless buzzwords like "positive feedback" to describe meeting with him.

Man, I hate phony corporate America

[FrenchieCat]

2. On taking over institutions:

Proposed outline of regulatory framework:


On taking over institutions:

"Depending on the circumstances, the FDIC and the Treasury would place the firm into conservatorship with the aim of returning it to private hands or a receivership that would manage the process of winding down the firm. The trustee of the conservatorship or receivership would have broad powers, including to sell or transfer the assets or liabilities of the institution in question, to renegotiate or repudiate the institution's contracts (including with its employees), and to deal with a derivatives book. A conservator would also have the power to restructure the institution by, for example, replacing its board of directors and its senior officers. None of these actions would be subject to the approval of the institution's creditors or other stakeholders." (Among other things, the trustee can step in, sell or keep whatever he or she felt was best for the company, completely replace the BoD, eliminate any necessary executives, void contracts and do so without stock or debt holder approval.)

Hedge funds -(This has been a long time coming):
"U.S. law generally does not require hedge funds or other private pools of capital to register with a federal financial regulator, although some funds that trade commodity derivatives must register with the Commodity Futures Trading Commission and many funds register voluntarily with the Securities and Exchange Commission. As a result, there are no reliable, comprehensive data available to assess whether such funds individually or collectively pose a threat to financial stability. The Madoff episode is just one more reminder that, in order to protect investors, we must close gaps and weaknesses in the regulation and enforcement of broker-dealers, investment advisors and the funds they manage."

Derivatives and swaps:
"In our proposed regulatory framework, the government will regulate the markets for credit default swaps and over-the-counter derivatives for the first time."

(This is just the first part of the proposals for the swaps, the others are well worth reading.)

http://www.treas.gov/press/releases/tg72.htm

[Skittles]

3. they don't have to come clean

only GM does

[MarjorieG]

4. They will.

[truedelphi]

5. It is not all that hidden.

AIG has a lot of counterparties to pay off. And since it has been kept operational, AIG's contracts are intact. This means that the people holding the Credit Default Swaps get paid off before anyone else. So that means that there will not be much left in the way of offering consumers the loans they might be seeking.

There was some hope around the beginning of the year that AIG's derivative creditors and counterparties might settle for cents on the dollar. But then it became evident that Goldman Sachs is going to insist on every penny it is owed and others have folowed suit.

None of this sad scenario was necessary as this interview on TYT points out:
http://tinyurl.com/dxowh8

[unc70]

6. Cheaper to pay off bad loans at full value than many times that in CDSs

If you "refinance" the loans and pay off fully, the CDOs go to full value and no risk, and the CDSs then have no value and do the ultimate unwind. CDSs as part of CDOs might still be a problem.

[truedelphi]

10. That is what most people don't get.

Apparently the kids at the top, like Geithner, get it. And are all too happy to make the folks at Goldman Sachs happy in having their CDS' redeemed.

[obiwan]

8. Bankers are genetically related to rats, roaches, and other vermin.

[Blackhatjack]

9. It is not that hard to hide bad investments 'off the books' as Enron proved....

You make an entry that is included in a legitimate balance sheet which is inflated in value which helps hide the 'missing money' elsewhere, and that 'missing money' becomes free to play with or sock away in an offshore account.

A forensic accounting expert would find it if they knew where to look, but if a large corporation has created dozens of shell corporate subsidiaries that disclose their financial information in combined reports it becomes next to impossible to find. THat is why prosecutors who work in white collar crime often try to 'turn' an insider who becomes a guide to where the evidence is hidden.

One thing is for sure .... those billions of dollars did not disappear due to spontaneous combustion. Find the money, and you find the criminals...

[truedelphi]

11. Why is it that there is no cry for auditing?

Except from Ron Paul. When a normal person wants a simple home equity loan, the appraisers are over at the house in a few weeks, making sure the home exists and evaluating the home and property. That for a loan on a few hundred thou.

But AIG has gotten one packet of money after another, with perhaps more to come. ANd no evalutation of what it is worth, (or how insolvent it really is) other than the admiinistration is believing its executives's statements.

[Blackhatjack]

12. The non-auditing of AIG is explainable.... AIG is a Passthrough...

AIG is not worth the taxpayer $$ we already invested in it.

So why are we pouring more taxpayer $$ in it and not investigating first? I am afraid the answer is that the Govt knows exactly what AIG is doing --- they are funneling taxpayer $$ to other Wallstreet entities who do not wish to be identified as receiving govt bailout money.

When they say "AIG" just think, Goldman and BOA, etc.

There is little to be gained by auditing AIG right now, but it needs to happen before too long.