More Quickly Than It Began, The Banking Crisis Is Over

[kpete]

Source: TIME Magazine

More Quickly Than It Began, The Banking Crisis Is Over
By 24/7 Wall St. Friday, Apr. 10, 2009


Investors find it disconcerting to see the stocks in the huge financial institutions that are at the foundation of the global capital system trading up and down 25% a day, and, in some cases trading in the pennies. Banks became the visible and ugly wound that reminded Wall St. each day what it had torn down what it spent decades building, which was a money-making machine driven by leverage and the cleverest synthetic financial instruments the world has ever seen.

But, the great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month. Most analysts believe that mortgage-backed securities which included packages of subprime home loans failed when mortgage default rates went up and housing prices raced down. That is only partially true. Banks made a tremendous series of ill-advised loans to private equity firms, hedge funds, commercial real estate holders, and the average man with a credit card balance which he cannot pay. (See pictures of the top 10 scared traders.)

When people look back on the near-collapse of the banking system they may say that the Congress and Henry Paulson threw enough money into the path of the oncoming failure of the credit system to slow it down so that the government could properly go through the process of guaranteeing parts of the balance sheets of firms including Citigroup (C) and Bank of America (BAC). The initial TARP may also have provided time for the new Administration to put together its widely hailed bank "stress test" program meant to determine which of the big financial institutions have dysentery and which do not. Finally, the hundreds of billions of dollars that went into the largest banks late last year allowed Secretary Geithner to produce his public/private partnership to buy toxic assets off of bank balance sheets.

All of those plans, no matter how well-intentioned they may seem, are unnecessary now. Wells Fargo (WFC) indicated that it made about $3 billion in the first quarter of the year and declared its buyout of the deeply troubled Wachovia to be a success. Wells Fargo (WFC) said that the low cost of money from the government combined with a surging demand for mortgages was all the medicine that it required.

Read more: http://www.time.com/time/business/article/0,8599,1890560,00.html

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huh? kp

[tekisui]

1. Mission Accomplished?

[drm604]

2. This seems a little premature.

I hope they're right, but it seems premature to declare the end of the crisis.

[Demeter]

3. And If You Believe It's All Over, I've Got Some Great

subprime asset-backed securities and CDOs at great discounts. Just the thing for your pension fund!

[tritsofme]

4. Well I'm glad that's over with.

I was really getting sick of that bank crisis.

[high density]

5. LOL!! this has got to be satire

Stocks up = banking system fixed? What sort of rationale is that?

[grasswire]

6. something wicked is going on

don't ya think?

[glitch]

15. Very much so. nt

[960]

7. hahahahahaha the banking crisis is not over. Hopefully it is on the mend, but

to say it is over is a real stretch.

[Catshrink]

8. Yeah. We gave the banks our tax dollars so they could rate

jack us and raise fees. Mission accomplished indeed.

[lumberjack_jeff]

9. Then our wallets must truly be empty.

"The crisis is over" can only mean one thing, we are perceived to have been completely shaken down.

[SOS]

10. Fed sez

Banks now allowed to ignore that pesky $17 trillion in on-the-books bank debt while filing quarterly profit reports.
Presto!

Our family is now in great shape too.
We no longer count our credit card debt, mortgage or back taxes when assessing our financial health.

[Autumn]

11. Of course the banking crisis is over. They have

emptied the till and people are watching.

[OwnedByFerrets]

12. They forgot the sarcasm thingie. IF they were being series......

they're fucking hilarious.

[leftofthedial]

13. "crisis"

yeah, right.

I'm having a "crisis" in my pants. Wanna check it out?

[KansDem]

14. Let's see, did we get it all? YES!!! "Banking Crisis is Over!"

That was one helluva crisis, but I'm glad it's "over!"

[Canuckistanian]

16. LOL. How did the Onion get that article on Time's website?

That's brilliant.

[Zenlitened]

17. Okay, great. Can we get to work on the economic crisis now?

:shrug:

[Elidor]

18. 2 more banks fail, lifting this year's tally to 23

By MADLEN READ – 2 hours ago

NEW YORK (AP) — Federal regulators shut down two more banks Friday, raising the number of bank failures so far this year to 23.

The first bank was Cape Fear Bank in Wilmington, N.C., the first North Carolina bank to fail in nearly 16 years. The other bank was New Frontier Bank of Greeley, Colo., the second Colorado bank this year to collapse.

The Federal Deposit Insurance Corp. took over both banks Friday after their respective state regulators closed them down.

The FDIC did not tap a buyer for New Frontier Bank, and instead created the Deposit Insurance National Bank of Greeley. The FDIC named San Francisco-based Bank of the West to manage the entity, which will stay open for about 30 days to give New Frontier Bank's customers time to open accounts at other insured institutions.

http://www.google.com/hostednews/ap/article/ALeqM5gjmW6jIy3FcPs7T_yje3_tU_CT6AD97FVGGG1

[neverforget]

19. Bookmarking for the next shoe to drop or the next TARP

[Elidor]

20. The really annoying thing about Douglas A. McIntyre...

Is that you can't comment on his stories. Not at Time, not at his home site. You can digg it, or pass it along in one of half a dozen ways, but there is no way to tell this tool what a fuckstick he is. Two banks down today, and I guarantee you there will be two more down in the next two weeks, but Bozo the Clown here wants to audition for a spot on CNBC. What a fucking joke.

[lunatica]

21. I don't think it's over yet

There are more bubbles lurking in the wings. The credit card companies are still overreacting by upping interest rates and the car companies are still not out of trouble and the real estate business is limp at best. And half a million people are still losing their jobs every month.

Just today 10 thousand people showed up to a job fair. That's not counting the ones who saw the immensely long lines and just left.

[Median Democrat]

22. So, Paul Krugman, Joe Stiglitz, Tim Geithner and Larry Summers Were Fighting Over Nothing?

Who knew? Maybe they were just grouchy.

[roamer65]

23. Bank earnings results are now just about as "cooked" as the inflation and unemployment figures.

Straight down the rabbit hole we go, folks.