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After all, this plan is no rush job cobbled together as a panic measure, however much it is presented as such. It has been months in the making and has been carefully crafted to a specific agenda determined some while back.
Evidence?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 11:31:13 AM EST
[ Parent ]
There were a few articles on it.  Treasury's been working on this laughable plan for months.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Sep 25th, 2008 at 11:36:16 AM EST
[ Parent ]
Links?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 11:43:27 AM EST
[ Parent ]
Blueprint for a Modernized Financial Regulatory Structure

March 2008

May 2008. US are witnessing implementation of these "objectives." Pending further Congressional approvals:

V Intermediate-term recommendations (89)

This chapter describes recommendations focused on eliminating some of the duplication in the US regulatory system, but more importantly on modernizing the regulatory structure applicable to certain sectors in the financial services industry (i.e. banking, insurance, futures, and securities) with the current framework. These recommendations serve as a useful transition to the optimal regulatory structure. However, each intermediate-term recommendation stands on its own merits, as well as on its merits as a transitional element.

VI The Optimal regulatory structure (137)
VII Conclusion

::

peenackers always broadcast. And their propaganda organs always fill the void with bullshit.

All the short-term recommendations are now law.

Mr Dodd and colleagues will institute intermediate recommendations. While voters argue whether Treasury can make a profit for them.

Diversity is the key to economic and political evolution.

by Cat on Thu Sep 25th, 2008 at 12:38:23 PM EST
[ Parent ]
I cannot believe it - it's not that complex.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 11:44:54 AM EST
[ Parent ]
See this dKos diary.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Sep 25th, 2008 at 11:46:34 AM EST
[ Parent ]
Isn't that them claiming it wasn't a panic measure? Why would we believe them?
by Colman (colman at eurotrib.com) on Thu Sep 25th, 2008 at 11:49:32 AM EST
[ Parent ]
True, but would you expect the bill to be any more competent given a few months?

I remind you: It took FEMA four days to get water to the Super Dome.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Thu Sep 25th, 2008 at 11:54:19 AM EST
[ Parent ]
I find this more ominous from a banking system perspective
Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.

``Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,'' Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.

The plan might precipitate an immediate collapse of the "bad banks" whose default would arode the balance sheet of their "good bank" creditors.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 11:51:26 AM EST
[ Parent ]
But note the reason why the BoA guy says it's more beneficial to MS and GS - they've been more realistic in sharply writing down their impaired assets.
by MarekNYC on Thu Sep 25th, 2008 at 11:54:10 AM EST
[ Parent ]
Presumably they've been able to because they are better capitalised than the other investment banks (Lehman and Merrill didn't make it), and more able to value them than the commercial banks.

But that point is the plan is likely to help the banks that least need it from a solvency point of view.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 11:58:15 AM EST
[ Parent ]
Both Merill and Lehman were also pretty agressive in writing stuff down by the end. But they couldn't afford reality, as you say. In the case of GS it's ability was helped by jumping out of the residential RE pyramid scheme before it collapsed, and then betting against it, making money that way.
by MarekNYC on Thu Sep 25th, 2008 at 12:04:02 PM EST
[ Parent ]
Right, GS was the first bank to get out of subprime, and remember that Paulson was the CEO and left for the Treasury in 2006, at the top of the housing bubble.

He knew what was coming. He and Bernanke just expected the Fed's balance sheet to last a bit longer.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 12:08:32 PM EST
[ Parent ]
GS and MS get a huge cash handout, they reinvent themselves as 'proper' banks to insure some of their losses, and they wipe out the immediate competition.

Because they have significant cash assets they can afford to go on a buying spree after prices stabilise.

Is there a downside here? (Not counting PR loss of face, which only really matters if it's translated into policy.)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Sep 25th, 2008 at 12:31:13 PM EST
[ Parent ]
Because they have significant cash assets they can afford to go on a buying spree after prices stabilise.

The will need to go on a buying spree for regional depository banks. At least the suggestion is that MS will merge with a large traditional bank but that GS will acquire some small ones.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 12:39:06 PM EST
[ Parent ]
They will not need to go on a spending spree. Has Paulson not already reserved the "right" to assign agents and consultants in the matter of "resolution"?

viz.

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

Does Dodd's plan eliminated that "right"? I dunno. What I do know is the "crisis" amounts to controlled demolition by FRB "core banks" and "primary dealers."

the OCC supervises the five largest bank derivatives dealers in the United States.

See this article on industry consolidation following the S&L RE scam. Regional banks and remaing S&Ls are now being seized by FDIC, predictably, slowly and steadily.

Diversity is the key to economic and political evolution.

by Cat on Thu Sep 25th, 2008 at 01:05:55 PM EST
[ Parent ]
Consolidation in the U.S. Banking Industry:
Is the "Long, Strange Trip" About to End?
, FDIC Banking Review

You will not get that story on Krugman's blog. But it might get a mention in one of his many, many books. I wouldn't know though.

Diversity is the key to economic and political evolution.

by Cat on Thu Sep 25th, 2008 at 01:10:14 PM EST
[ Parent ]
So why would the Bushies want it?

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Sep 25th, 2008 at 11:56:06 AM EST
[ Parent ]
It might carry them over to January 21. The Fed needs to be able to make two more bridging loans to the banks (two end-of-quarter dates to go) and as Jerome pointed out in his recent FP story the Fed is out of Treasury Bills.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Sep 25th, 2008 at 11:59:38 AM EST
[ Parent ]

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