• If you are having problems logging in please use the Contact Us in the lower right hand corner of the forum page for assistance.

Greenspan- More Government Funds- Nationalize Banks

A

Anonymous

Guest
This coming from Reagans biggest promoter of capitalism and deregulation....May be an indicator of how severe the Bush Bust really is...

Greenspan Says U.S. May Not Be Doing Enough to Promote Recovery


By Rich Miller

Feb. 18 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. may be doing too little to repair its financial system and promote an economic recovery.

President Barack Obama yesterday signed into law a $787 billion economic stimulus package of tax cuts and increased spending. He has also pledged to use the bulk of the roughly $315 billion left in the bank bailout fund approved by Congress last October to revive the battered financial industry.

“The amount of money in both these pots may not be enough to solve the problem,” Greenspan said in an interview before a speech yesterday to the Economic Club of New York.

The comments highlight the difficulties Obama faces in fighting the steepest recession in a generation. The economy contracted at an annual pace of 3.8 percent in the fourth quarter of last year, the most since 1982.

In the speech, the former Fed chairman said “what we are currently going through is a once-in-a-century type of event. It will pass.”

Greenspan, who now heads his own Washington-based consulting company, warned in his speech that the positive impact of the stimulus package on the economy will peter out if the U.S. fails to fix its financial system.

“Given the Japanese experience of the 1990s, we need to assure that the repair of the financial system precedes the onset of any major fiscal stimulus,” he said.

Bank Losses

U.S. bank stocks have been hammered as their loan losses have mounted. Citigroup Inc., the bank that received $45 billion from the government last year, fell 43 cents to $3.06. JPMorgan Chase & Co., the second-largest U.S. bank by assets, declined $3.04 to $21.65. Bank of America Corp. dropped 67 cents to $4.90.

The Obama administration last week laid out a multipronged plan to aid the banks, drawing on the remaining money in the $700 billion Troubled Asset Relief Program. Greenspan said that wouldn’t be enough.

“To stabilize the banking system and restore normal lending, additional TARP funds will be required,” he said.

He highlighted the importance of building up banks’ capital. “Banks are not going to increase their lending until they feel comfortable with the amount of capital they hold,” he said in the Feb. 16 interview. “That’s not going to happen for a while.”

The 82-year-old economist also stressed the importance of halting the decline in house prices that is battering banks. “Until we can stabilize the asset side of bank balance sheets, this crisis will not come to a close,” he said.

Mortgage-Related Assets

U.S. banks have sustained $758 billion in credit losses since the crisis began. Many of those losses stemmed from mortgage-related investments that declined with the collapse in the housing market.

Home prices in 20 U.S. cities fell 18.2 percent in November from a year earlier, the fastest drop on record, according to the S&P/Case-Shiller index.

“Unfortunately, the prospect of stable home prices remains many months in the future,” Greenspan said in his speech. “Many forecasters project a decline in home prices of 10 percent or more from current levels.”

Greenspan estimated the collapse in housing, coupled with the steep drop in equity prices worldwide, had wiped out more than $40 trillion of wealth, equivalent to two-thirds of last year’s global gross domestic product. U.S. stocks tumbled to a three-month low yesterday, extending a decline that began overseas.

“Certainly, by any historical measure, world stock prices are cheap,” Greenspan said. “But as history also counsels they could get a lot cheaper before they turn.”

Gripped by Fear

He said that investors were gripped by a degree of fear not seen since at least 1932. Those fears should dissipate once the rate of decline in the economy and the financial markets starts to slow, he added.

“A rise in equity prices could help offset the impact of falling house prices” on the economy, he said in the interview.

Yet he warned that a stock market recovery could be derailed if inflation fears resurface because of the money the government is channeling into the economy.

“The recent rise of long-term interest rates appears to be signaling market concerns about inflationary pressures,” he said. “It could turn out to be the canary in the coal mine.”

The yield on the 10-year Treasury note ended yesterday at 2.65 percent, down from 2.88 percent a day earlier, yet still well above the 2.05 percent level set on Dec. 30.

Responding to questions after the speech, Greenspan blamed insufficient regulatory oversight in part for failing to recognize the degree of risk that was accumulating in the banking system.

‘Behind the Curve’

“The regulatory structures, especially internationally, were way behind the curve,” he said.

Greenspan said he was skeptical that officials can adopt a policy that prevents asset bubbles from forming without harming other parts of the economy. To help resolve the banking system’s problems, financial institutions may need higher capital reserves to help restore them to health, he said.

“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said. “What we’ve got to do is to try to make them more efficient, to put far more capital into these organizations.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAeJgeIi_e5c&refer=home


The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times. In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers. "It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring," he said. "I understand that once in a hundred years this is what you do."

http://content.usatoday.com/communities/theoval/post/2009/02/63005211/1
 

Mike

Well-known member
“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said.

Regulation in itself is not the answer. Bush raised the Regulatory watchdogs to unprecendented highs (money AND Regulators) during office and some still slipped through the cracks.

Finance is an ever changing and greedy institution that can never be held in constant check. Once you pass a rule, they will induly figure a way around it.

Not counting how much Regulatory Enforcement has cost us in taxes.

How can anyone attribute Greenspan to Reagan alone, since he appointed him at the end of his second term, and he remained until 2006?
 
A

Anonymous

Guest
Mike said:
“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said.

Regulation in itself is not the answer. Bush raised the Regulatory watchdogs to unprecendented highs (money AND Regulators) during office and some still slipped through the cracks.

Finance is an ever changing and greedy institution that can never be held in constant check. Once you pass a rule, they will induly figure a way around it.

Not counting how much Regulatory Enforcement has cost us in taxes.

How can anyone attribute Greenspan to Reagan alone, since he appointed him at the end of his second term, and he remained until 2006?

He picked him- then he was then reappointed every 4 years by GHW Bush, Clinton, and Shrub...

If they nationalize the Banks- I can just see Sandhusker having Obama as his boss .... :wink: :lol: :lol: :p
 

TexasBred

Well-known member
Oldtimer said:
Mike said:
“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said.

Regulation in itself is not the answer. Bush raised the Regulatory watchdogs to unprecendented highs (money AND Regulators) during office and some still slipped through the cracks.

Finance is an ever changing and greedy institution that can never be held in constant check. Once you pass a rule, they will induly figure a way around it.

Not counting how much Regulatory Enforcement has cost us in taxes.

How can anyone attribute Greenspan to Reagan alone, since he appointed him at the end of his second term, and he remained until 2006?

He picked him- then he was then reappointed every 4 years by GHW Bush, Clinton, and Shrub...

If they nationalize the Banks- I can just see Sandhusker having Obama as his boss .... :wink: :lol: :lol: :p

And I can see you broke ass on the corner with a cup and a "chimp". :lol2:
 

kolanuraven

Well-known member
Oldtimer said:
Mike said:
“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said.

Regulation in itself is not the answer. Bush raised the Regulatory watchdogs to unprecendented highs (money AND Regulators) during office and some still slipped through the cracks.

Finance is an ever changing and greedy institution that can never be held in constant check. Once you pass a rule, they will induly figure a way around it.

Not counting how much Regulatory Enforcement has cost us in taxes.

How can anyone attribute Greenspan to Reagan alone, since he appointed him at the end of his second term, and he remained until 2006?

He picked him- then he was then reappointed every 4 years by GHW Bush, Clinton, and Shrub...

If they nationalize the Banks- I can just see Sandhusker having Obama as his boss .... :wink: :lol: :lol: :p



Ohhhh......now that's funny!!!!
 

Mrs.Greg

Well-known member
Oldtimer said:
Mike said:
“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said.

Regulation in itself is not the answer. Bush raised the Regulatory watchdogs to unprecendented highs (money AND Regulators) during office and some still slipped through the cracks.

Finance is an ever changing and greedy institution that can never be held in constant check. Once you pass a rule, they will induly figure a way around it.

Not counting how much Regulatory Enforcement has cost us in taxes.

How can anyone attribute Greenspan to Reagan alone, since he appointed him at the end of his second term, and he remained until 2006?

He picked him- then he was then reappointed every 4 years by GHW Bush, Clinton, and Shrub...

If they nationalize the Banks- I can just see Sandhusker having Obama as his boss .... :wink: :lol: :lol: :p
OK...I got A HUGE chuckle over that!
 

Sandhusker

Well-known member
OT, "....May be an indicator of how severe the Bush Bust really is... "

Don't you mean the Frank and Dodd led Democrat Bust? Let's try to stick to facts here.
 
A

Anonymous

Guest
Sandhusker said:
OT, "....May be an indicator of how severe the Bush Bust really is... "

Don't you mean the Frank and Dodd led Democrat Bust? Let's try to stick to facts here.

Yep- I forgot- these new Republicans don't accept responsibilty for the bad things that happen when they are in control :roll: :(

The Buck Stops Here
~Harry S. Truman

Are you practicing up on your "Yes sir, Mr. Obama" :???: :wink: :p :lol:
 

Sandhusker

Well-known member
Oldtimer said:
Sandhusker said:
OT, "....May be an indicator of how severe the Bush Bust really is... "

Don't you mean the Frank and Dodd led Democrat Bust? Let's try to stick to facts here.

Yep- I forgot- these new Republicans don't accept responsibilty for the bad things that happen when they are in control :roll: :(

The Buck Stops Here
~Harry S. Truman

Are you practicing up on your "Yes sir, Mr. Obama" :???: :wink: :p :lol:

You're ignoring facts again, OT. The Dems are in control now, but why is it so important for them to get 60 seats in the Senate? HINT: It's for the very reason that the Republicans couldn't get Fannie and Freddie straigtened out. When has Frank or Dodd accepted any responsibility for their roles? When has Obama accepted any responsibility for promising to fillibuster and Republican attempt to fix Fannie and Freddie? Let's talk about responsibility.

Unless you're a solid Socialist, there's no reason to nationalize the bank I work for, we're well capitalized and in as good of shape as anybody. Maybe I should practice "Go away, Mr. Soetoero, or whatever your name is today. By the way, don't you have a Kenyan Independence Day celebration to attend"?
 

Tex

Well-known member
Sandhusker said:
Oldtimer said:
Sandhusker said:
OT, "....May be an indicator of how severe the Bush Bust really is... "

Don't you mean the Frank and Dodd led Democrat Bust? Let's try to stick to facts here.

Yep- I forgot- these new Republicans don't accept responsibilty for the bad things that happen when they are in control :roll: :(

The Buck Stops Here
~Harry S. Truman

Are you practicing up on your "Yes sir, Mr. Obama" :???: :wink: :p :lol:

You're ignoring facts again, OT. The Dems are in control now, but why is it so important for them to get 60 seats in the Senate? HINT: It's for the very reason that the Republicans couldn't get Fannie and Freddie straigtened out. When has Frank or Dodd accepted any responsibility for their roles? When has Obama accepted any responsibility for promising to fillibuster and Republican attempt to fix Fannie and Freddie? Let's talk about responsibility.

Unless you're a solid Socialist, there's no reason to nationalize the bank I work for, we're well capitalized and in as good of shape as anybody. Maybe I should practice "Go away, Mr. Soetoero, or whatever your name is today. By the way, don't you have a Kenyan Independence Day celebration to attend"?

They should never nationalize "good" banks that are not involved in crisis. To do so would be total lunacy.

To nationalize the "bad" banks without replacing their governance is equal lunacy.

Fannie was taken out of the govt. arm----the whole reason Raines had the excuse to make the kind of money he did-- and they should stand on their own capital with regulatory requirements. Putting the rubber stamp on securitizing the loan packages at that time was supposed to be a private capital risk---not a public one.

The vast majority of the loans that did cause the problem were not Fannie or Freddie loans, but sub prime loans that were supposed to be done all with private capital (which should have been able to be risked with no hurt to the system). Wall Street did not price the risk right, sold to everyone as if they did, and then began making derivatives out of thin air based on parts of the securities which leveraged the whole amount to unrealistic levels. All of that part was supposed to be regulated by an incompetent or asleep SEC and allowed by the fed (which is composed of the major banks in the U.S. banking system). It was the capitalization of all of the mortgage backed securities by higher and higher amounts of risky sub prime lending by Wall Street that has caused this financial contraction, not Fannie and Freddie (which had better underwriting but sliding underwriting standards).
 

TexasBred

Well-known member
Fannie and Freddie have never been concerned with underwriting guidelines. Those are for originators. All they cared about was discount and net yield.
 

Tex

Well-known member
TexasBred said:
Fannie and Freddie have never been concerned with underwriting guidelines. Those are for originators. All they cared about was discount and net yield.

All of the loan portfolios they securitized had to follow certain underwriting guidelines. If those guidelines were not followed, Fannie didn't have to securitize the loan portfolios and hence the originators could not sell them off. Their holding onto the portfolios gave them interest rate risk that was huge on the amounts they were dealing with. See the other article I posted on the subject.
 

Sandhusker

Well-known member
Tex said:
Sandhusker said:
Oldtimer said:
Yep- I forgot- these new Republicans don't accept responsibilty for the bad things that happen when they are in control :roll: :(



Are you practicing up on your "Yes sir, Mr. Obama" :???: :wink: :p :lol:

You're ignoring facts again, OT. The Dems are in control now, but why is it so important for them to get 60 seats in the Senate? HINT: It's for the very reason that the Republicans couldn't get Fannie and Freddie straigtened out. When has Frank or Dodd accepted any responsibility for their roles? When has Obama accepted any responsibility for promising to fillibuster and Republican attempt to fix Fannie and Freddie? Let's talk about responsibility.

Unless you're a solid Socialist, there's no reason to nationalize the bank I work for, we're well capitalized and in as good of shape as anybody. Maybe I should practice "Go away, Mr. Soetoero, or whatever your name is today. By the way, don't you have a Kenyan Independence Day celebration to attend"?

They should never nationalize "good" banks that are not involved in crisis. To do so would be total lunacy.

To nationalize the "bad" banks without replacing their governance is equal lunacy.

Fannie was taken out of the govt. arm----the whole reason Raines had the excuse to make the kind of money he did-- and they should stand on their own capital with regulatory requirements. Putting the rubber stamp on securitizing the loan packages at that time was supposed to be a private capital risk---not a public one.

The vast majority of the loans that did cause the problem were not Fannie or Freddie loans, but sub prime loans that were supposed to be done all with private capital (which should have been able to be risked with no hurt to the system). Wall Street did not price the risk right, sold to everyone as if they did, and then began making derivatives out of thin air based on parts of the securities which leveraged the whole amount to unrealistic levels. All of that part was supposed to be regulated by an incompetent or asleep SEC and allowed by the fed (which is composed of the major banks in the U.S. banking system). It was the capitalization of all of the mortgage backed securities by higher and higher amounts of risky sub prime lending by Wall Street that has caused this financial contraction, not Fannie and Freddie (which had better underwriting but sliding underwriting standards).

The banking committees are supposed to be watching the banks. What were they doing?
 

Mike

Well-known member
Sandhusker said:
Tex said:
Sandhusker said:
You're ignoring facts again, OT. The Dems are in control now, but why is it so important for them to get 60 seats in the Senate? HINT: It's for the very reason that the Republicans couldn't get Fannie and Freddie straigtened out. When has Frank or Dodd accepted any responsibility for their roles? When has Obama accepted any responsibility for promising to fillibuster and Republican attempt to fix Fannie and Freddie? Let's talk about responsibility.

Unless you're a solid Socialist, there's no reason to nationalize the bank I work for, we're well capitalized and in as good of shape as anybody. Maybe I should practice "Go away, Mr. Soetoero, or whatever your name is today. By the way, don't you have a Kenyan Independence Day celebration to attend"?

They should never nationalize "good" banks that are not involved in crisis. To do so would be total lunacy.

To nationalize the "bad" banks without replacing their governance is equal lunacy.

Fannie was taken out of the govt. arm----the whole reason Raines had the excuse to make the kind of money he did-- and they should stand on their own capital with regulatory requirements. Putting the rubber stamp on securitizing the loan packages at that time was supposed to be a private capital risk---not a public one.

The vast majority of the loans that did cause the problem were not Fannie or Freddie loans, but sub prime loans that were supposed to be done all with private capital (which should have been able to be risked with no hurt to the system). Wall Street did not price the risk right, sold to everyone as if they did, and then began making derivatives out of thin air based on parts of the securities which leveraged the whole amount to unrealistic levels. All of that part was supposed to be regulated by an incompetent or asleep SEC and allowed by the fed (which is composed of the major banks in the U.S. banking system). It was the capitalization of all of the mortgage backed securities by higher and higher amounts of risky sub prime lending by Wall Street that has caused this financial contraction, not Fannie and Freddie (which had better underwriting but sliding underwriting standards).

The banking committees are supposed to be watching the banks. What were they doing?

Congressional Research Service (CRS) Report for Congress[1]
Congressional Oversight refers to the review, monitoring, and supervision of federal agencies, programs, activities, and policy implementation. Congress exercises this power largely through its standing committee system. However, oversight, which dates to the earliest days of the Republic, also occurs in a wide variety of congressional activities and contexts. These include authorization, appropriations, investigative, and legislative hearings by standing committees; specialized investigations by select committees; and reviews and studies by congressional support agencies and staff

Congress’s oversight authority derives from its “implied” powers in the Constitution, public laws, and House and Senate rules. It is an integral part of the American system of checks and balances.
 

TSR

Well-known member
Mike said:
“There is a general belief that somehow we can regulate very complex organizations, and we can’t,” he said.

Regulation in itself is not the answer. Bush raised the Regulatory watchdogs to unprecendented highs (money AND Regulators) during office and some still slipped through the cracks.

Finance is an ever changing and greedy institution that can never be held in constant check. Once you pass a rule, they will induly figure a way around it.

Not counting how much Regulatory Enforcement has cost us in taxes.

How can anyone attribute Greenspan to Reagan alone, since he appointed him at the end of his second term, and he remained until 2006?

Question is Mike did these regulatory watchdogs do the job they were supposed to do? Then you must ask what was that job? To regulate or to turn their backs? :???: :(
 

TexasBred

Well-known member
reader (the Second) said:
You realize that the "banks" they are talking about are the investment banks more than the ordinary banks although the latter are also in trouble due to the real estate / mortgage market woes. I heard an interesting talk show with a banking association representative.

Actually most locally owned commercial banks have a rather small % of their loan portfolio tied up in real estate loans. Not enough money in it for them.
 

hypocritexposer

Well-known member
Another attack on intelligence Reader? Yes sometimes I like to lighten things up with a bit of a joke, and I react positively to them also.

Would you like me to start attacking, instead?
 
Top