Filed under: GSE Bailout, Paulson's Blueprint — admin @ 10:40 am
Ruth Lee
More doom and gloom? Money and Markets ran a comprehensive article last week outlining the future of Washington Mutual, Wachovia and the economy’s general direction:
“Much of our nation’s financial structure is collapsing, and our government’s only response is phony money, bogus bailouts and a litany of false promises.
Ben Bernanke, Henry Paulson, the FDIC and the U.S. Congress say they can do it all.”
Washington Mutual in a Death Spiral?
“Washington Mutual, America’s largest savings and loan, is unfortunately, also one of the nation’s largest subprime lenders. A direct consequence: It appears to be in a death spiral, losing $3.3 billion in the second quarter … admitting to losses of as much as $19 billion this year … and probably on its way to losses of an estimated $26 billion.
That estimated loss is over four times its total market value as of Friday’s close … twelve times its yearly earnings in the best of times. Can it get a new capital infusion to stave off failure?”
Click here to read the full article.
Filed under: Paulson's Blueprint — admin @ 8:00 am
Ruth Lee
I encourage you to check out this great blog post that linked to an even better article on Bloomberg …Click here for the post on Naked Capitalism.com.
Here is an excerpt:
“The Fed has to undertake substantial open-market operations to sop up the liquidity that would otherwise be generated by its various new lending facilities. The result? The Fed is buying far fewer short-dated Treasuries at auctions, which is no doubt leading to higher interest rates.”
This is the Bloomberg article… and this is really really really good: Paulson Finds Fed Won’t Help With One-Year T-Bills (Update2).
Here is an excerpt:
“June 2 (Bloomberg) — As if a slowing economy, a falling dollar, faster inflation and a credit crunch weren’t enough headaches for U.S. Treasury Secretary Henry Paulson, he now has to worry that the Federal Reserve will undermine the return of the one-year bill.”
(Click here to read the full article)
Filed under: Paulson's Blueprint — admin @ 11:09 am
Ruth Lee
I am quite confident that the industry’s skepticism of the Blueprint comes down to the notion that: the building is on fire…and Paulson is focused on the finer points of the master safety plan. In addition, why get all up in arms scouring the minutiae of the 218 page Blueprint, when it requires legislative action that will most certainly not get done prior to the end of Bush’s presidency? The document focuses on re-engineering the federal banking regulatory landscape. It pares down some of the antiquated, leverages inefficiencies…blah blah blah. But the fact is… it is a lame duck proposal sitting in a shooting range of issues.
If you haven’t read about the proposal, there are some good articles here, here and here.
