“They didn’t tell me I had to do anything particular with it”
January 18, 2009 3:06 PM Subscribe
At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.
“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”
Personal stories from the front lines of the American bailout.
“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”
Personal stories from the front lines of the American bailout.
[whistles title music to Law & Order]
In the finance system, people depend on two separate but equally important systems. The market, which produces wealth and distributes it, and the government, which licences and regulates that market.
These are their stories.
posted by Fiasco da Gama at 3:20 PM on January 18, 2009 [22 favorites]
In the finance system, people depend on two separate but equally important systems. The market, which produces wealth and distributes it, and the government, which licences and regulates that market.
These are their stories.
posted by Fiasco da Gama at 3:20 PM on January 18, 2009 [22 favorites]
Cocksuckers.
Paulson should be hung by his fingers, Indiana-Jones-Nazi-looking motherfucker.
posted by notsnot at 3:21 PM on January 18, 2009
Paulson should be hung by his fingers, Indiana-Jones-Nazi-looking motherfucker.
posted by notsnot at 3:21 PM on January 18, 2009
I think I still have around fifty bucks in my Whitney account from when I lived in New Orleans...
Yeah, they don't deserve that any more.
posted by Katemonkey at 3:22 PM on January 18, 2009
Yeah, they don't deserve that any more.
posted by Katemonkey at 3:22 PM on January 18, 2009
We’re not going to change our business model
Time to foreclose on *these* fuckers.
posted by PeterMcDermott at 3:25 PM on January 18, 2009 [2 favorites]
Time to foreclose on *these* fuckers.
posted by PeterMcDermott at 3:25 PM on January 18, 2009 [2 favorites]
So the point is they are not making loans like they said? Are the even investing in the commercial paper market?
Well, my original suggestion for the bailout was : Don't give money to people who lost money. Let smaller untouched banks manage the bailout investments, but send them NSA & military intelligence analysts to help out and monitor the money.
posted by jeffburdges at 3:29 PM on January 18, 2009 [1 favorite]
Well, my original suggestion for the bailout was : Don't give money to people who lost money. Let smaller untouched banks manage the bailout investments, but send them NSA & military intelligence analysts to help out and monitor the money.
posted by jeffburdges at 3:29 PM on January 18, 2009 [1 favorite]
Worst financial disaster since the Great Depression and apparently we've learned nothing. I don't recall hearing anything about better mortgage policies, regulation of credit default swaps, etc. I'm not one for conspiracy theories, but this is beginning to feel like a kleptocracy.
posted by wastelands at 3:33 PM on January 18, 2009 [2 favorites]
posted by wastelands at 3:33 PM on January 18, 2009 [2 favorites]
In fairness to the Whitney, NOLA banks aren't quite in the same situation as the rest of the country; having seen much of their collateral drown in 2005, they already took the hit and dealt with it. I would not expect a NOLA banker to react much differently. My main curiosity is why the Whitney is getting any TARP money at all; it may be just to keep them from squawking about being punished for being responsible while the irresponsible all around them are being rewarded.
Then again, they could just be assholes. My bank, Parish, just got bought by Hibernia. So whatever.
posted by localroger at 3:37 PM on January 18, 2009
Then again, they could just be assholes. My bank, Parish, just got bought by Hibernia. So whatever.
posted by localroger at 3:37 PM on January 18, 2009
this is beginning to feel like a kleptocracy.
Beginning?
posted by grouse at 3:38 PM on January 18, 2009 [1 favorite]
Beginning?
posted by grouse at 3:38 PM on January 18, 2009 [1 favorite]
I understood TARP as a program to help loosen inter-bank credit; an attempt to inject more liquidity in the market and ease the fears of finicky investors and boards. To wit, a hugely expensive placebo.
So I find this news hardly surprising. That being said, I was never a fan of TARP to begin with, except that in the choice of buy distressed securities (Buffet) vs. stock in the bank (Soros), I was on the side of the lesser evil (Soros).
posted by sbutler at 3:41 PM on January 18, 2009
So I find this news hardly surprising. That being said, I was never a fan of TARP to begin with, except that in the choice of buy distressed securities (Buffet) vs. stock in the bank (Soros), I was on the side of the lesser evil (Soros).
posted by sbutler at 3:41 PM on January 18, 2009
this, these banks. i want to throw up.
posted by localhuman at 3:47 PM on January 18, 2009 [1 favorite]
posted by localhuman at 3:47 PM on January 18, 2009 [1 favorite]
The US really should've looked at how the Swedes did it in the '90's.
BoA has a market cap of $36B but has had over $40B pumped directly into it by the treasury not to mention $100B of asset guarantees to cover their now disastrous purchase of Merril-Lynch.
posted by PenDevil at 3:48 PM on January 18, 2009 [13 favorites]
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.There literally is no reason why Bank of America and Citi are not at least 90% owned by the American taxpayer at the moment.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.
BoA has a market cap of $36B but has had over $40B pumped directly into it by the treasury not to mention $100B of asset guarantees to cover their now disastrous purchase of Merril-Lynch.
posted by PenDevil at 3:48 PM on January 18, 2009 [13 favorites]
So the point is they are not making loans like they said?
I don't think they did say, did they?
Honestly, you can't blame the(se) banks for pursuing their own interests here. The government gave them a barrel full of money with no strings attached - why should they do anything with that money besides what they think will best grow their own business?
Now, the people who decided that was a good way to spend $350M dollars? Them you can blame. Preferably with a sharp stick.
posted by freebird at 3:49 PM on January 18, 2009 [3 favorites]
I don't think they did say, did they?
Honestly, you can't blame the(se) banks for pursuing their own interests here. The government gave them a barrel full of money with no strings attached - why should they do anything with that money besides what they think will best grow their own business?
Now, the people who decided that was a good way to spend $350M dollars? Them you can blame. Preferably with a sharp stick.
posted by freebird at 3:49 PM on January 18, 2009 [3 favorites]
Look. These guys are in business for one reason. To accumulate money. Handing them billions in free money does absolutely nothing to encourage them to loan it out, especially to those dodgy consumers.
But, if the consumers had possession of those billions, you can bet the finance sector would take keen interest in this sudden pile of cash in consumer's hands. They would want to get their little paws on it asap.
They would compete for it. Not only would they have to compete with each other, they would also have to compete with other businesses who would want a piece of the consumer's new pie.
Of course, some consumers would elect to save the money. But, that's ok, since that would mean the money would be put into financial institutions...many of them, the same firms who wanted the cash in the first place. Others might actually pay-off debt. Debt that the financial sector claims we should be ashamed of running-up. Truth is, though, they want us to keep that debt on the books. The love collecting that smack-like interest.
So...seriously...give the money to the consumers and let the rest of the players compete for their share.
Unless you don't really believe competition makes our economy stronger, of course.
posted by Thorzdad at 3:50 PM on January 18, 2009 [15 favorites]
But, if the consumers had possession of those billions, you can bet the finance sector would take keen interest in this sudden pile of cash in consumer's hands. They would want to get their little paws on it asap.
They would compete for it. Not only would they have to compete with each other, they would also have to compete with other businesses who would want a piece of the consumer's new pie.
Of course, some consumers would elect to save the money. But, that's ok, since that would mean the money would be put into financial institutions...many of them, the same firms who wanted the cash in the first place. Others might actually pay-off debt. Debt that the financial sector claims we should be ashamed of running-up. Truth is, though, they want us to keep that debt on the books. The love collecting that smack-like interest.
So...seriously...give the money to the consumers and let the rest of the players compete for their share.
Unless you don't really believe competition makes our economy stronger, of course.
posted by Thorzdad at 3:50 PM on January 18, 2009 [15 favorites]
A stranger was seated next to a little girl on the airplane when the stranger turned to her and said, "Let's talk. I've heard that flights go quicker if you strike up a conversation with your fellow passenger."
The little girl, who had just opened her book, closed it slowly and said to the stranger, "What would you like to talk about?"
"Oh, I don't know," said the stranger. "How about banking?" and he smiles.
"OK," she said. "That could be an interesting topic. But let me ask you a question first. A horse, a cow, and a deer all eat the same stuff... grass. Yet a deer excretes little pellets, while a cow turns out a flat patty, and a horse produces clumps of dried grass. Why do you suppose that is?"
The stranger, visibly surprised by the little girl's intelligence, thinks about it and says,"Hmmm, I have no idea."
To which the little girl replies, "Do you really feel qualified to discuss the banking mess when you don't know shit?"
posted by netbros at 3:51 PM on January 18, 2009 [43 favorites]
The little girl, who had just opened her book, closed it slowly and said to the stranger, "What would you like to talk about?"
"Oh, I don't know," said the stranger. "How about banking?" and he smiles.
"OK," she said. "That could be an interesting topic. But let me ask you a question first. A horse, a cow, and a deer all eat the same stuff... grass. Yet a deer excretes little pellets, while a cow turns out a flat patty, and a horse produces clumps of dried grass. Why do you suppose that is?"
The stranger, visibly surprised by the little girl's intelligence, thinks about it and says,"Hmmm, I have no idea."
To which the little girl replies, "Do you really feel qualified to discuss the banking mess when you don't know shit?"
posted by netbros at 3:51 PM on January 18, 2009 [43 favorites]
Many of the middle sized banks didn't really have any residential real estate exposure -- they quite simply couldn't compete against the big banks and the dedicated mortgage firms.
Of course, they had to make loans somewhere, so they did. Where?
Commercial Real Estate. Which is now collapsing as well.
Expect these midsized banks to have a very bad time.
posted by eriko at 3:58 PM on January 18, 2009
Of course, they had to make loans somewhere, so they did. Where?
Commercial Real Estate. Which is now collapsing as well.
Expect these midsized banks to have a very bad time.
posted by eriko at 3:58 PM on January 18, 2009
What's amusing to me is that banks are actually having trouble making good loans, which is why they're keeping the cash (depositing with the Federal Reserve, to be exact, and letting the Fed pay interest in the cash).
To understand this banking crisis, you have to understand what got us into this mess in the first place. The #1 reason we're in this hell is that banks made bad loans to normal consumers and commercial ventures on the assumption that good times would last forever.
People keep saying: banks are too big, banks can't be too big to fail. But what does that really mean? It means that for years now, banks have made loans to people who didn't deserve them. And now these loans are sitting on the banks' books, going bad. But it also means that there aren't many good loans out there anymore.
Loans are debt. Loans mean that people are borrowing now on the premise that they'll pay back later. But with unemployment rising so fast, with people's savings rate having dipped into the negative (although that's finally rebounding), and with many, many people getting underwater on their mortgages, banks are having trouble finding good loans to make. And for good reason. We (the American consumer) have been tapped out for a while.
Good loans are still available, albeit rarely. If you have a great credit score, little to no personal debt, and a fat down payment, you'll get a great mortgage. Same with auto loans. If you can afford the car, truly afford it with a great down payment and plenty of income to back it up, you'll get a great finance rate.
But many, many Americans are no longer in that camp. Many Americans simply don't have 20% down payments sitting in cash in their savings account. Many Americans don't have savings, period. So banks are retrenching. They've been burned pretty badly by this crisis thus far and are taking lending standards to the extreme. Can't blame them, really. Because if they loosen lending standards, in addition to all of their loans on their books going bad, they'll go belly up before you know it. And that's why they were given these capital infusions in the first place: to maintain adequate capital reserves to deal with impending loans blowing up on them.
The solution was always to force banks to write down loans properly. But if they did, every bank in America would be insolvent, destroying shareholders and the entire banking system. So the original plan was to buy their bad assets with TARP money. That plan seemed so practically infeasible and soon the UK starting pumping equity into their banks, which forced the US to follow suit. It's a good idea in theory, and helps prop up the banks (preventing systemic failure), but it does NOTHING to help the economy.
So that's where we are now. How do we help the economy? People think that more bank lending is the key. Banks create the money, swish it around, and recycle it. Theoretically, that's true. But what happens when there are no more good loans to make? What happens when banks spent the better part of a decade creating more and more loans, only to realize that they've gone too far and need to go the other way?
Banks need to get smaller. And the only way to do that is to call in some of the existing loans, and get people to build more equity (save). That means no more lending for a while. Banks helped create this financial crisis, but unfortunately, they aren't the solution. The solution is government intervention to create jobs, workforce education, and reinforce the social safety net to prevent more people from falling into the cracks. That takes years, if not decades.
posted by SeizeTheDay at 4:00 PM on January 18, 2009 [5 favorites]
To understand this banking crisis, you have to understand what got us into this mess in the first place. The #1 reason we're in this hell is that banks made bad loans to normal consumers and commercial ventures on the assumption that good times would last forever.
People keep saying: banks are too big, banks can't be too big to fail. But what does that really mean? It means that for years now, banks have made loans to people who didn't deserve them. And now these loans are sitting on the banks' books, going bad. But it also means that there aren't many good loans out there anymore.
Loans are debt. Loans mean that people are borrowing now on the premise that they'll pay back later. But with unemployment rising so fast, with people's savings rate having dipped into the negative (although that's finally rebounding), and with many, many people getting underwater on their mortgages, banks are having trouble finding good loans to make. And for good reason. We (the American consumer) have been tapped out for a while.
Good loans are still available, albeit rarely. If you have a great credit score, little to no personal debt, and a fat down payment, you'll get a great mortgage. Same with auto loans. If you can afford the car, truly afford it with a great down payment and plenty of income to back it up, you'll get a great finance rate.
But many, many Americans are no longer in that camp. Many Americans simply don't have 20% down payments sitting in cash in their savings account. Many Americans don't have savings, period. So banks are retrenching. They've been burned pretty badly by this crisis thus far and are taking lending standards to the extreme. Can't blame them, really. Because if they loosen lending standards, in addition to all of their loans on their books going bad, they'll go belly up before you know it. And that's why they were given these capital infusions in the first place: to maintain adequate capital reserves to deal with impending loans blowing up on them.
The solution was always to force banks to write down loans properly. But if they did, every bank in America would be insolvent, destroying shareholders and the entire banking system. So the original plan was to buy their bad assets with TARP money. That plan seemed so practically infeasible and soon the UK starting pumping equity into their banks, which forced the US to follow suit. It's a good idea in theory, and helps prop up the banks (preventing systemic failure), but it does NOTHING to help the economy.
So that's where we are now. How do we help the economy? People think that more bank lending is the key. Banks create the money, swish it around, and recycle it. Theoretically, that's true. But what happens when there are no more good loans to make? What happens when banks spent the better part of a decade creating more and more loans, only to realize that they've gone too far and need to go the other way?
Banks need to get smaller. And the only way to do that is to call in some of the existing loans, and get people to build more equity (save). That means no more lending for a while. Banks helped create this financial crisis, but unfortunately, they aren't the solution. The solution is government intervention to create jobs, workforce education, and reinforce the social safety net to prevent more people from falling into the cracks. That takes years, if not decades.
posted by SeizeTheDay at 4:00 PM on January 18, 2009 [5 favorites]
Check out many of Mishs' posts and what he has to say about all this
http://globaleconomicanalysis.blogspot.com/
posted by robbyrobs at 4:04 PM on January 18, 2009
http://globaleconomicanalysis.blogspot.com/
posted by robbyrobs at 4:04 PM on January 18, 2009
Honestly, you can't blame the(se) banks for pursuing their own interests here.... Now, the people who decided that was a good way to spend $350M dollars? Them you can blame. Preferably with a sharp stick.
When they're the same people do I get to blame both?
We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.
Naturally not. Those fake peasant villages aren't going to build themselves, you know.
posted by enn at 4:07 PM on January 18, 2009
When they're the same people do I get to blame both?
We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.
Naturally not. Those fake peasant villages aren't going to build themselves, you know.
posted by enn at 4:07 PM on January 18, 2009
But, if the consumers had possession of those billions, you can bet the finance sector would take keen interest in this sudden pile of cash in consumer's hands. They would want to get their little paws on it asap.
They would compete for it. Not only would they have to compete with each other, they would also have to compete with other businesses who would want a piece of the consumer's new pie.
Actually, that's how this whole mess started in the first place - except substitute "consumer" with "huge institutional investors." They (mostly oil-rich middle eastern nations, the chinese, etc...) were flush with oodles of cash. The investment banks wanted to get their little paws on it and so they came up with the concept of mortgage backed securities. The rest is history (when combined with the greed/reckless debt of many homeowners and speculators). Plenty of blame to go around here.
That said, I agree with PenDevil - the U.S. taxpayer got f*cked by Wall Street and Washington twice - first in the initial crash and now, second, by bailing out the banks and getting nothing to show for it.
posted by webhund at 4:18 PM on January 18, 2009 [1 favorite]
They would compete for it. Not only would they have to compete with each other, they would also have to compete with other businesses who would want a piece of the consumer's new pie.
Actually, that's how this whole mess started in the first place - except substitute "consumer" with "huge institutional investors." They (mostly oil-rich middle eastern nations, the chinese, etc...) were flush with oodles of cash. The investment banks wanted to get their little paws on it and so they came up with the concept of mortgage backed securities. The rest is history (when combined with the greed/reckless debt of many homeowners and speculators). Plenty of blame to go around here.
That said, I agree with PenDevil - the U.S. taxpayer got f*cked by Wall Street and Washington twice - first in the initial crash and now, second, by bailing out the banks and getting nothing to show for it.
posted by webhund at 4:18 PM on January 18, 2009 [1 favorite]
One of our major problems is the only people who know banking are bankers.
Lets imagine you're a government regulator, someone like Tim Geithner. What's your carrier path? If you work at the central bank, and you're smart and a good banker, why not work in the private sector? Well, if you spend some time at the government you'll get to do lots of networking, do little favors for people (even if they're not illegal, you could expedite something or give someone some advice) and after a decent tenure you could walk out of government into any one of a number of great, millions-paying (or billions-paying) jobs.
So what's the incentive to be tough on the banks? There is none. That's certainly what Robert Rubin did, before helping to crater Citibank.
That's one of the reasons I don't trust Geithner. I'm sure he's a nice guy, but he was in the middle of all of this. It's a huge mess.
Another problem is that the size of Wallstreet compensation is enormous, Apparently the financial services industry was taking up 10% of the economy. That's just fucked up.
Think about it like a casino that has poker tables. They'll have a rake of a few percent of each pot. But if the rake is too high, all the poker money will end up flowing to the casino too quickly, no one will have any cash left to play, and when they do get some more, there's no one else to play with, and the poker tables die.
The same thing can happen to an economy. Wallstreet compensation needs to be lowered, and central bankers and regulators could be paid more, with bonuses based on various economic health metrics.
I think a regime where regulatory jobs were as valuable as Wallstreet jobs (by reducing Wallstreet compensation and increasing regulatory compensation) And make sure that regulatory compensation is tied to the health of the economy including the economic health of the middle class and poor, not just overall growth.
Basically, we have got get our incentive structure straightened out.
posted by delmoi at 4:35 PM on January 18, 2009 [3 favorites]
Lets imagine you're a government regulator, someone like Tim Geithner. What's your carrier path? If you work at the central bank, and you're smart and a good banker, why not work in the private sector? Well, if you spend some time at the government you'll get to do lots of networking, do little favors for people (even if they're not illegal, you could expedite something or give someone some advice) and after a decent tenure you could walk out of government into any one of a number of great, millions-paying (or billions-paying) jobs.
So what's the incentive to be tough on the banks? There is none. That's certainly what Robert Rubin did, before helping to crater Citibank.
That's one of the reasons I don't trust Geithner. I'm sure he's a nice guy, but he was in the middle of all of this. It's a huge mess.
Another problem is that the size of Wallstreet compensation is enormous, Apparently the financial services industry was taking up 10% of the economy. That's just fucked up.
Think about it like a casino that has poker tables. They'll have a rake of a few percent of each pot. But if the rake is too high, all the poker money will end up flowing to the casino too quickly, no one will have any cash left to play, and when they do get some more, there's no one else to play with, and the poker tables die.
The same thing can happen to an economy. Wallstreet compensation needs to be lowered, and central bankers and regulators could be paid more, with bonuses based on various economic health metrics.
I think a regime where regulatory jobs were as valuable as Wallstreet jobs (by reducing Wallstreet compensation and increasing regulatory compensation) And make sure that regulatory compensation is tied to the health of the economy including the economic health of the middle class and poor, not just overall growth.
Basically, we have got get our incentive structure straightened out.
posted by delmoi at 4:35 PM on January 18, 2009 [3 favorites]
Put another way, here's a great article describing why banks aren't lending.
posted by SeizeTheDay at 4:35 PM on January 18, 2009
posted by SeizeTheDay at 4:35 PM on January 18, 2009
I told you so.
Anyone who supported the first TARP for any reason whatsoever needs to be slapped. It was one of the biggest looting operations in our country's history.
posted by tgrundke at 5:11 PM on January 18, 2009 [6 favorites]
Anyone who supported the first TARP for any reason whatsoever needs to be slapped. It was one of the biggest looting operations in our country's history.
posted by tgrundke at 5:11 PM on January 18, 2009 [6 favorites]
The solution is government intervention to create jobs, workforce education, and reinforce the social safety net to prevent more people from falling into the cracks. That takes years, if not decades.
The solution is to nationalize banks that fail to make taxpayer funds available to lenders, and incarcerate their executives for fraud and theft. The TARP funds are paid for by the public and are set up to help the public's economy. This was not meant to be a handout to a wealthy minority. We can conclude this business within the next 12-24 months, and we can use the public's banks to help finance new job creation, education and single-payer healthcare for the public.
posted by Blazecock Pileon at 5:19 PM on January 18, 2009 [2 favorites]
The solution is to nationalize banks that fail to make taxpayer funds available to lenders, and incarcerate their executives for fraud and theft. The TARP funds are paid for by the public and are set up to help the public's economy. This was not meant to be a handout to a wealthy minority. We can conclude this business within the next 12-24 months, and we can use the public's banks to help finance new job creation, education and single-payer healthcare for the public.
posted by Blazecock Pileon at 5:19 PM on January 18, 2009 [2 favorites]
s/lenders/lendees
posted by Blazecock Pileon at 5:22 PM on January 18, 2009
posted by Blazecock Pileon at 5:22 PM on January 18, 2009
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks.
Didn't the stock market do that already?
posted by IndigoJones at 5:45 PM on January 18, 2009
Didn't the stock market do that already?
posted by IndigoJones at 5:45 PM on January 18, 2009
The elephant in the room here is the United States Congress. They're the ones who gave the money, and they also should've/should be the ones demanding accountability from the banks. Congress is so incredibly weak as a legislative body that they won't demand this accountability. And that's how they like it; being neutral keeps them in their jobs. If Harry "Worst. Bluffer. Ever" Reid and Nancy "Practically a Bushie" Pelosi are the top of the heap, can you imagine the spinelessness that exists below them?
Problem is for most of us, this bailout is so damn complex that the average, even the above average person, doesn't know the correct path to take. We'll just know the path we shouldn't have taken in a year or so. But ultimately, we voted these jokers in, and we should all remember what they did when the 2010 elections roll around.
posted by zardoz at 6:04 PM on January 18, 2009 [3 favorites]
Problem is for most of us, this bailout is so damn complex that the average, even the above average person, doesn't know the correct path to take. We'll just know the path we shouldn't have taken in a year or so. But ultimately, we voted these jokers in, and we should all remember what they did when the 2010 elections roll around.
posted by zardoz at 6:04 PM on January 18, 2009 [3 favorites]
Congress is indeed at fault. But does no one remember the incredible panic the Bush administration set off, waving charts and numbers around to prove that the banking system was about to collapse? And the many media outfits that bought into it because no real reporting was done?
posted by etaoin at 6:43 PM on January 18, 2009 [1 favorite]
posted by etaoin at 6:43 PM on January 18, 2009 [1 favorite]
[whistles title music to Law & Order]
Oooh! Now do the "donk donk" sound. I love the "donk donk" sound.
I once read how that sound was made. It's like 20 single-note hits of different instruments recorded and layered and mixed with each other, back when sampling was too lo-fi for the application. That knowledge is occupying space where something useful could be. I blame the Internet.
posted by DecemberBoy at 7:00 PM on January 18, 2009 [1 favorite]
Oooh! Now do the "donk donk" sound. I love the "donk donk" sound.
I once read how that sound was made. It's like 20 single-note hits of different instruments recorded and layered and mixed with each other, back when sampling was too lo-fi for the application. That knowledge is occupying space where something useful could be. I blame the Internet.
posted by DecemberBoy at 7:00 PM on January 18, 2009 [1 favorite]
“Robbing a bank’s no crime compared to owning one!”
-- Brecht, "Happy End"
posted by ford and the prefects at 7:39 PM on January 18, 2009 [2 favorites]
-- Brecht, "Happy End"
posted by ford and the prefects at 7:39 PM on January 18, 2009 [2 favorites]
An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future., from the first link.
Sounds like exactly what the majority of US consumers want to be able to do. Save some money, pay off credit cards, and put a little money toward the future (education, buy some new piece of equipment for the family business, etc.). But, instead, this free money is allowing the banks to do what consumers can't.
posted by msbrauer at 8:22 PM on January 18, 2009
Sounds like exactly what the majority of US consumers want to be able to do. Save some money, pay off credit cards, and put a little money toward the future (education, buy some new piece of equipment for the family business, etc.). But, instead, this free money is allowing the banks to do what consumers can't.
posted by msbrauer at 8:22 PM on January 18, 2009
But, instead, this free money is allowing the banks to do what consumers can't.
Sorry, but... why did you cross out "acquire other businesses?"
posted by Civil_Disobedient at 8:41 PM on January 18, 2009
Sorry, but... why did you cross out "acquire other businesses?"
posted by Civil_Disobedient at 8:41 PM on January 18, 2009
Seems like the greatest transfer of wealth from poor people to the rich since, well, the founding of America.
posted by mrgrimm at 9:16 PM on January 18, 2009
posted by mrgrimm at 9:16 PM on January 18, 2009
This whole bailout feels like when a magician asks to borrow your watch to do a trick, and after he makes it disappear, when you ask for it back, says "No, it's gone!" And for a couple of seconds you're like, Ha, ha but then the reality sinks in and you're all No, motherfucker, you don't understand.
posted by Civil_Disobedient at 9:53 PM on January 18, 2009 [8 favorites]
posted by Civil_Disobedient at 9:53 PM on January 18, 2009 [8 favorites]
Crossed out "acquire other businesses" because that's not something I think a lot of ordinary people, those who are being affected most direly by rising prices and unemployment, are trying to do. The description of the how the banks view the bailout fits what I imagine a lot of people would want to do, except for that bit.
posted by msbrauer at 10:08 PM on January 18, 2009
posted by msbrauer at 10:08 PM on January 18, 2009
Seems like the greatest transfer of wealth from poor people to the rich since, well, the founding of America.
I have plenty of my own issues about the socio-economic history of America and the West in general - but you have to explain that a little. It comes off to me as sophomoric and vague to the point of meaninglessness, but I'd like to think you actually are making a point. Who are the poor you see getting their wealth transferred to the rich by America's founding? And do you mean the revolution, the colonies, or the original invasion by what we now call natives?
posted by freebird at 10:10 PM on January 18, 2009
I have plenty of my own issues about the socio-economic history of America and the West in general - but you have to explain that a little. It comes off to me as sophomoric and vague to the point of meaninglessness, but I'd like to think you actually are making a point. Who are the poor you see getting their wealth transferred to the rich by America's founding? And do you mean the revolution, the colonies, or the original invasion by what we now call natives?
posted by freebird at 10:10 PM on January 18, 2009
The US really should've looked at how the Swedes did it in the '90's.
They did. The capital puchase program under TARP is a lot like what you describe. Here is a set of model documents, if you're interested (you'll probably want to start with the the term sheet). You can find weekly transaction reports here.
posted by Mr. President Dr. Steve Elvis America at 11:37 PM on January 18, 2009 [2 favorites]
They did. The capital puchase program under TARP is a lot like what you describe. Here is a set of model documents, if you're interested (you'll probably want to start with the the term sheet). You can find weekly transaction reports here.
posted by Mr. President Dr. Steve Elvis America at 11:37 PM on January 18, 2009 [2 favorites]
freebird: I think he meant that in this period, that was the single greatest transfer of wealth.
posted by rainy at 11:55 PM on January 18, 2009
posted by rainy at 11:55 PM on January 18, 2009
The median net worth of US families is circa $80 000 (though that'll have fallen significantly over the past year), while the median net worth of CEOs is about $70 000 000. (The median net wealth for black families is dismal, something south of $20 000. Sickening.)
Back in the 1970s, CEOs averaged ~50x the paycheque of front-line workers. These days, it touches on 500x. Real pay has decreased, while working hours have increased. And where it used to be the wealthiest 10% controlled about 50% of the wealth, these days they basically own the USA lock, stock, and barrel: over 90% of US wealth is controlled by less than 10% of the super-elite.
The situation is absolutely unsustainable. It may be necessary to place a cap on wealth. One simply can not have a workable nation and society under these conditions.
posted by five fresh fish at 11:58 PM on January 18, 2009 [7 favorites]
Back in the 1970s, CEOs averaged ~50x the paycheque of front-line workers. These days, it touches on 500x. Real pay has decreased, while working hours have increased. And where it used to be the wealthiest 10% controlled about 50% of the wealth, these days they basically own the USA lock, stock, and barrel: over 90% of US wealth is controlled by less than 10% of the super-elite.
The situation is absolutely unsustainable. It may be necessary to place a cap on wealth. One simply can not have a workable nation and society under these conditions.
posted by five fresh fish at 11:58 PM on January 18, 2009 [7 favorites]
And that's why they were given these capital infusions in the first place: to maintain adequate capital reserves to deal with impending loans blowing up on them.
That's not true. As the Times article says, "Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy."
A smaller-scale example here.
But we knew months back that "In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans."
In light of the relentlessly irresponsible choices that created the crisis, it was totally unreasonable to assume that the banks would use a big pile of money as intended when there were no strings attached. The money was disbursed based on the same facile free-market delusion that made Allen Greenspan think that these institutions would somehow regulate themselves.
posted by foxy_hedgehog at 3:29 AM on January 19, 2009
That's not true. As the Times article says, "Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy."
A smaller-scale example here.
But we knew months back that "In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans."
In light of the relentlessly irresponsible choices that created the crisis, it was totally unreasonable to assume that the banks would use a big pile of money as intended when there were no strings attached. The money was disbursed based on the same facile free-market delusion that made Allen Greenspan think that these institutions would somehow regulate themselves.
posted by foxy_hedgehog at 3:29 AM on January 19, 2009
Honestly, you can't blame the(se) banks for pursuing their own interests here.
Watch me.
posted by vibrotronica at 8:32 AM on January 19, 2009 [1 favorite]
Watch me.
posted by vibrotronica at 8:32 AM on January 19, 2009 [1 favorite]
That's not true. As the Times article says, "Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy."
That just doesn't make any sense. Using the TARP investments to make more risky loans would've put us right back where we started. You talk about banks being "relentlessly irresponsible", but would it really have been responsible to use the TARP investments to make more high-risk, inadequately collateralized loans? Remember, good credits can still get loans.
If you look at the term sheet and transaction reports I linked above, the TARP investment appears to be largely in the form of 5% preferred stock/senior debt that will adjust to 9% in a few years. The expectation is clearly that the banks will do something productive with the money. If the plan was to help struggling borrowers, it wouldn't make sense for the Treasury to demand that return on its investment, since helping struggling borrowers is never going to pay for itself.
posted by Mr. President Dr. Steve Elvis America at 8:34 AM on January 19, 2009
That just doesn't make any sense. Using the TARP investments to make more risky loans would've put us right back where we started. You talk about banks being "relentlessly irresponsible", but would it really have been responsible to use the TARP investments to make more high-risk, inadequately collateralized loans? Remember, good credits can still get loans.
If you look at the term sheet and transaction reports I linked above, the TARP investment appears to be largely in the form of 5% preferred stock/senior debt that will adjust to 9% in a few years. The expectation is clearly that the banks will do something productive with the money. If the plan was to help struggling borrowers, it wouldn't make sense for the Treasury to demand that return on its investment, since helping struggling borrowers is never going to pay for itself.
posted by Mr. President Dr. Steve Elvis America at 8:34 AM on January 19, 2009
This was not meant to be a handout to a wealthy minority
Keep telling yourself that.
In seriousness, how come the previous 8 years of Neocon thievery didn't tip you off to this?
Fool me once, shame on you.
Fool me twice, have a couple of trillion dollars.
posted by fullerine at 9:04 AM on January 19, 2009 [2 favorites]
Keep telling yourself that.
In seriousness, how come the previous 8 years of Neocon thievery didn't tip you off to this?
Fool me once, shame on you.
Fool me twice, have a couple of trillion dollars.
posted by fullerine at 9:04 AM on January 19, 2009 [2 favorites]
Honestly, you can't blame the(se) banks for pursuing their own interests here.
Watch me.
That seems a totally useful way to spend energy. Do you also curse sharks for eating cute seals? Berate the winds? Castigate diseases? Surely the fault is not with Things and People for being exactly what they are, but with those who expect anything else from them - as the Bailout proponents did and do?
posted by freebird at 10:19 AM on January 19, 2009
Watch me.
That seems a totally useful way to spend energy. Do you also curse sharks for eating cute seals? Berate the winds? Castigate diseases? Surely the fault is not with Things and People for being exactly what they are, but with those who expect anything else from them - as the Bailout proponents did and do?
posted by freebird at 10:19 AM on January 19, 2009
... do you mean the revolution, the colonies, or the original invasion by what we now call natives?
In real terms (today's dollars), let's just call it since the Louisiana "purchase." (admittedly a little after the country was founded).
freebird, I understand your general point (it's "our" fault for giving the banks money with no strings attached and generally no regulation whatsoever (although 80% of Americans opposed TARP, and many of us were yelling "hell no" long before details of the program were every public)) but you do seem a bit defensive.
Should we *not* be upset that billions of taxpayer money were given away to the financial industry, with no promise of any sort of return on our investment? If it's our representatives that we should be angry with, what should we do about it? All political candidates are still backing TARP, at least the "legitimate" ones--the ones we can vote for without hearing that our vote was "wasted." I've been "wasting" my votes for decades now, and I have as much
How do we correct the problem of TARP?
What I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as “fair value” purchases of toxic assets.
Exactly. And who will complain, since the "shareholders" own everything?
posted by mrgrimm at 10:57 AM on January 19, 2009
In real terms (today's dollars), let's just call it since the Louisiana "purchase." (admittedly a little after the country was founded).
freebird, I understand your general point (it's "our" fault for giving the banks money with no strings attached and generally no regulation whatsoever (although 80% of Americans opposed TARP, and many of us were yelling "hell no" long before details of the program were every public)) but you do seem a bit defensive.
Should we *not* be upset that billions of taxpayer money were given away to the financial industry, with no promise of any sort of return on our investment? If it's our representatives that we should be angry with, what should we do about it? All political candidates are still backing TARP, at least the "legitimate" ones--the ones we can vote for without hearing that our vote was "wasted." I've been "wasting" my votes for decades now, and I have as much
How do we correct the problem of TARP?
What I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as “fair value” purchases of toxic assets.
Exactly. And who will complain, since the "shareholders" own everything?
posted by mrgrimm at 10:57 AM on January 19, 2009
Should we *not* be upset that billions of taxpayer money were given away to the financial industry, with no promise of any sort of return on our investment?
As I pointed out earlier in the thread, the TARP capital purchase program (which seems to be the only ongoing, active TARP program) involves the sale of preferred shares, senior debt, and warrants to the Treasury. I frankly don't see how you can characterize this as "no promise of any sort of return on our investment".
It may or may not turn out to be a bad deal, but from the way you talk, one would think Treasury did nothing but cut checks to the banks.
posted by Mr. President Dr. Steve Elvis America at 11:16 AM on January 19, 2009
As I pointed out earlier in the thread, the TARP capital purchase program (which seems to be the only ongoing, active TARP program) involves the sale of preferred shares, senior debt, and warrants to the Treasury. I frankly don't see how you can characterize this as "no promise of any sort of return on our investment".
It may or may not turn out to be a bad deal, but from the way you talk, one would think Treasury did nothing but cut checks to the banks.
posted by Mr. President Dr. Steve Elvis America at 11:16 AM on January 19, 2009
Valid points MrGrimm; I am not convinced that there have not been larger "giveaways": some defense industry scams lasting decades and such seem like they must be in the running. But I don't have numbers to back up any such wild arguments, so I'll take your word and appreciate the clarification. I misunderstood your point to be some claim that the founding itself was a similar wealth transfer, which seemed either a stretch (if unsupported) or a great and interesting historical perspective.
your general point (it's "our" fault for giving the banks money with no strings attached)
Whoah there tiger - I think it's crazy to blame sharks for being sharks, but I don't think most of "us" approved of the bailout. I place the blame pretty squarely on the legislators and officials who signed the blank check and expected the sharks to act like friendly dolphins helping us shipwrecked sailors to shore - or pretended to . We probably deserve some blame for electing them, but surely that's a much larger question about the nature of republican democracy to be left aside for a nice rant with a nice hot coffee and whisky.
Should we *not* be upset?
Hell no! "We" should probably be *more* upset. I just think it's a waste of time to be upset with bankers for acting like bankers.
How do we correct the problem of TARP?
I wouldn't claim to have a real answer, but I think it would be a good start to STOP GIVING THEM MORE MONEY.
posted by freebird at 11:20 AM on January 19, 2009
your general point (it's "our" fault for giving the banks money with no strings attached)
Whoah there tiger - I think it's crazy to blame sharks for being sharks, but I don't think most of "us" approved of the bailout. I place the blame pretty squarely on the legislators and officials who signed the blank check and expected the sharks to act like friendly dolphins helping us shipwrecked sailors to shore - or pretended to . We probably deserve some blame for electing them, but surely that's a much larger question about the nature of republican democracy to be left aside for a nice rant with a nice hot coffee and whisky.
Should we *not* be upset?
Hell no! "We" should probably be *more* upset. I just think it's a waste of time to be upset with bankers for acting like bankers.
How do we correct the problem of TARP?
I wouldn't claim to have a real answer, but I think it would be a good start to STOP GIVING THEM MORE MONEY.
posted by freebird at 11:20 AM on January 19, 2009
That seems a totally useful way to spend energy. Do you also curse sharks for eating cute seals? Berate the winds? Castigate diseases?
These are not inanimate objects, forces of nature, or animals we're talking about. These are human beings with free will who are supposed to have a moral compass. I'm sick and tired of people talking about the "free market" like it was a natural phenomenon. it's not. It's a human construct, and and we can construct it any way we want.
And your oh so glib excuse, "Honestly, you can't blame the(se) banks for pursuing their own interests here..." pisses me off the more I think about it. Why don't I rob these people's banks? After all, you can't blame me for pursuing my interest, right? Or how about this: Let's take all of the assets of the banks and the richest people in America and redistribute them evenly among everybody else. After all, you can't blame us for pursing our own interest, can you?
posted by vibrotronica at 1:18 PM on January 19, 2009 [1 favorite]
These are not inanimate objects, forces of nature, or animals we're talking about. These are human beings with free will who are supposed to have a moral compass. I'm sick and tired of people talking about the "free market" like it was a natural phenomenon. it's not. It's a human construct, and and we can construct it any way we want.
And your oh so glib excuse, "Honestly, you can't blame the(se) banks for pursuing their own interests here..." pisses me off the more I think about it. Why don't I rob these people's banks? After all, you can't blame me for pursuing my interest, right? Or how about this: Let's take all of the assets of the banks and the richest people in America and redistribute them evenly among everybody else. After all, you can't blame us for pursing our own interest, can you?
posted by vibrotronica at 1:18 PM on January 19, 2009 [1 favorite]
Floyd Norris from the NYTimes basically in agreement with my previous comment.
posted by SeizeTheDay at 1:23 PM on January 19, 2009
posted by SeizeTheDay at 1:23 PM on January 19, 2009
Vibrotronica: my point is not that these bankers are great people, nor that they are acting well. It is that their behavior should come as no surprise, and it seems futile to spend much time on them.
It's a human construct, and and we can construct it any way we want.
If you really think you can construct a market where people will all act nice, I'm all for it. But I think that's unlikely, and our efforts would be better spent making sure laws are enforced, crimes are punished, and the fox is not in charge of the henhouse. If you want to spend a bunch of time railing about how the fox should be nicer, go for it. I think the effort is better spent on fixing the gate to keep it out.
posted by freebird at 2:19 PM on January 19, 2009
It's a human construct, and and we can construct it any way we want.
If you really think you can construct a market where people will all act nice, I'm all for it. But I think that's unlikely, and our efforts would be better spent making sure laws are enforced, crimes are punished, and the fox is not in charge of the henhouse. If you want to spend a bunch of time railing about how the fox should be nicer, go for it. I think the effort is better spent on fixing the gate to keep it out.
posted by freebird at 2:19 PM on January 19, 2009
Why don't I rob these people's banks? After all, you can't blame me for pursuing my interest, right?
False and silly analogy. You robbing the bank is against existing law. The whole point here is that the money was handed to these banks with no legal requirements in place as to how it was spent. So they are entirely within the law and the social contract by spending however they see fit. Further, they might well argue that their continued well-being benefits the economy as a whole, so whatever they do to serve themselves serves us all. This is not true of you robbing the bank.
You and I may might not agree with this notion (a rising tide blah blah blah), but my point is that there was nothing in place to preclude this approach and that the real blame lies in that fact.
posted by freebird at 2:31 PM on January 19, 2009
False and silly analogy. You robbing the bank is against existing law. The whole point here is that the money was handed to these banks with no legal requirements in place as to how it was spent. So they are entirely within the law and the social contract by spending however they see fit. Further, they might well argue that their continued well-being benefits the economy as a whole, so whatever they do to serve themselves serves us all. This is not true of you robbing the bank.
You and I may might not agree with this notion (a rising tide blah blah blah), but my point is that there was nothing in place to preclude this approach and that the real blame lies in that fact.
posted by freebird at 2:31 PM on January 19, 2009
FWIW, Frost Bank, the largest independent Texas-based bank, turned down the TARP money. They said they didn't need it, didn't want it, give to somebody else, thank you.
posted by Robert Angelo at 2:32 PM on January 19, 2009
posted by Robert Angelo at 2:32 PM on January 19, 2009
Honestly, you can't blame the(se) banks for pursuing their own interests here.
That seems a totally useful way to spend energy. Do you also curse sharks for eating cute seals? Berate the winds? Castigate diseases? Surely the fault is not with Things and People for being exactly what they are, but with those who expect anything else from them - as the Bailout proponents did and do?
...Our efforts would be better spent making sure laws are enforced, crimes are punished, and the fox is not in charge of the henhouse. If you want to spend a bunch of time railing about how the fox should be nicer, go for it. I think the effort is better spent on fixing the gate to keep it out.
Placing blame is necessary to figure out how to fix the situation, and who to imprison. Also, I would totally blame said shark if it was remote-controlled by hundreds of thousands of college-educated adults, and then it ate my fucking house.
posted by thsmchnekllsfascists at 3:07 PM on January 19, 2009 [1 favorite]
That seems a totally useful way to spend energy. Do you also curse sharks for eating cute seals? Berate the winds? Castigate diseases? Surely the fault is not with Things and People for being exactly what they are, but with those who expect anything else from them - as the Bailout proponents did and do?
...Our efforts would be better spent making sure laws are enforced, crimes are punished, and the fox is not in charge of the henhouse. If you want to spend a bunch of time railing about how the fox should be nicer, go for it. I think the effort is better spent on fixing the gate to keep it out.
Placing blame is necessary to figure out how to fix the situation, and who to imprison. Also, I would totally blame said shark if it was remote-controlled by hundreds of thousands of college-educated adults, and then it ate my fucking house.
posted by thsmchnekllsfascists at 3:07 PM on January 19, 2009 [1 favorite]
Placing blame is necessary to figure out [..] who to imprison
Totally in agreement, and that's kind of my point. Was what these bankers did with TARP illegal? Immoral, ill-advised, short-sighted, even evil - sure. But I've not yet seen anyone explain why it was actually against the law. If it was, I'll happily burn them in effigy along with the rest of the mob along the route to their oubliette. But if it wasn't, then shouldn't the attention be on fixing the laws?
posted by freebird at 3:56 PM on January 19, 2009
Totally in agreement, and that's kind of my point. Was what these bankers did with TARP illegal? Immoral, ill-advised, short-sighted, even evil - sure. But I've not yet seen anyone explain why it was actually against the law. If it was, I'll happily burn them in effigy along with the rest of the mob along the route to their oubliette. But if it wasn't, then shouldn't the attention be on fixing the laws?
posted by freebird at 3:56 PM on January 19, 2009
Totally in agreement, and that's kind of my point. Was what these bankers did with TARP illegal?
It's worth noting that the TARP capital purchase plan letter agreement (in the fourth paragraph) contains an integration clause that would make it difficult to argue that there was a side agreement to use the funds in a particular way not set forth in the agreement itself.
posted by Mr. President Dr. Steve Elvis America at 4:20 PM on January 19, 2009
It's worth noting that the TARP capital purchase plan letter agreement (in the fourth paragraph) contains an integration clause that would make it difficult to argue that there was a side agreement to use the funds in a particular way not set forth in the agreement itself.
posted by Mr. President Dr. Steve Elvis America at 4:20 PM on January 19, 2009
I suggest that if the thing we value is chickens, and we are having problems with foxes eating our chickens, we should be shooting the foxes.
First up against the wall...
posted by five fresh fish at 5:37 PM on January 19, 2009
First up against the wall...
posted by five fresh fish at 5:37 PM on January 19, 2009
I suggest that if the thing we value is chickens, and we are having problems with foxes eating our chickens, we should be shooting the foxes.
That is an excellent ecosystem management plan. I think that shooting and poisoning wolves has turned out to be a great way to protect cattle populations too!
posted by freebird at 9:45 PM on January 19, 2009
That is an excellent ecosystem management plan. I think that shooting and poisoning wolves has turned out to be a great way to protect cattle populations too!
posted by freebird at 9:45 PM on January 19, 2009
If you're going to go all doe-eyed about the pretty foxes and majestic wolves, simply switch to a different analogy.
Wall Street is infested with cockroaches. Bring out the Raid. Kills 'em dead.
posted by five fresh fish at 4:46 PM on January 20, 2009
Wall Street is infested with cockroaches. Bring out the Raid. Kills 'em dead.
posted by five fresh fish at 4:46 PM on January 20, 2009
Come to think of it, Wall Street is infested with leeches, they're bleeding the nation dry, and we need a shitload of salt to deal with the problem.
posted by five fresh fish at 8:36 PM on January 20, 2009
posted by five fresh fish at 8:36 PM on January 20, 2009
Bailout Recipients Hosted Call To Defeat Key Labor Bill
posted by homunculus at 10:05 AM on January 28, 2009
posted by homunculus at 10:05 AM on January 28, 2009
Krugman: The plans for rescuing the banking system are shaping up as a classic exercise in “lemon socialism”: taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right.
posted by homunculus at 9:40 AM on February 3, 2009
posted by homunculus at 9:40 AM on February 3, 2009
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What does that even mean?
posted by grouse at 3:08 PM on January 18, 2009 [1 favorite]