Time to Fire Geithner

Or maybe the bank decided that the property wasn't worth the contract price. Which would mean that a bank was actually doing what it is supposed to do. To draw a conclusion like that on incomplete information, that's ...

Ridiculous.

Because the deal is the banks need to park money at the Fed or invest in AAA treasuries or MBS in order to repair their balance sheet.

i hate to say this, but banks getting stricter on to whom they lent to and using what value of the property as collateral, was the only right thing the banks did during the crisis. We tried the, 'lets loan to everyone' road and look what happened.

people need to understand that banks are still undercapitalized and still have tons of toxic assets tucked away on and off balance sheets. The fed is still engineering a bank recapitalization eenvironment, to which wall street is riding via a huge dollar carry trade. The carry trade that's on now has nothing to do with the FX carry of old. It's that a US bank can have illiquid assets on it's books at 40 when they are worth 10. They just make $10 a year for 3 or 4 years and write down the investment a little bit more each time around while still able to show a profit. So long as nothing drastic happens eventually they'll have it written down to market. That's why even if you bid 15 for it you can't get them to sell it. Yes the carry trade is on, but if banks can earn their way out then who cares?

Who cares? Are you kidding me?

We have turned the rules of capitalism upside down and inside out so individuals/companies/industries that should have known better are essentially put in a position where they CAN'T LOSE no matter what decisions they make.

We have enacted a series of policies that have not only preserved the wealth of the richest but made them even richer in the process.

It is insane.

Put it this way, do you remember the Beanie Baby craze years ago?

You know, the one where housewives started to trade "rare" Beanie Babies for hundreds of dollars (even though they were worthless)?

Why didn't the Fed step in and buy all of those Beanie Babies at inflated "market" prices and bailout out those housewives?

What we are doing makes just as much sense.

It matters because this method of repair is coming on the backs of the tax payer. It should've been done by wiping out equity holders and forcing debt holders to convert to equity.

The problem with the banking system and why we never solve anything is the huge subsides given to it. No other industry comes close.

Nothing has changed. Banks are still over-leveraged at 12 to 1, and get away with voodoo accounting, below market borrowing from the Fed and gov't covering credit costs.

the who cares is about the carry trade..not the policy that created the framework for the carry trade

I think you are wrong urbandigs. The carry trade has distorted the yield curve and QE has shifted the duration of Treasury debt to money market duration. And even thought the mid part of the yield curve has shifted as a result of this policy, only AAA credits can borrow at those rates, everone else suffers. Of course the banks can borrow at rediculous rates and engage in trading and arbitrage which while noble does not benefit thereal economy and certaintly does not require access to the Fed window.

What Geither should have done is broken up the big banks and allow the next tier banks to step up to the plate. We would have reduced systemic risk, increased competition, save the taxpayers money and increased lending.

Not to mention that the real beneficiary of this policy has been the NYC RE market where prices have hardly budged and people who should be out of a job are buying $2M apartments.

We have created an environment where Wall St. actually believes that this sort of policy should be the norm and there is nothing to really worry about; whether it is making bad investment decisions or ripping off their customers. There are NO consequences.

It is sickening.

I think it's fair to say that the Banks have been first on the mind of Fed & Treasury. And when Bernanke says he's targeting higher inflation, he really means real estate, which has not responded due to the large over-supply. So basically we're all forced to watch Ben & Tim push on a string trying to save the banks while we lose purchasing power and increase the national debt.

There should be no confusion as to why Austrian Economics is back in vogue, along with the Tea Party and those preaching Austerity.

On a local note, it just pisses me off that I have to compete with thousands, if not tens of thousands, of people who are bidding up NYC real estate with taxpayer money.

Again, it wasn't as if these were a bunch of individuals making $45K a yr and just getting by... we are talking about an industry that already received all of the breaks and got away with screwing over clients. We are talking about an already spoiled and over-paid industry that has written its own regulations and legislation which protected them from being prosecuted for fraud that would send individuals to jail for life.

The scariest thing is that I get the impression that the vast majority of Wall St. doesn't even feel the slightest guilt for all of this. They have become a protected special class within our society that are super-geniuses when they make money and have "bad luck" when they lose money.

NYC RE has become linked to their massive gov't subsidized incomes and it pisses me off that when I pay my taxes I am helping price myself out of buying an apartment.

It is just twisted and wrong; but it is clear that has become accepted as the "norm".

That said, it seems clear to me that it's only prudent to constantly surf the REO inventory of the big banks. There's so much supply that once the banks are given the go-ahead to unload by the courts there will be deals to be had.

Which opens another issue we have discussed: Most banks don't have the proper documentation to legally foreclose; which is why they are looking to change those rules.

Most banks have as much of a right to foreclose on property as I have the right to foreclose on the Empire State Building - both of us don't have the actual titles.

If and when we see the banks squirm their way out of the robosigning / foreclosure nightmare they themselves created we are going to see another wave of fraud taking advantage of the softened documentation rules linked to foreclosure. Look for criminals to come out of the woodwork with "fake" documents and try to extort families facing foreclosure.

All of this to "save" Wall St.

I just don't have the right words to describe how screwed up this all is...

Isn't it Geithner who said if you raise capital requirements on banks we'd have less lending, which ignores the fact that low capital standards contributed to the Credit crisis and..less lending?

Think back -- During the heart of the financial crises Geithner repeatedly made the case in the media that "a strong economy requires strong banks" (or words to that effect). That's how he sold the bailout and he's never waivered. That's his worldview (right or wrong).

UD is right -- it's ALL about saving the [big] banks, always has been and EVERYTHING else is secondary.

"It matters because this method of repair is coming on the backs of the tax payer. It should've been done by wiping out equity holders and forcing debt holders to convert to equity."

So you support the govt. telling shareholders of a private corporation what to do? That sounds awfully, um, how do I put this.... SOCIALIST, no? Are you a Socialist Riversider?

Our economy needed and needs to restructure.

We have built an economy that is dependent on near zero real interest rates and a financial industry that breaks every rule and rips off customers left and right.

You know those "checks" you get in the mail for $20 to get you to enroll in some bank's XYZ plan? What would happen if I sent "checks" to every bank (using their legalize but just changing names and the "service" offered? But instead of charging them $29.99/month, I would charge them $35,000/mo. and when their treasurer "endorses and deposits" my check they have agreed to pay for a minimum of 3 months.

How long would it be before I was arrested and charged with god-knows-what "crimes"... meanwhile this is EXACTLY how financial institutions try to trick individuals into paying them fees... lots of legalize and fine print and offering them something for "nothing"....

Just imagine if common people had the same ability to make companies their "customers"!

It would be a crime for me to do that but it is standard practice for banks...

Bankrupting these institutions and restructuring the economy was what needed to happen; instead we have emboldened and strengthen these fraud-promoting institutions.

if banks can earn their way out then who cares?

Like ANYONE that wants to earn money on capital, that's who cares. NOBODY can borrow as cheaply as the banks. In fact, the point of this post is someone who is good for a loan cannot borrow.

Obama turned over his campaign fiances to Robert Rubin and his friends on Wall Street. That they see the health of the banks as paramount importance should not come as a surprise.

And a side effect of making the big banks healthy is continued support of NYC real estate values at distorted levels. Geithner bailed out NYC real estate market by proxy.

Courtesy of QE2 t-bills yield ZERO and the dollar is tanking.
The Fed and Treasury know that most Americans(unlike Europeans) are dumb to currency moves unless they happen to travel overseas. Anyone remember when investing in T-bills as a prudent risk averse way of investing short?

i guess rs wasn't paying attention to the currency moves that occurred prior to QE, and i mean I. i was. remember when it took $2 to buy a pound? or $1.7 to buy a euro? I do.

Obama is embracing George W's weak dollar policy. Of course Obama has more ammunition at his disposal.