This is precious:
Then there is Richard “Is This America?” Kovacevich, the chairman of Wells Fargo. Late last week, Kovacevich gave a talk at Stanford University, complaining about how unfair it is that the government forced his bank to take $25 billion in bailout money last year when it could have easily raised private capital — and then compounded that outrage by changing the terms of the deal and forcing Wells to cut its dividend. Kovacevich said it was “asinine” for the Treasury to order his and other big banks to undergo a special “stress test,” explaining that well-run banks like Wells were routinely doing their own stress tests.
This isn’t to say that Wells Fargo isn’t well-run. For all I know, it is. But how on earth could any bank be making the “trust us, we know what we’re doing” argument at this point?
The arrogance of the banking world seems to know no bounds. A friend of mine in finance, someone I genuinely like, even if he was predicting Lehman would bounce back this summer, told me “Vikram Pandit should just tell the government `leave me alone for two years and let me do my job'”.
It’s amazing.
SpotWeld
And "well run" peanut companies were routinely doing thier own product saftey checks.
Incertus
Bank executives are arrogant ass-monkeys? Inconceivable!
BC
I’d love nothing better than have Vikram Pandit in a position where he could tell the government that. Unfortunately, that is not the position we are in – now V Pan has to come to government to get the $$ to do his job. That’s a horse of a different color. For the government to give $$ to banks and just let them "do their job" would be an abrogation of the duty the government has to make sure the $$ given is used in the manner that the $$ was appropriated for. To paraphrase old Donald Rumsfeld, we are in the banking crisis we have, not the banking crisis we wish we had.
DougJ
Exactly. That was my point.
NutellaonToast
I dunno. I would like the government to stay out of banks that are actually not completely fucked. We can’t just assume that they’re all bad because some of them are. That’s for the wingnuts.
Of course, we definitely need to figure out which banks ARE bad, and how we do that, I don’t know. I don’t think assuming they’re all bad is in anyway the best proxy. If his bank is fine, he’s got every right to bitch about the treasure forcing them to cut dividends. I don’t think he’s right to complain about being evaluated by the "stress test."
BDeevDad
Didn’t you know it’s the FDIC’s fault for forcing banks to take CRA loans. Nevermind that they had a lower default rate.
Cat Lady
"leave me alone for two years and let me do my job"
Cuz, uhmm, it worked out so well before?
Irony is dead. Jeebus wept.
theturtlemoves
I will personally attest that Wells Fargo is not well-run. Two days ago I received a letter from them telling me a credit card which hadn’t had a late payment in two years "remains delinquent" and that I could settle the debt for 70% of the outstanding balance. The number on the letter went to a shrew of a collections agent. The guy at the actual call center for credit cards assured me this was an error and that they had been sent out to likely thousands of people who have been flooding them with angry calls. So, they are currently sending out threatening letters to scare people into settling debt that they don’t need to. Yep, that’s somebody I trust to govern themselves.
gopher2b
They should have left them all alone and let the bad ones fail.
Some guy on one of the Sunday programs said it best: there is no such thing as a company that is too big to fail; there are just a few companies that are too big to liquidate quickly.
gopher2b
@theturtlemoves:
Be careful. This may be 3rd party fraud.
Calouste
The well run liberation of Iraq also routinely does its checks to see that no equipment or pallets full of cash go missing.
jnfr
I think WF should feel free to give us our money back and go on their merry way.
QDC
Wells Fargo seems to have gotten the shaft, in my opinion. They managed to dodge the worst of the crisis and were in a position to be one of the stable banks in the aftermath. Then they had bailout money shoved down their throats by Treasury and had all of their insolvent competitors propped up by government money. They manage to buy Wachovia out from under Citigroup without a Fed backstop, thereby sparing taxpayers some exposure. What other bank in this whole crisis has actually done anything that reduces taxpayer exposure?
So why shouldn’t they chafe at government intervening and cutting their dividend? They were a successful company in an unsuccessful industry. They and JP Morgan should be reaping the benefits right now. Instead, they end up under Treasury supervision while their incompetent competitors are propped up at huge expense. If I were CEO, I would be pissed off.
We probably shouldn’t take their word for it that they are solvent, but I can’t blame them for being pissed off when we don’t. What else could they have done?
Notorious P.A.T.
You guys just need to read "Atlas Shrugged". THen you’ll see things the right way! ! ! ! !
camchuck
@jnfr:
Exactly. Simply give the TARP funds back. Otherwise, fuck off.
theturtlemoves
@gopher2b: I called the actual number on the card to confirm the account was fine and he was the guy who said they were getting a pile of irate calls, so I made sure to verify. Fraud was my first thought, as well, but the phone numbers matched Wells listings. I also contacted the appropriate regulatory agencies and am pondering filing a formal complaint. Wells is saying it was a "mistake" but I kind of suspect them of using scare tactics to raise a little quick capital from people not inclined to raise a stink.
aimai
How on earth was bailout money "shoved down" anyone’s throat? I don’t recall any bailout money coming my way and I’m damned solvent. If Wells Fargo didn’t want the money please do explain the mechanism by which they took it. I understand Maxine Waters is in trouble for trying to arrange for a black owned bank to be allowed to pitch a request for money to the bailout crew. Is it in fact the case that solvent, white owned banks, were *forced* to take the money while minority owned banks had to pitch for it?
aimai
Martin
Let me just point out that the conservative (small-c conservative that probably exists more in the Democratic party than the GOP these days) attitude here would be that the nation, being dependent on a healthy banking sector for a healthy economy should always assume that they are bad unless the bank can prove otherwise.
Put another way, our national well-being is as dependent on Wall Street as it is on the Pentagon. I would go so far as to say they are co-equals, since we’re more likely today to be taken down by the bankers than by China invading. Reverse their roles, with a fully socialized banking system and a fully privatized, unregulated military. Which is scarier – a transparent to the taxpayer national bank, or a nation protected only by Blackwater?
The Grand Panjandrum
Pearlstein has been doing some great writing on this entire mess. And, no, Wall Street and the banks don’t get it and others are saying the same thing. They think we’re still playing by the old rules. I read this in the comments over at Free Exchange (via Sullivan):
The bankers and Wall Street are indeed playing a game of chicken and they have the gun to the taxpayers head.
NonyNony
Sigh.
I’m not normally an idealistic person – in fact, I’m a cynical bastard – but I really thought that perhaps this current set of problems might finally wake people the fuck up about the myth of the "SuperCaptialist – Captain Of Industry" archetype that we Americans love so much. These guys aren’t the Masters of the Universe – they’re a bunch of fools who on average aren’t that much smarter than anyone else, and aren’t more ethical than anyone else either. Leaving them "alone" to "do their jobs" is what got us into this mess in the first place.
But apparently not. The myth of the Masters of the Universe is just too damn embedded in our psyches. Stupid.
Zifnab
I can almost sympathize, if only because I imagine that – for his business – the stress test was awkward, time consuming, and demeaning. So, for a Master of the Universe, I can understand the ego.
But what’s this bullshit about "forcing" Wells Fargo to take the money? And remind me again, was this under Bush or Obama? Or is this another round of "blame the Clintons"? I’m a little fuzzy on who he’s singling out for his ire.
Finally, taking a page from the previous Admin’s wiretapping policies, shouldn’t they be secretly clicking their heels if they’ve been doing such a good job. A public universal stress test of bank stability that reveals Wells Fargo to outperform BoA, Citi, and the rest, should send Kovacevich’s stock through the roof – both for his business and his personal prestige. What’s he complaining about, if he’s got nothing to hide?
QDC
@jnfr:
That is probably not an option at that point. Wells Fargo probably could have raised private capital when Treasury forced all of the banks to take TARP money, but the markets have deteriorated since then, and raising private capital would be harder (impossible) now. It’s certainly likely that they (or maybe JPMC) will be the first ones paying the money back, though.
Scruffy McSnufflepuss
Careful, folks. I read the first 100 pages or so of "Atlas Shrugged" a couple years ago, and what I gathered from that cautionary tale is that if we aren’t really, really nice to these guys, they might leave us completely and go hang out with the cool people somewhere else. Then, we’ll all be very, very sorry.
The Other Steve
I’m not very happy with Wells Fargo now. I’ve been with them 12 years, and in the past month I’ve started getting phone calls from my "Credit Advisor".
I was not aware I had a credit advisor.
I was not aware I asked for one.
But they’ve been calling me, trying to get me to refinance my mortgage, or get a new credit card or something.
The Moar You Know
I understand why the guy is pissed off, but "we’ll take your word for it" is no longer the operative rule for the banking business.
He’s going to have to get used to it. American banking is not going to be the same.
Actually, this is going to have to be the consitions that banks operate under from now on. We’ve tried it the other way. That has not worked out so well.
Scruffy McSnufflepuss
@Notorious P.A.T.:
Exactly. Without the titans of industry, the rest of us are aimless fools wandering adrift, pointlessly searching for accidental dooms. I can personally attest to that: just last week I almost swallowed two whole bottles of paste and a stopper of rubber cement, and only my boss’s timely intervention saved me!
QDC
@aimai:
One account of Wells Fargo objecting to taking the money is here: http://www.nytimes.com/2008/10/15/business/economy/15bailout.html?_r=1.
"Mr. Paulson began calling the bankers personally Sunday afternoon. Some were already in Washington for a meeting of the International Monetary Fund."
"The executives did not have an inkling of Mr. Paulson’s plans. Some speculated that he would brief them about the government’s latest bailout program, or perhaps sound them out about a voluntary initiative. No one expected him to present his plan as an ultimatum."
The details of what when on in that meeting are sketchy, but the general account is that Treasury wanted to avoid signaling to the market which banks were in the most trouble (precipitating their collapse and defeating the purpose of the bailout), so they made it clear that everyone would be signing up for the funds. You can argue that if they really didn’t want the money, they should not have signed, but Treasury was clearly applying pressure and the notion that WF went crawling to the government is just not the case.
Martin
But that was precisely the point – the markets were deteriorating so rapidly that by the time anyone stuck their hand out, it might have been too late for Treasury to help.
And I think the argument that Wells Fargo could raise capital then is pretty wishful thinking. The sector was hemorrhaging money. Investors were fleeing like mad and not looking back – and Wells Fargo was not considered to be even as strong as Citi and BofA at the time.
I think WF did get screwed here a bit, but I don’t feel bad for them. They collectively screwed the nation and whining about how they were marginally less fucked up than the others isn’t really a basis for cheerleading, IMO.
KG
@21: "What’s he complaining about, if he’s got nothing to hide?"
I know it’s the court of public opinion rather than a court of law, but there’s that little concept of "innocent until proven guilty." I mean, if you haven’t done anything illegal, than you shouldn’t have any problem with the police walking through your front door every night, right? I think he’s rightly pissed off at the rest of the industry playing fast an loose while Wells Fargo tried to remain semi-prudent in an insane market.
From what I can recall, Wells Fargo was one of the few (if not the only) bank that didn’t invest heavily in the subprime market, or in the subprime asset backed securities. They took a hit when the market crashed because everyone in an industry takes a hit when that happens, but everything I’ve read about them suggests that they are a hell of a lot healthier than their competitors.
camchuck
AIG CEO testimony starting. Get ready for some congressional grandstanding.
Church Lady
@aimai:
Paulson called in the CEO’s of all the biggest banks, in trouble or not, and essentially told them that they were not leaving the room unless and until they agreed to take loan money from the Treasury. It was done in an effort to keep the public from knowing which banks were really in trouble and, by doing so, preventing a run on those banks, which would have compounded the financial crisis. Remember, this was done at the point that a total economic collapse was being seen as a distinct possibility. At the time, Wells (which was not in trouble and continues to be in good shape) and Bank of America (which mistakenly thought it was in good shape, not realizing the nest of snakes it was getting with the Merrill acquisition) bitched openly about being forced to take the money.
Maxine and OneBank is a little different. OneBank lost $50 million due to their investment in preferred stock in FNMA. Maxine pitched a meeting with Treasury under the guise that it would be an opportunity for minority banks to find out how Treasury programs would work and what effect the programs would have on them. Instead, OneBank used the meeting to try to pry $50 million out of Treasury, wanting it to cover their losses and make OneBank whole. Treasury’s anger at Ms. Waters was due to her failure to give them a heads up on the relation she and her husband had with the bank. Neglecting to mention that her husband had a stake in the bank of somewhere between $250K and $500K (which means that she did as well, since California is a community property state) and had until recently served on the bank’s Board of Directors, made people in the Treasury Dept. feel like she had a financial conflict of interest in arranging the meeting.
gwangung
I have no sympathy for her or her situation. Even if it was in a blind trust (which it SHOULD have been), she should have given the heads up.
Shinobi
So, they were forced to take the money, but they can’t somehow negotiate giving it back under this new administration? And therefore not being subject to rules under the stimulus plan? It was my understanding that giving money to the government was supposed to be easier than getting it out.
Lola
My bank WAMU went under so I looked into a new bank. I went to Wells Fargo and met a super nice bank guy who almost got me to sign up with him but I ultimately went with a local credit union. Who knows how stable any of the big banks are? It is time to go local.
Mnemosyne
@KG:
This could be the argument against any regulation of the financial industry. After all, until we have proof that they’re acting dishonestly, who are we to insist that they give quarterly information to the public?
You can’t run a financial system without transparency, because no one will trust anyone else enough to actually move money around. That transparency will sometimes take the form of the innocent having to prove they haven’t done anything wrong in the form of quarterly and annual reports, outside audits, etc. "Innocent until proven guilty" is a recipe for disaster in finance.
The Moar You Know
@Scruffy McSnufflepuss: I was an impressionable young teenager who went and checked out that book because one of my musical heroes, drummer Neil Peart, was into Objectivism. I read the whole fucking thing.
Never has someone dropped so much in my regard based on what literature they were into.
If I’m told someone is a Rand fan, I know immediately that they have nothing useful to tell me, and that I should avoid them or else they’ll manage through sheer ignorance to enrage me to the point of beating them senseless.
That Greenspan is one of her devotees is just so…perfect. Here we stand in a smoking pile of economic carnage, largely of his making. Of course he was a Randite.
Church Lady
@gwangung: Absolutely agreed.
@Shinobi: My understanding is that there are excessive prepayment penalties that were put in place in order to keep any bank from paying back TARP funds in under three years. A number of banks that didn’t need money and that now want to give the money back are negotiating with the Treasury Dept. in order to do so.
The Other Steve
Damnit. GE is at $10. I wish I’d bought at $6.50 when I thought of buying.
Granted, if I had bought it’d be at $2 now.
guest
yesterday i noticed people applauding grassley’s note to aig to commit suicide. if you ask me, my instincts suspect the loudest protesters against bonus-gate were the very ones who helped enable it to happen. senator wyden was on rachel maddown:
MADDOW: Back in early February, you [wyden] and Senator Snowe added an amendment to the stimulus bill that, I think, would have prevented AIG from giving out these millions of dollars worth of bonuses. That amendment was taken out of the bill.
senator grassley needs to be questioned if he played any part in undermining wyden’s amendment.
Krista
And if any of these idiots try to tell you that regulation kills industry success, you can point them to this:
The entire industry here is regulated, and regulated well. It obviously hasn’t hurt their profits one tiny little bit.
And this was nice to see too:
The crazy thing is that Nixon’s base salary (before bonuses, options, etc.) is actually higher than the CEO of Wells Fargo’s base salary for 2008. (Even after the dollar conversion.) So all of this anti-regulation bullshit is just that…bullshit. With proper oversight and regulation, not only would your banks be stronger, but their CEO’s definitely wouldn’t be suffering. Win-win.
Ash Can
I don’t think there’s any real disagreement on this. But it seems to me this was basically what TARP was all about in the first place. Paulson made all the banks take bailout money (and I’m still not sure where precisely the rumors leave off and the facts begin on that) so that there wouldn’t be any runs on shaky banks. Fine. Now that the preliminary hair-on-fire period is passed, what’s preventing all the supposedly healthy and well-run banks such as Wells Fargo from turning that bailout money back over to the government and thus altogether avoiding the conditions the government — under both W and Obama — attached to the bailout funds?
What am I missing here? Am I just dense on this? Or do people like Kovacevich just like having something to publicly whine about? Or do they just want to have it both ways — keep the TARP money but be allowed to decide themselves how to
spend it on hookers and blowuse it? Which would be shocking, I know…bloodstar
The only reason I can think for giving blanket money to all the banks is to hide the ones that are in real danger of collapse. Are we ok with letting everyone know which banks are at risk? if so, let banks return money as they want, with the understanding if they collapse afterwords, there will be no rescue.
Scruffy McSnufflepuss
@The Moar You Know:
I agree with you completely, especially if we’re talking about anyone who’s a Randian over the age of 16. My only question is, how’d you finish the damn thing? Getting through the first 100 pages was a brutal, grueling slog for me.
I never finished "Chariots of the Gods," either. And I only read the first 100 pages of Mein Kampf, too. Life’s too short to waste it reading crazy, evil, unfunny shit.
KG
@35: um, no. Laws and regulations are perfectly appropriate, hell, banking is one of the few things the federal government actually has constitutional authority to regulate. It’s a matter of how the laws and regulations are enforced. There is nothing wrong with the government saying that if you are going to be a bank, then you have to publicly state your quarterly earnings and expenses. But, if there is little or no evidence of wrong doing then you can’t simply declare that someone is a lying, cheating, bastard that deserves to be flogged. If you think there is something fishy (if you have probable cause or reasonable suspicion), you have one of the law enforcement or regulatory agencies investigate. If there is enough evidence, then you deal with it.
I guess my point is just that Due Process matters, or at least it should still matter.
Karmakin
Yeah, regulation is expected to do Canada pretty well through this whole mess. I think it’s actually a good view of how much the financial meltdown actually does matter.
I’m watching the AIG head at congress right now, honestly, I thought that the first go around was informative and a good run down of the debate from all sides.
This Republican is an asshole ‘tho. He’s digging for partisan dirt.
aimai
I agree with Ash Can. There appears to be absolutely nothing preventing wells fargo from "returning the money" if they don’t like the conditions attached *even if* they argue that Paulson made them take it. I’d also like to point out that there appears to be a schroedinger’s cat kind of problem here in that if BOA "didn’t know" that it would need the money until after it took it its far from clear that Wells fargo didn’t benefit from taking the money in some way. Because of the secrecy and lack of transparency there is no guarantee that they (damn this comment box which always inserts mulitiple key strikes whcih I have tooooooooooooooo delete!!!) either didn’t need the money or didn’t use the money. And if they used the damned money after taking it, well, the difference between wanting to live off the public dole and just living off the public dole is invisible to me.
aimai
Ash Can
@Church Lady:
Do you have a source for this? I’m not trying to be snippy, either; I’m genuinely curious. I did a search on this and all I could find was a passing mention in a Reuters article that stipulations in the stimulus bill had caused confusion on payback timing and regulations. I didn’t find any information on penalties per se.
AhabTRuler
@KG: Heh. As someone pointed out before, IIRC, its now actually a National (booming voice, reverb) issue; the idea that businesses have a right to due process and protection from governmental intrusion is so…pre-9/11.
guest
isn’t there a tension of free market republicans protesting AIG bonuses when the main tenet of their philosophy dictates that government is incompetent and ineffective and doesn’t have the right to tell business what to do? how are they going to square that circle?
another thing, gingrich was on meet the press and repeated talking points that accused dems as being responsible for talking down the economy. cited mccaskill calling ceos "idiots" as an example. by that logic, what the hell did grassley do to the economy?
KG
@48: oh, yeah, I forgot, 9/11 changed everything. We don’t have time for those quaint concepts like due process and equal protection any more. We’re too busy destroying the Republic in order to save it.
I mean, that worked so well for the Romans. Or the Galactic Republic in Star Wars (sue me, it’s been a long day and it’s only 11 am here in Cali).
Balconesfault
Meanwhile, the CEO of NBC Universal says that John Stewart is unfair for picking on CNBC for not subjecting CEOs to tough interviews.
And he didn’t even have Sharon Epperson holding a microphone in front of his face when he said it!
NonyNony
@Krista:
The thing is – this is only glaringly obvious in hindsight. I seem to recall many of Canada’s conservatives screaming when times were good that they had too much regulation and couldn’t compete with the banks in the UK and the US. And they seemed to have a strong case when it looked like both the US and the UK banks were rolling in money and Canada was getting left behind.
Now Canadians look like geniuses – and I agree we should look up north to help to figure out what to do next. But we need to figure out our fucking lessons down here first. NONE of this would have been a problem if we’d learned our lessons from the Great Depression and regulated the banks the way they should be regulated. Instead we "forgot" those lessons and let the banks dictate the regulations they should operate under. Great for short term profit-taking – terrible for long term economic stability.
geg6
@QDC:
Whatever the case may be about how they came about taking the money, they could have handed it back the next day. They could have put it in one of their many vaults and left it there and paid it back in a month. Or two months. Or…how many months is it now since last September?
All these assholes know how to do is whine. They took the fucking money. If they don’t have it now (which, if they never wanted it, they should…no excuse not to really), then what did they do with it?
I call complete bullshit on this and any defense of it.
Balconesfault
@guest:
Ya think? If the Feds had put stronger oversight/control measures in place with TARP, we’d be hearing that all the overlay of government intervention is what is keeping these institutions from self-correcting.
Mnemosyne
@KG:
I don’t know that paying out $140 million in bonuses with taxpayer money counts as "little or no evidence of wrongdoing." That’s kind of the reason there’s a controversy right now — people think that paying out those bonuses may well be evidence of wrongdoing and want it investigated.
It’s not like people walked up to AIG and started accusing them out of the blue. There is a precipitating event here that needs to be explained. If the cops find you holding a smoking gun over a dead body, all the screaming in the world about presumption of innocence isn’t going to stop them from arresting you and investigating the crime.
Ash Can
@guest:
Probably not, since the de facto head of the Republican Party is in favor of the AIG bonuses, and we’ve seen how quickly the GOP rank and file fall in line behind him.
The Grand Panjandrum
Maybe Senator Grassley was right after all?
South of I-10
@Ash Can: I didn’t think there was a penalty for repayment either. Iberiabank is returning their TARP funds. Another regional bank, MidSouth, is probably going to do the same.
NutellaonToast
Banks actually were forced to take money. Part of Bernake’s thing was to try and hide which banks were screwed by giving money to all the banks, regardless of need. His reasoning was that the banks that received funds would be labeled as "in trouble" and people would run on them.
So, yeah, it may well be true that Wells Fargo WAS forced to take the money. Seriously, this is ridiculous. The left is becoming the new right. We’re letting our hatred of the bad banks color everything we see. I don’t know the specifics of W-F but it might be true that they weren’t as stupid as the rest.
I’m not saying W-F are awesome guys who deserve to have the world, but you can’t just assume that every bank is run by a bunch of idiots that are swindling everyone. A lot of them did, but we NEED the ones that didn’t REALLY BADLY so maybe we shouldn’t piss them off, too.
geg6
@The Grand Panjandrum:
Crazy as I sound to myself for saying it?
Yes, Senator Grassley is right.
I hope every goddamn banker, broker, and trader in the whole US of A takes his advice and runs with it.
‘Cuz I have a hunch a buncha dead bodies are gonna come in useful in this dystopian world they’ve brought us to. We’re gonna need us some Soylent Green.
Church Lady
@Ash Can:
I found a report on AOL Money & Finance, dated 3/11, concerning banks wanting to repay funds.
Under the original terms of the TARP disbursements, the government had to maintain a stake institutions receiving funds until 2012, unless the TARP funds were swapped out with private capital. This requirement was removed in the Stimulus Bill.
Now, under the changed terms, banks can repay TARP funds with a minimum of 30 days notice to the Treasury, but regulators have to sign off on the deal. So far, although four banks have requested to repay TARP funds, no approvals have been granted. The understanding is that the delay is because they are having problems figuring out how to unwind the deals, which gave the government a stake in the institutions through a combination of preferred shares and warrants. Staffing shortages at Treasury is believed to also be compounding the problem with repayments.
As to the veracity of this report, I assume it is correct, but I wouldn’t stake my life on it.
Hope this provides the info you wanted.
liberal
@Martin:
I don’t feel bad for any institution granted the power to create money out of thin air, loan it out, and pocket the interest.
geg6
@NutellaonToast:
Nothing is forcing them from giving it back. As mentioned above, other banks are doing it. Locally, I heard the president of PNC Bank saying they were going to give theirs back.
So give the fucking money back and STFU, seriously.
guest
oic. i visited a mixed board yesterday and saw ambivalence from republicans. they didn’t know how to process it. but now that rush has spoken, they don’t have to worry their little minds about it.
Church Lady
@South of I-10: Yes, Iberia Bank was one of the four mentioned in the news report I got my info from. However, until the regulators sign off on the deal, they can’t return the money.
NutellaonToast
I don’t know either way, but since no one has presented a citation for one or the other, I’m going to guess that there IS some stipulation as to how the money can be repaid, for a few reasons:
1) It’s the government. They make rules about everything
2) Trying to hide which banks were insolvent would be completely negated if all the healthy ones just immediately gave back all the TARP funds. It would only delay the disclosure for a short time.
3) Wells is not happy with the government intervention so if there was a way to get out from under it, they likely would. It doesn’t seem to NEED TARP, so I bet it would get rid of the funds if it were possible.
I might be wrong, since I don’t have source either, but it makes more sense to me that way.
feebog
Does anyone remember what this TARP money was supposed to be for in the first place? Wasn’t it to be used to buy up the toxic "assets" that many of these banks had bought and were now virtually worthless? And didn’t Paulson change the strategy after the 750 Billon had been approved by congress and just basically shove the first half of the TARP money to the banks, whether they needed it or not?
It now seems painfully obvious that one, Paulson made a huge mistake in not sticking with Plan A (who would have thought…) and two, both Paulson and Bernake were afraid that directly targeting those banks who held the toxic assets would create a run and ruin them anyway.
NutellaonToast
Whoops, too late.
@geg 63: Um, did you read what Church Lady – 61 wrote? Banks have attempted to repay the money and haven’t been allowed to.
Mnemosyne
Also, KG, you might want to walk back that "no evidence of wrongdoing by AIG" thing a bit:
http://www.talkingpointsmemo.com/archives/2009/03/looking_further.php
If you’re arguing on behalf of Wells Fargo, they have an easy solution to all of this intrusive government scrutiny: pay back the $25 billion that they took and claim they didn’t need in the first place. I don’t think I’m comfortable saying that it’s none of my business what a bank does with my tax dollars, and that I have no right to find out what they’re doing with that money because, if it were private money, they wouldn’t have to tell me.
The Moar You Know
@Scruffy McSnufflepuss: A shitload of weed, the fact that I’m a speedreader, and a vague hope that maybe at some point the book might get better. It did not.
These were the same things that got me through "Battlefield Earth", which may be the worst book ever written.
Mnemosyne
@Church Lady:
And the thing stopping Wells Fargo from at least making the request to return the money as Iberia and others have is …. ? That step alone would take a lot of the heat off them. It’s complaining that they were forced to take the money but clinging to said money with both hands that’s making them the object of mockery.
Michael
I’m wondering what bankers taste like- sadly, it looks like I’m going to find out.
guest
thanks, ash can, for the rush cite. i thought if i hit the time stamp, that would link back to your reply.
Radon Chong
@Mnemosyne:
Unless, of course, you are yourself also a cop.
NutellaonToast
http://www.thedeal.com/dealscape/2009/03/wells_fargo_chair_calls_stress.php
"Wells Fargo slashed its dividend by 85% to create a capital cushion of $5 billion and has started paying back Treasury’s $25 billion TARP investment."
geg6
@NutellaonToast:
Um, why yes, Nutellaon Toast, I did read what Church Lady said.
And I say that if a president of a major regional bank goes on my tv and says they’re making arrangements to pay theirs back because they aren’t BofA assholes, then it really can’t be all that difficult. He didn’t mention any roadblocks he foresaw to getting it done. And, yes, he was asked.
Ailuridae
@Mnemosyne:
The fact that only four banks were mentioned in that article doesn’t mean that Wells Fargo hasn’t asked to return the money. More importantly the CEO seems to claim that he thought he was taking a low-interest loan at a time where there was a lack of liquidity in the market. He protested at the time that he had outside investors (who would have higher rates but different conditions presumably), took the loan at the Treasury Department’s insistence and then was told after the fact that his company had to cut its dividend.
I’m not one to argue for Captains of Industry but it seems pretty plausible that he has great reason to be pissed. There’s also the fact that Wells was competing in the market for the assets of Wachovia against a preferred government suitor who is now in deep financial trouble. And that was after JP Morgan Chase was given multiple sweetheart deals.
NutellaonToast
@geg: You’re right, geg, we’re not overreacting at all. I bet all the good banks are being treated completely fairly. You’re not making assumptions or being biased at all. The failure of some banks has led you to the logical, honest conclusion that they’re all terrible. It’s just like how all Muslims are bad because of 9-11! Those damn Republicans are deserving the memory of 9-11 the great crash of 2008!
Vote McCain!
Ash Can
@Church Lady:
Yes, I do believe it does; many thanks.
I didn’t look up the AOL article you cited, but I did find this CNNmoney article, which contains exactly the info you cited and on which the AOL article was probably based. Once again, nowhere in this information is any evidence of "excessive prepayment penalties" preventing TARP funds from being repaid. The replacement of government financing with private capital presented a significant hurdle to repayment, to be sure, but with this stipulation having been removed by the stimulus bill, the remaining hurdles — complexity of the financing and not enough hands on deck at Treasury — are hardly "penalties."
Martin
Mmmm. Soylent Greed. Tastes like failure.
NutellaonToast
meh, the strikethrough on the second 9-11 got dissappeared…
geg6
@NutellaonToast:
Okay, so they’re paying it back. So what the hell is he whining about it for…still?????
Oh, yeah. It’s the fact that someone had to go in and make sure he and his little Gringott’s goblins were actually telling the truth about the health of their bottom line. It’s not like there’s ever been a reason to question a word out of a banker’s mouth or anything, right? It’s all just a bunch of libtard, commie propaganda that banks and investment firms might ever do anything to ever endanger the world’s economy, their customers, or their shareholders. They are cuddly and warm and want nothing more than to bring rainbows and unicorns to this dark and dreary world and, dammit, regulations kill rainbows and unicorns, donchano.
Scruffy McSnufflepuss
@The Moar You Know:
I was reading it, thinking about rumors it was going to be made into a movie, and that Angelina Jolie was going to play the girl. So I kept picturing her as the chick in the story, trying to see if that made it any more readable. It didn’t.
Life’s too short to waste it on crappy books. If the thing isn’t any good after a significant chunk of it’s been read, it’s not going to get any better later.
The one exception I can think of might be for Tolkien fans who had trouble with "The Silmarillion." That thing changes quite a bit if you get past the beginning.
But basically, I tell myself that if there’s a Hell, these crappy books will be the only ones in its library, and I’ll have all eternity to read them in between bouts of torture.
kay
So what Wells Fargo is saying is that although they didn’t act irresponsibly, they are being forced to share some of the pain. Them and everyone else. They just figured that out?
A world-wide financial melt-down touches a huge bank? Who knew that might happen? It’s so completely unfair!
I love how Wells Fargo happily takes advantage of the elaborate private financial infrastructure in this country, until it tanks, and then they want nothing to do with these other….deadbeats. Is asking them to, ahem, pitch in really all that unreasonable?
Mnemosyne
@Radon Chong:
True. Which may be part of the problem here, at least with Summers and Geithner.
Ash Can
@guest: Anytime! (The quotes taken from his radio spiel made me LOL.) And you weren’t too far off the mark (literally) — click on the little arrow right next to the time stamp (if in fact it shows up on your screen; I’ve found this to be iffy on older computers) and it automatically references back.
NutellaonToast
Also, none of you are accounting for the fact that many of the provisions of TARP were changed after the fact. W-F may have spent some of the money thinking the terms were static and thus can’t pay it back.
Whether or not they should have spent it is one thing, but since pretty much every institution has spent TARP how they pleased, and W-F was forced to take it, they’d have been fucking stupid NOT to spend it. Were they supposed to assume that months later the contract would be drastically altered? Were they supposed to let all of their competitors take massive infusions of money while they sat on their ass?
There are plenty of banks and other corporations to hate. You don’t have to hate them all.
KG
@55:
1. I was speaking, specifically, of Wells Fargo, not the other institutions. There is plenty of evidence of wrongdoing at AIG and others to warrant investigation and criminal charges.
2. I think you missed my point about probable cause and reasonable suspicion. Standing over a dead body with a smoking gun, or walking out of a bank with big bags full of c-notes will get you arrested 101 times out of 100. But, in the case of Wells Fargo, we have a company that was more conservative with its lending practices and investments during the bubble getting lumped in with the bad guys simply because they are also a big bank.
Martin
I think it divides fairly clearly down between regional S&Ls and national hybrid investment/S&L/etc. banks.
Some of the regional S&Ls have failed, but nobody is too worried about them because FDIC can catch them just fine – and they didn’t wreck the place, just their own bank. The problem is these big monsters. It’s always been the problem from the moment the regulation fell away.
I talked to someone on the board of our relatively large local credit union. They’re doing really well. He said that the smaller local banks appeared to also be doing well. They never got in the business of selling their loans, so they’re continuing to pull in payments from their borrowers, and there are so many people fleeing the large banks that they’re seeing a nice uptick in deposits and new customers. I don’t begrudge them one bit – they’re doing precisely what we’ve always wanted banks to do. And the majority of banks fall in this category. Wells Fargo, alas, does not.
Rome Again
Interesting that a "well run" bank is listed on the Write Down and General Distress list of BankImplode.com and has been for several months. Bank Implode shows them (Wells Fargo) as having a debt of 138.6 billion dollars. Is that a "well run bank"?
Hmmmmm!
Church Lady
I’m watching the circus of the Liddy hearing on TV right now. Our members of congress are the biggest bunch of preening monkeys I’ve ever seen. After each one says, "Well, I’m an attorney…" I want to ask how successful they were in the practice of law. My guess would be, for the most part, not very.
If I was Liddy, I’d stand up, pull $1 out of my wallet, slap it on the table and tell them "I quit. Here’s the salary I’ve been paid since I was requested to come out of retirement. See you bitches on the other side of the apocalypse."
Mnemosyne
@Ailuridae:
Sorry, I’m with Kay at #84 — Wells Fargo is upset because they’ve been touched by the financial crisis when they thought they should be immune because they’re such special snowflakes.
There are lots of situations in life where you end up getting screwed even though you didn’t do anything wrong, and right now the entire US is experiencing one of them. For Wells Fargo to complain that they’re the only ones being punished in this situation is incredibly selfish of them. We’re ALL being punished for things we didn’t do. They need to nut up and pull their weight instead of whining about it.
NutellaonToast
@geg 82 : I already said he should STFU about the stress test, you fucking idiot. I also said that some of his other arguments are solid.
Just because he’s a right wing tool, doesn’t mean you’re not a left wing tool.
Rome Again
According to the Wells Fargo page, it doesn’t look that "well run".
geg6
@NutellaonToast:
Yes, I feel perfectly justified in vilifying an entire industry based on the actions of the vast and overwhelming majority of major players in said industry.
Exactly where did this bubble begin? I suppose you think it was the CRA and ACORN? But that’s not what the evidence shows. The evidence shows that this bubble and the dire economic straits we find ourselves in are, in large part, a function of the bankers, finaciers, and brokers who have been playing a giant Ponzi scheme on us for the last 20 years (at least). With the help of their paid minions on Capitol Hill who made sure no one had any authority to look over their shoulders and make sure they weren’t stealing us all blind.
Please, I’d love to see exactly why we should listen to you or Kovacevich or any of these bankers/brokers explain how we shouldn’t blame them and how we should just leave them alone to do business as usual.
rts
Based on limited personal experience I would hazard to guess that Wells Fargo is not particularly well run. We took out a jumbo mortgage with Wells in 2005. They did their job and made sure that we had the wherewithal to service the debt. However, before we closed we were able to sell our old home and wanted to put a fair bit of money into the mortgage so that our monthly charges would be easier to swallow. Thus, we asked if we could modify the terms of the mortgage to reduce the amount of the loan. Wells required, of all things, that the loan be completely reunderwritten even though none of the fundamentals of the deal had changed and they were, in fact, being more protected because we were putting more equity into the property.
Recently, we refinanced the loan (getting a substantial rate drop). Wells agreed to the refi. The process was a shitshow. No one at Wells knew what was going on. Calls were not answered nor were emails. Finally, we receive a notice that the closing was scheduled to happen in two days. The closer, who is a contract worker, was chosen purely because he was a notary public not because he had any knowledge of real estate law or closings. The forms were incorrectly filled out thus causing us to spend a lot of time with the Wells’ mortgage service line as the closer had no authority to make changes. Despite their essential incompetency we managed to close the deal.
During the closing, we specifically asked if Wells was going to account for the fact that our payment on the old loan was going to come due just after we had closed on the new loan. The answer was of course. Apparently, their idea of accounting for this issue was to take our old payment as well as our new payment. Presumably, in two or three months (or when they get around to it) Wells will credit us for the overpayment, which will require more work on their end. Of course, had they simply done this at the time they could have avoided this problem as well as not put us in a situation where we had overpaid the mortgage.
So, all in, if this retail experience is any indication Wells is clearly not a well run organization.
kay
@NutellaonToast:
There’s something wrong with their thinking. They’re out of synch. It’s jarring.
It’s a crisis. Specifically, it’s a banking crisis. That well-run banks thought they were getting out of this with no involvement in the fix seems weirdly delusional to me.
Maybe it’s because regular taxpayers have had a couple of months to face the stark reality that this is a big problem that is going to involve everyone taking a hit. I feel as if bank execs don’t get that. I would like them to make some effort to start getting it.
The Treasury and the Federal Reserve didn’t create this problem. Banks and investment houses and insurance entities did. That they’re being asked to help solve it seems rational and a small sacrifice. They’ve done very, very well. Time to sacrifice a little for the larger good.
Blue Raven
@The Moar You Know:
It’s got to be right down there in the muck with Architects of Sleep, which at least had the excuse that Swycaffer was under contract to a publisher that was about to go under but would’ve taken him with them if he hadn’t gotten his novels done in time. BE was certainly the worst movie I’ve ever sat through, and that was purely because I was avoiding a heat wave that had temps in the triple digits.
geg6
@Martin:
I guess that was kind of the obviously too subtle point I made when I mentioned the interview I saw with the PNC president where he said they just put the money away and are making arrangements to pay it back right now. PNC wasn’t ever in trouble and neither was my bank, ESB. Because they didn’t overshoot the target on what they actually were and what make them and kept them profitable: being regional banks that concentrate on traditional banking functions, not lusting to become gigantic worldwide banking/investment powers in order to brag to the other adolescent boys in the locker room about how big their penises are. Not a credit union anywhere that I’m aware of is in trouble. And few regional banks that stuck to what banks are supposed to do.
Ash Can
@NutellaonToast:
This is something else I’m thoroughly confused about. I agree that to accept the funds under certain conditions, then to have those conditions changed, especially "drastically," is abjectly unfair. Once again, though, I’m coming up empty on this. Kovacevich complains that the government forced WF to slash its dividend, yet the news stories on this say that this slash was WF’s decision. Now, I can easily imagine that this "decision" would have been effectively forced by the public-private capital swap requirement Church Lady and I mentioned above. However, this requirement no longer exists. Furthermore, as far as I’ve been able to tell, the subsequent changes in conditions and requirements apply to additional TARP funds — in other words, the conditions under which the original TARP payments were made (such as they were) still hold.
Having said that, however, I’m suspecting that the real problem here may have been the vagueness of those original conditions to begin with. Things were happening too quickly last fall, people were panicking, and that’s surely a recipe for disaster right there.
The Other Steve
I don’t know why people are buying this "Wells Fargo is just fine" myth.
Wells has substantial mortgage holdings through their mortgage operations in Des Moines. They were also a heavy player in subprime and home equity product.
One bank I do suspect is solid, and I would believe their arguments is USBank. They have long been more conservative, and didn’t get into subprime like Wells did.
I don’t know, maybe it’s my gut. Maybe it’s the way Wells has lately gotten desperate to get more business from me. Maybe it’s the fact I worked for GMAC for 10 years in mortgages and saw a lot of dealings with Wells and know a lot of people who went off to work at Wells.
But I have a suspicion that Wells isn’t in much better shape than Bank of America. Especially after the Wachovia purchase, and I know Wachovia had nasty shit. Oh, they’re better than Citi and such, and maybe not quite as bad as BoA.
But they ain’t clean. Any talk on their part that they are, is a bluff.
Church Lady
Uh oh – get ready to go back to sharpening the tines on those pitchforks. Fannie & Freddie, wholly owned subsidiaries of the United States government due to their failures, has just announced plans to pay bonuses to certain select executives. Most of the bonuses are in the $600K range. These are in addition to their salaries. The reason? Why human capital is important, don’t cha know.
I wonder what Barney will have to say about this?
Mnemosyne
@Church Lady:
And the reply from the rest of the country would be, "Don’t let the door hit you on the ass on the way out."
Seriously, you think Liddy is some kind of savior in this situation? He’s just trying to preserve his own bonus and (not incidentally) pay off his employees so they don’t talk to the government about all of the shady deals AIG has been making (see my link to TPM above). He needs to either help or get the fuck out of the way and let the rest of us clean up the mess instead of trying to obstruct.
Sorry, I’ve got experience with executives who "came out of retirement" and, to a man, they’re all overentitled assholes who are convinced they know how to solve every problem with the company even though they’ve been out of the loop for 10 years. The "solution" generally involves screaming at employees and threatening to fire everyone. This goes double for the most profitable branches, which need to be kept in line lest they realize they’re the ones keeping the rest of the company afloat and start asking for things like more employees to help with the workload.
BC
No, no, no – this money was to be loaned out, giving the economy a swift kick. That’s why all the banks were "encouraged" to participate in TARP – get the money from the government and put it into the economy to keep the economy from collapsing. The govt doesn’t want the money back now – they want the banks to start using it to make money and pay the govt back from that money. Which the banks haven’t done. But that was one of the reasons all the banks were in TARP – getting the first tranche of the $700B out into the economy in terms of auto loans, etc.
Church Lady
Liddy doesn’t get a bonus. He’s working for $1 a year. Period. Mnemosyne, perhaps you can offer your services. I’m sure you’d be willing to disrupt your retirement, in the service of your country like Liddy, and work for $1 a year. Heck, with your no-doubt long resume of executive experience, they might even pay you $2.
Liddy came on in September of last year, at the request of the Fed and the Treasury. He didn’t have anything to do with the crap AIG created.
Mnemosyne
@Church Lady:
Yes, four (4) people total getting bonuses of $600K apiece is EXACTLY THE SAME as an entire division getting bonuses of over $1 million apiece.
Glad you’re here to explain things like this to us rubes who might otherwise think they’re not equivalent.
geg6
@The Other Steve:
Well, their private educational loan division isn’t lending any more and haven’t been for several months. In fact, I have students who were approved for WF alternative loans who got notice 2 weeks into the semester that they wouldn’t be disbursing the funds at all (I am a financial aid officer at a branch campus of a major university). Causing these students to have to scramble well into the semester in order to avoid having schedules cancel, their purchase cards for food shut off, and their dorm keys turned off through no fault of their own.
So excuse me if I have a hard time believing a fucking word out the mouth of anyone from Wells Fargo.
Edited to add: The same thing happened with Citi, by the way. Which doesn’t bode well for WF, IMHO.
Mnemosyne
@Church Lady:
Uh-huh. I’m guessing you also think that the only compensation that Steve Jobs gets from Apple is his official $1 a year.
And you’re trying to call the rest of us naive?
Rome Again
Human capital doesn’t work. Many of those employees who took bonuses from the bailouts no longer work for the companies they were paid by to retain them.
Mnemosyne
@Church Lady:
I’d be happy to. I can’t imagine that I could do any worse than Liddy is considering the situation we’re in, and I’ll be happy to take his compensation package, too. Unless, again, you’re under the impression that his total compensation is that $1?
Rick Taylor
@Church Lady:
*puts head in hands* I haven’t watched it yet myself, but I’m not surprised. With few exceptions, congressmen use this to score points and look good on camera, and rarely to ask questions they care about the answers too. I remember the questioning of Petraeus; for the most part it was a huge waste of time. If they were serious, instead of making sure each of them got their two minutes of fame, they’d nominate a small group to do all the questioning, after a period of careful research, and an attempt to find out what we actually need to know.
Church Lady
Liddy’s compensation plan is well known. $1. That and two quarters out of his pocket will get him a cup of coffee.
If any of you can do a better job than he is, given what he has to work with, I’m sure there are a few agencies in Washington breathlessly waiting to hear from you.
Unless you’ve got the experience to see the unwinding of this crap and the selling off of the good assets needed to ever repay us, the taxpayers, then, as so many of you are so fond of saying, STFU.
JM
I wonder what Barney will have to say about this?
He’ll probably say something like "STFU, I can count."
geg6
Completely OT but…
If you haven’t read TBogg today, you should. I love when he gets all snarky ‘nat. /Pittsburghese
Notorious P.A.T.
I second the credit union route.
Church Lady
Also, not every employee got a million or more. Many received much less for retention, which they qualified for after they completed the task at hand. The ones already gone completed unwinding their books of business and are now unemployed.
If you are so upset about the retention bonuses, why in the world would you support them for the idiots at Fannie and Freddie? Why would $600K be ok, but $1M be an outrage?
MikeJ
If you can get great people for $1/yr why does anyone need to pay $165,000,000 in retention bonuses?
The people who run banks are obviously not very good capitalists.
Notorious P.A.T.
How could any of us do worse? Seriously, how?
r€nato
Off-topic, sort of, but here is an example of the kind of stuff which – after a tidal wave of bailouts and fraud scandals and other capitalism-run-amok shenanigans – leads eventually to increased government regulation of business and markets:
…
so not only are these people probably way upside-down on their house thanks to a toxic mortgage, their toxic mortgage is paying for a toxic house.
Tax Analyst
I have to ask – was this a fortunate intervention preventing a FIRST-TIME dalliance with paste & rubber cement or had you been quaffing two bottles a day for an extended period of time before the issue was recognized?
And did he only notice because when he went to get his daily paste & rubber cement tonic the supply cabinet was empty.
Johnny Pez
I’ve always thought that Nicholas Biddle was screwed over by Andrew Jackson, but I can’t help wishing Jackson was president right now.
kay
For the record, I think it’s ridiculous to blame Libby. He has no culpability here. He was retired. It was generous to step up when they asked him.
I have no idea who would take that job if indeed Libby were fired. I get the feeling the same is true for working at Treasury. Taking money from taxpayers and doling it out to behemoth banks is a terrible job. People are angry, and they’re looking for a scapegoat.
Mr Furious
@The Moar You Know:
Re: Neil Peart / Ayn Rand
From Peart’s wikipedia page:
I like to think Peart has grown up since the heady days of the early 70s, and would be even stronger in a rejection of Rand these days…well, a disillusioned fan can hope so anyway…
Barry
kay
"For the record, I think it’s ridiculous to blame Libby. He has no culpability here. He was retired. It was generous to step up when they asked him."
Frankly, at this point *any and all* finance elites are guilty until proven innocent. The way that I put it on another blog is that if I, as a contractor, f*cked up the client for $100 million, and walked in for my remaining (contractually owed) payment, I d*mn well wouldn’t get that payment, and would be lucky not to be sued.
Now, it’s true that the bonuses are a p*ss glaze on a large sh*t cake, but the thing is that the whole bailout has been handled on the basis of giving Wall St as much money as possible, with as few strings as feasible (subject to Washington DC not being literally burned to the ground).
Johnny Pez
@Notorious P.A.T.:
There hasn’t been a terrorist attack since Liddy was put in charge, so obviously he must be doing a good job.
guest
okay, now beside rush endorsing taxpayer provided AIG bonuses, now i see glenn beck has too.
but wait, what happened to the going galt movement?
geg6
@Mr Furious:
This explains my visceral hate for all things Rush, I guess.
Worst.band.ever.
And, apparently, not just because the music sucked either.
guest
@NutellaonToast: @NutellaonToast:
Also, none of you are accounting for the fact that many of the provisions of TARP were changed after the fact.
speaking of sneaking in provisions, what happened to the big tax given to banks that got slipped into the bill? where is the outrage over that? and when is the senate going to reverse it?
JM
Because there have been no terrorist attacks since Fannie and Freddie announced those bonuses.
You can’t argue with that.
kay
@Barry:
I agree that they’re tone deaf. I agree that we have probably celebrated their genuis and told them how wonderful they are for too long. I personally believe (now) that the compensation financial elites were receiving was its own separate "bubble", as inflated and groundless as the housing market.
I think they haven’t accepted that yet. That their salaries were grounded in illusory gains and when the latest bubble burst THAT ENDED.
But Libby’s just trying to do a job. There’s simply nothing that indicates he’s operating in bad faith.
geg6
@kay:
I really don’t see any reason to cut Liddy any breaks.
First, that letter he wrote to Geithner? Most arrogant thing I’ve ever read. Period.
Second, he’s not exactly a Boy Scout. This is the guy who was running Allstate when Katrina hit and he spent that national disaster cheating victims out of their insurance coverage. He was also CFO of a pharma when Rummy was CEO, where they spent their time getting rid of 60% of the employees to make it attractive to Monsanto. He and Rummy got a nice profit on that at the expense of the employees who had built the company.
I don’t exactly think the term "white knight" quite fits our Mr. Liddy.
Scruffy McSnufflepuss
@Tax Analyst:
Don’t look a gift horse in the mouth. The important thing is, without someone better than me to boss me around, I’d be a dead man.
I forget if this has happened before. I’m incredibly stupid and weak-willed, and incapable of even the most basic acts of higher cognition.
Elie
Kay at 97 and
"For the record, I think it’s ridiculous to blame Libby. He has no culpability here. He was retired. It was generous to step up when they asked him.
I have no idea who would take that job if indeed Libby were fired. I get the feeling the same is true for working at Treasury. Taking money from taxpayers and doling it out to behemoth banks is a terrible job. People are angry, and they’re looking for a scapegoat".
Totally agree. I actually wonder if Geithner et al actually wanted the jobs they have or were influenced to take them as a defense from the accusation that they would be the scapegoats for how f—-d everything is. I know they aren’t exactly blowing everyone away with their effectiveness at this point, but they are screwed either way — so I guess they had better find some way to bring this home in the best way possible.
NutellaonToast
"I suppose you think it was the CRA and ACORN? But that’s not what the evidence shows."
You stupid ASSHOLE. I’m as much of a liberal as anyone, bus since I refuse to demonize EVERYONE in the banking industry, I’m just a fucking right-wing hack? I’m the one blinded because I refuse to make blanket judgements about EVERYONE.
I don’t give a fuck how big a majority is. Blaming everyone for other people’s mistakes is called FUCKING BIGOTRY you closed minded shit.
If we destroy EVERY bank, we’re FUCKED! The idea is to FIX the system, not immolate it. You’re just the kind of fucker who actually would cut off their nose to spite their face.
guest
@NutellaonToast:
Also, none of you are accounting for the fact that many of the provisions of TARP were changed after the fact.
speaking of being sneaky, what happened to the big tax breaks for banks that got snuck in last minute? where was the outrage over that? why hasn’t that been recalled and amended?
liberal
@Rick Taylor:
I’d go much farther than that. I don’t know what rational purpose face-to-face questioning serves at all (except that they might have to swear something under oath; and lying to Congress is a crime even when not under oath; etc). The usual way of investigating this stuff is to get ahold of the documents, with some assistance of people who know how the documents are organized and what they mean.
Tax Analyst
Well, wouldn’t we all?
Are you sure you’re not a member of Congress? You seem to have the right aptitude.
guest
beside rush endorsing the AIG bonuses, i see glen beck has too.
wait, i thought wingers were going galt?
kay
@geg6:
Find me someone else who wants to unwind AIG. The job sucks. I don’t buy that they are all in a secret cabal of back-scratching and self-interest.
I love the calls for Geithner’s head. Worse Job In The World, right now. Who wants that job?
liberal
@BC:
I could be wrong, but I thought the point of giving the banks money was to inject capital so the banks (and the financial sector) wouldn’t collapse. And the reason they gave it to (or forced it on) putatively healthy banks was that otherwise the banks who did have to take it would be stigmatized and collapse as a result due to no one else dealing with them.
Of course, the ultimate "purpose" of the banks is to lend money out, but the immediate concern was that they not go belly up.
(The non-scare-quoted purpose is to serve as a vehicle for rich white collar assh*les to loot money.)
les
@Church Lady:
Yeah, well, maybe not quite "period." He gets $1, plus "equity grants" and he’s bonus eligible in 2010. The hundreds of millions he’s scammed…err, earned…over the last few years will have to tide him over.
liberal
@The Other Steve:
And maybe it’s because one lesson of this crisis is that bankers are lying, coniving sacks of sh*t who shouldn’t be trusted.
Scruffy McSnufflepuss
@Tax Analyst:
No, but maybe I should run. I’m certainly stupid enough and spineless enough. And I’ve usually got a stick of paste coming out of my nose. That should garner me at least 89% of the Republican vote, right there.
geg6
@NutellaonToast:
Get over yourself. Your posts have done nothing but make excuses for these assholes. I can only assume, based on those statements, that you support what these idiots have done. I have no way of knowing if you are a liberal or a conservative other than your own posts. And yours have been increasingly hysterical in support of all the financial shenanigans that these creeps are playing on us.
FTR, I actually have quite a bit of knowledge about banks and lending and, more specifically, several of the banks that are in the midst of this mess such as Citi and WF. Unlike the Church Lady and you, I refuse to defend these people and, in fact, have been denouncing their practices for at least 5 or 6 years. BECAUSE IN THE CAPACITY OF MY JOB, I HAVE SEEN WHAT CROOKS THESE ASSHOLES ARE.
So I suggest you quit calling me an asshole. I’ve been fixing these problems these institutions created for real people in real life for a decade. So I really don’t need your fucking lectures on the subject nor do I need someone who knows nothing about me or my expertise to tell me what a fucking bigot I am.
You should look in the mirror, dude.
guest
@Ash Can:
besides rush, i see glenn beck is endorsing AIG bonuses too.
wait, i thought wingers were going galt.
geg6
@kay:
I work in finance, granted it’s in a public sector job where there are no "retention bonuses" or any bonuses, for that matter. And my salary is well below what any of them get paid in a week, from what I can tell.
So, yeah. I’ll take the job. Happy to. I don’t believe it’s as difficult as they are making it out to be. I’ve done a lot of reading on this the past couple of weeks and I think I have a pretty good grasp of what these bad bets are all about. Sure, I’ll take the job and I guarantee I will cost the country less than Liddy. Just give me one federal prosecutor and he/she and I will take care of it.
guest
@kay:
i too was skeptical of geithner. i wondered if he was too much of an insider. then i read he spotted early on the potential problems of credit default swaps. he tried to do something about it. he’s not the slickest communicator, but we need someone who is prescient and with an instinct for reform.
Tax Analyst
I’m really kinda surprised you haven’t been approached by the GOP. I’ve gotta believe the stick of paste stuck in your nose would play well with the base. I mean if a candidate has sticks, poles, rods, dowels, baseball bats or hockey sticks coming out of his orifices I think he would be well-positioned to arouse the enthusiasm and toe-tap into that special segment of the GOP voter base. You would truly be a man that many of them could get behind.
Calouste
@Church Lady:
"They say" that if it is well known, you could easily provide a link to that.
And don’t tell us that you can’t procide a link because "no one could have foreseen" that you would be asked for one.
The Other Steve
I don’t think employees at Fannie and Freddie should get bonuses either.
There is a certain reality here, and apparently today Rush Limpbutt defended bonuses claiming these guys don’t get a very big salary and most of their earnings are bonuses.
Having worked in that world, it is true. They tend to underpay on salary and overpay on bonuses. I don’t know why they do this, because if they think they’re going to get away without paying bonuses that are a substantial portion of someone’s earnings, and that someone could leave tomorrow and get a salary from another company that more then made up for this… they’re kind of stupid.
Frankly, I think they ought to just pay a decent salary to begin with comparable with what the industry is paying, and maybe have some limited bonuses based on personal performance and/or company profit sharing.
The funny part is right now, there isn’t a lot of demand for bankers. So they’re fucked. It’s the jobs of people who are not say banking or mortgage specific. What they like to call overhead… Namely IT folks.
But try to run a company without IT. Especially Fannie/Freddie who made their name on automation. Good luck. :-)
Xanthippas
Communism has never sounded more appealing than now.
Mnemosyne
Church Lady, what’s $600,000 x 4?
What’s 219 x $1,000,000?
With math skills like that, I’m surprised you’re not running AIG yourself.
gex
@geg6: Geez, with his background he sure as shit should have known all his CDS insurance would fail him in the end. That’s how you do insurance right? Take the premiums but don’t pay out…
les
@Mnemosyne:
Damn you, damn you and your liberal facts and reality to teh eternal blue flaming halls of hell! Didn’t you hear her–they’re bonuses!!! Fannie and Freddie got overextended buying and insuring individual mortgages, and AIG exercised stunningly bad judgment and colossal institutional hubris to destroy the world economy, and it’s just the same!!!!
Church Lady, brought to you by the proud makers of the Internet Spit Shield, protecting the inside of monitors worldwide.
Church Lady
Mnemosyne: I do believe $600K x 4 is $2.4M and I do believe 219 x $1M is $219M. The total retention bonus pool paid on March 15, for over 350+ employees, was $165M, not $219M.
Might want to check your own math skills first, buckoo. If you’re really in public fiance, I fear for the entity that employs you. Maybe you should work for $1 a year.
Scruffy McSnufflepuss
@Tax Analyst:
Yeah. Especially with my strong views about how gay people are the minions of Satan who’ve been reared in the pens of Hell to destroy America and provoke God into sinking this continent in a massive earthquake. Those are the kinds of values that resonate well with voters across vast swaths of the South and Midwest. And the fact that I eat paste just shows that I’m not afraid to stand up for my beliefs.
Elie
— Over at Kos there is a diary by David Sirota demanding that Geithner be fired right away..
I am sure Geithner and Summers would love to be taken off the hook that easily
One poster recommended a "Secretary Krugman"…yeah — THAT would be likely. Hard to say who would like that the least – the O administration which has probably loved his really helpful suggestions or Krugman who would at last have to put something else other than his opinions on the line. Never has a Nobel prize been used to bludgeon with such effectiveness…
Mnemosyne
And yet $165 million is still more than $2.4 million, yes? I seem to recall at least that much from college algebra.
But, then, you know all, so if you tell us that $2.4 million and $165 million are numbers that are so close that there’s really no difference between them, so the bonuses for Fannie Mae and AIG are exactly the same, I guess we have to believe you.
Brian J
I don’t really think that’s arrogance. Unless he’s lying, he’s saying his banks were healthy but forced to make some bad decisions because they were required to take bail out money that they didn’t need. If they really didn’t need help from the government, I’m not sure it’s fair to blame them for having involvement from the government forced on them and then getting angry about it.
But maybe I just don’t understand something about this world.
guest
@Elie:
krugman doesn’t understand the legislative process.
guest
testing testing why wont my comments post? was it something i said?
JG
From somewhere back in the 60s: you think the Wells Fargo claim that they can’t just hand the money back should be questioned (reason: big banks are evil and cause of this crisis). I don’t disagree with being skeptical. He should be able to back that up. The news noted all over the place at the time that Wells was forced into taking the money, but I haven’t seen news reports on conditions about it being paid back.
However, you are basing his statement being a lie on the fact that the head of PNC says he’s going to give the money back. Perhaps I missed a step, but isn’t PNC’s president just as subject to skepticism? Particularly when giving a statement/press conference/whatever about how great they are so great and stable for giving the money back? PNC may not be BofA, Citi, or Wells, but they aren’t even in the neighborhood of George Bailey’s little S&L. PNC is a huge company with a lot to gain by good press and being seen as "responsible." It is in their interest to gloss over the fact that the government hasn’t said it will take the money back.
If you’re going to be skeptical of anyone just for being involved in banking right now, be skeptical of everyone.
Church Lady
Mnemosyne: I’m so proud of you. You also recognize the difference between $165M and $2.4M. Sadly, you don’t realize the difference between 4 (the number of FNMA executives up for bonuses ranging between $400K and over $600K) and 418 (the total number of AIG employees paid out of the $165M retention bonus pool). If you divided the entire pool at AIG with the number of employees being paid, the bonuses would average out to approximately $395K per employee. And yes, I realize that 73 people got over $1M each.
You are comparing your apples (four people) to my oranges (428 people) and saying that since you have less apples than I have oranges, it’s ok for your apples to get taxpayer funds for failure, but my oranges can’t. My point was that if AIG employees shouldn’t get retention bonuses because "it’s the taxpayers money", then neither Fannie nor Freddie should be awarding retention bonuses either. Why? Because both Fannie and Freddie FAILED, we own all of them (vs. 80% of AIG) and BECAUSE IT’S TAXPAYER MONEY!
Good enough?
Elie
Guest @ 160 —
Yes, I realize that about Krugman. I was actually being snarky in my post. I don’t actually think that he would be a good choice for that position and I also don’t think that he would want it, preferring the certainties and plaudits of unaccountable academia rather than the whips and vagaries of actually trying to serve the public.
les
@Church Lady:
Nice try. Mn-person is comparing his two formerly and presently government entities, tasked with providing funds for individual mortgages, peripherally involved in securitized mortgages and properly taken back into the government. Some tens of billions, to shore up trillions in mortgages; with an immediate result of a significant drop in mortgage interest rates. Vs. your precious free market insurance company, getting hundreds of billions as its reward for so fucking up its business that it is a central player in the collapse of the world financial system. Apples and oranges, indeed. There may well be 4 people at Fannie/Freddie worth the bonuses; every last Master of the Universe at AIG should be turning in his net worth to us, with profound apologies.
craig
Why would you lump well-run banks that did not contribute to the problem with poorly run banks that did? That they are in the same industry is not sufficient justification for treating them in the same manner. On the contrary, don’t you think? Were it not for some regional banks and well-run national banks like WF this could be a much more serious issue than it already is. Think about how you would feel if you were in the same situation.