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November 9, 2008
'Hope Won' - Banks Close
November 5, 2008: Oprah Winfrey came out excitedly onto the stage of her post-election televison show sporting a white T-shirt that stated simply, 'Hope Won.' She referred to herself as being 'unleashed.' To her credit, I think, she acknowledged that some of her loyal viewers might be disappointed in the results of the election. But fair to say, Oprah and many other dignitaries and leaders have now expressed their deep-seated emotional exurberance over the election of the Barack Obama as the 44th President of the United States, some because Barack Obama is the first Afro-American President of the United States and some because Barack Obama represents to them a breath of fresh air from the economic and foreign policies of George W. Bush, the 43rd President of the United States.
November 6, 2008: The Federal Reserve released numbers today showing that it increased lending in the 'Commercial Paper Funding Facility' from $144 billion to $243 billion during the previous week. This is not part of the $700 billiion bailout package passed by Congress in early October as the Economic Stabilization Act of 2008 (which authorizes the U.S. Treasury to to purchase weak assets, such as mortgage-backed securities, from U.S. banks). Instead, this is a separate program begun recently by the Federal Reserve to loan money to corporations for short-term operations because banks have drastically reduced their loan activity in this corporate market.
November 7, 2008: President-Elect Barack Obama held his first news conference in Chicago, focused primarily on the state of the economy. He opened the conference by acknowledging that morning's report that the U.S. economy lost another 240,000 jobs in October. He then reminded the public that the current administration (President Bush) remains in power until January 20th. He then tells us that after he becomes President, he will confront the economic crisis 'head-on by taking all necessary steps to ease the credit crisis, help hardworking families and restore growth and prosperity.' At the conference Obama is backed-up, literally, by his Transition Economic Advisory Board, a list of whose members makes for interesting reading.
November 8, 2008: The FDIC took over two more banks Friday night. These are the 18th and 19th banks to fail this year. The costs related to these takeovers are also not part of the $700 billion bailout program.
No one said it was going to be easy to be the first Afro-American President of the United States, attempting to take the country, and its politics, in a new direction. And we haven't even talked about climate change.
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I think you have summed the situation up rather well. The only thing I note which is a personal belief with some evidence is the three major banks still standing are buying out competition with our tax dollars rather than lending. I suppose this is the law of unintended consequences at work, but it re-enforces my belief that this refusal to regulate by the government is exactly the wrong approach. We are going to end up with another set of banks which will be untouchable and which will, (MARK MY WORDS) get themselves in trouble because they can't be allowed to fail. Eventually we will have a government banking system as does much of the world , and we will wonder how it happened.
ReplyDeleteTxLostWolf
Or perhaps intended consequences, or is that just being too cynical? How about just being okay with the likely consequences of all this extra government money? Note that Bank of America recently began running its largest advertising campaign in history touting, among other things, that nearly 1 out every 2 American households relies in some way on Bank of America for financing. (I've seen the ads). And it's not just me speaking. See what a high ranking Bank of America official had to say at a Four Seasons Resort & Spa in Arizona on September 23, 2008. And if you read the list of members on Obama's Transition Economic Advisory Board, you'll notice that both Citigroup and JP Morgan Chase have their people on that select group. They are number 2 and 3 in size, I believe, in one order or the other, behind Bank of America. Of course, I'm very hopeful that this is not just politics as usual, or we very well may end up, as you say, with a small group of mega-banks that will appear to be untouchable, and available, for yet another future bailout. Tell me why that isn't so?
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