told, not asked

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http://www.bizjournals.com/portland/stories/2009/02/16/daily21.html

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While government leaders were well-intentioned in setting up the Troubled Asset Relief Program, it’s a “lousy program,” U.S. Bancorp CEO Richard Davis said at a business leaders forum Tuesday.

U.S. Bank was told, not asked, to participate in the program, which is a Darwinian attempt to “synthesize” weaker banks into stronger banks through consolidation, Davis said at the forum, held at Thrivent Financial for Lutherans in Minneapolis. U.S. Bank (NYSE: USB) sold $6.6 billion in preferred stock with warrants to the U.S. Treasury in November through its capital purchase program.

“There’s no A, R or P in TARP,” Davis said, adding that “troubled” is the only word in the phrase that’s accurate. “The ‘asset relief program’ has yet to occur.”

The problems with the U.S. Treasury Department’s program are that its goals and rules have changed since its inception last fall, it’s poorly defined and it’s caused collateral damage to healthy banks.

Davis said he would be “darned” if Minneapolis-based U.S. Bank would suffer collateral damage from the government’s “sloppy attempt at nationalizing the [banking] industry.”

U.S. Bank, which has $247 billion in assets, was the sixth-largest commercial bank in the country as of the end of the third quarter of 2008. It has more than 2,500 banking offices in 24 states.

U.S. Bank is Oregon’s largest bank, with 186 branches and more than 4,700 employees statewide. U.S. Bank has 103 branches and 3,925 employees in the Portland metropolitan area.


http://online.wsj.com/article/SB122402486344034247.html

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It was Monday afternoon at 3 p.m. at the Treasury headquarters. Messrs. Paulson and Bernanke had called one of the most important gatherings of bankers in American history. For an hour, the nine executives drank coffee and water and listened to the two men paint a dire portrait of the U.S. economy and the unfolding financial crisis. As the meeting neared a close, each banker was handed a term sheet detailing how the government would take stakes valued at a combined $125 billion in their banks, and impose new restrictions on executive pay and dividend policies.

The participants, among the nation's best deal makers, were in a peculiar position. They weren't allowed to negotiate. Mr. Paulson requested that each of them sign. It was for their own good and the good of the country, he said, according to a person in the room.

During the discussion, the most animated response came from Wells Fargo Chairman Richard Kovacevich, say people present. Why was this necessary? he asked. Why did the government need to buy stakes in these banks?

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Mr. Bernanke said the situation was the worst the country had endured since the Great Depression. He said action was for the collective good, an understated appeal. The room was silent as he described the economy's fragile condition.

Mr. Geithner, whose job as New York Fed chief makes him the central bank's main man on Wall Street, delivered the most sobering news. He described how much preferred stock the government was going to buy from each firm. The government would take $25 billion in Citigroup, $10 billion in Goldman Sachs Group Inc., and so on.

The CEOs shot off questions, peppering officials for details about how the share purchases would be structured and how it might constrain them. At one tense moment, Mr. Bernanke jumped in to calm nerves. The meeting didn't need to be confrontational, he said, describing paralysis in the market and the threat that posed to everyone in the room.

U.S. officials argued the plan represented a good deal for the banks: The government would be buying preferred shares, and thus wouldn't dilute their common shareholders. And the banks would pay a relatively modest 5% in annual dividend payments.



The banks were basically forced to take "bailout" money. This is indeed a veiled attempt at nationalization.
 
Imagine the ire and frustration from banks who were (I'm assuming) solvent and may have followed prudent business practises. No good deed goes unpunished.
 
Originally Posted By: Kestas
Imagine the ire and frustration from banks who were (I'm assuming) solvent and may have followed prudent business practises. No good deed goes unpunished.


I think that's the same ire some of are feeling today. Those of us who were conservative borrowers and paid their mortgages will now get to cover the losses of those that weren't and didn't.

No good deed for sure.
 
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Originally Posted By: Kestas
Imagine the ire and frustration from banks who were (I'm assuming) solvent and may have followed prudent business practises. No good deed goes unpunished.

Gov. had to get their teeth into all of the big players whether they needed the the "help" or not. Ensures compliance.
 
http://www.pbs.org/wgbh/pages/frontline/meltdown/cron/

Paulson wanted the markets to take care of their own, no one wanted Lehman without federal funds, so he let it fail. As Lehman fails the global credit markets freeze, the market nosedives, then AIG starts to fail and it is nationalized. The last two investment banks on Wall Street turn into bank holding companies. The House votes down the bailout and the markets have their largest drop on record. The bailout finally passes, and Paulson has a meeting the CEOs of the largest banks, forcing them to accept cash intervention.

Paulson went from strongly believing in moral hazard, letting people take their losses in order to enforce market discipline, to trying to keep the world financial system from melting down anymore than it did. It's easy to find fault now, but does anyone want things to be a lot worse than they are now, worse than they still can be ?
 
There is ZERO evidence that the bank bailouts did anything. There is PLENTY of evidence that it scared the living daylights out of banks and companies since they have no idea what the Gov. is going to do next. The plunging stock market is a key example of this as well as what Richard Davis said above.

Government interference is getting in the way of recovery.
 
"The plunging stock market is a key example of this as well as what Richard Davis said above.....Government interference is getting in the way of recovery. "

The markets plunged around 500 pts when Lehman failed, and plunged around a record 700 pts when the House failed to pass the bailout plan. It seems obvious if Bear Stearns and AIG had also been allowed to fail that the markets would have droppd more, and it seems obvious that more companies would have failed or be on the brink.

Wht didn't the markets go up then, as obviously in each case the government was not 'getting in the way of recovery'.
 
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Government interference is getting in the way of recovery.



What recovery? Care to let us in on the foiled "Tempest Plan"?


What most of you seem to ignore is that there will be misery. Lots of it. You are probably correct that this will be a major screw up ..but I really don't see too much being offered that isn't going to be very nasty.

You just don't like the flavor of nasty. Again, find the people who have the money ..execute them ..

That will teach 'em!!
 
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Wht didn't the markets go up then, as obviously in each case the government was not 'getting in the way of recovery'.

It's not about single events, it's about trending.
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Any one event can cause a one day dip, but the market has continued to drop at a dramatic rate even with all of these bailouts and stimulus plans.
The reason for this is that they know government interferance will further distort the market and cause higher taxes which crowd out the private sector. Even the CBO has stated this.

Tempest plan is to cut spending and taxes. Let the private sector grow us out of this. Government spending has never worked.
 
Originally Posted By: Tempest
It's not about single events, it's about trending.


That's what I said when I looked at today's weather.
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Tempest, your attitude is widely shared by an uneducated masses that reads just enough Wall Street Journal to be dangerous, but don't understand enough to know what's really going on.

You know, this U.S. Bank chief could be right, but then again, he could be another Ken Lewis who also said Bof A was doing just fine and they were forced to take the money (yeah right). What we have here is a severe lemons problem (get past chapter 1 of your economic textbook and try reading chapter 14 for once). That means nobody can sort out the good from the bad because nobody knows the quality of the toxic assets on any banks balance sheets. So everyone is going to talk a good game because they've go nothing to lose. When U.S. Bank fails, I'm sure Davis is going to blame it on "collateral damage" and suckers like you will believe him.

But [censored], no skin off my back. Your attitude will just prevent them from doing the inevitable (nationalization) sooner and create more shorting opportunities for guys like me. Thanks, Tempest. The gift that just keeps giving.
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Tempest, there is no first best solution. There is only the inevitable which happens to be nationalization. That is the least of the worst. The horse has been out of the barn for months now. Rather than dance around, just get it over with because its going to happen anyways.

Mori,
Yes, I would hire you as my secretary. You are very good at proof reading. Send me your resume, but don't call me.....I'll get back to you.
 
Originally Posted By: VeeDubb
Mori,
Yes, I would hire you as my secretary. You are very good at proof reading. Send me your resume, but don't call me.....I'll get back to you.


I wouldn't hire you, amigo.
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Originally Posted By: Tempest
Tempest plan is to cut spending and taxes. Let the private sector grow us out of this. Government spending has never worked.


Cutting taxes means you can't pay the enourmous cost of servicing the debt...unless the plan is never to pay it back (or pay it off through inflation)
 
Originally Posted By: Tempest
There is ZERO evidence that the bank bailouts did anything. There is PLENTY of evidence that it scared the living daylights out of banks and companies since they have no idea what the Gov. is going to do next. The plunging stock market is a key example of this as well as what Richard Davis said above.

Government interference is getting in the way of recovery.

It's human nature that one "has to do something" when there's a problem. Many people think government "has to do something" to help us get out of this financial mess and help the housing bubble that finally burst. This is where we run into problems. Sometimes it is best to do nothing and let things (the market) work itself out.
 
I well did this.........for your benefit. And I knew you would take the bait. And you didn't disappoint. A mighty fine secretary indeed.
 
Originally Posted By: Shannow
Originally Posted By: Tempest
Tempest plan is to cut spending and taxes. Let the private sector grow us out of this. Government spending has never worked.


Cutting taxes means you can't pay the enourmous cost of servicing the debt...unless the plan is never to pay it back (or pay it off through inflation)

You are assuming less taxes = less revenue which is not the case. If we cutout mandatory spending we could have the debt paid off fairly quickly. Mandatory spending just went drastically up yesterday.
But you are right that our Gov. seems perfectly happy to print money to pay off our debt.
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I also agree that nationalization is most likely eminent. I do not believe however that this is the correct path as the pseudo nationalization and money printing that we have now has done nothing to help.

Franklin Raines testified in front of Congress in 2004 that the Fanny Mae holding were so safe that it only took 2% to securitize them! With things like this coming out of a government enterprise and the implicit guarantee of FM & FM the market became seriously distorted.
 
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You are assuming less taxes = less revenue which is not the case.


The infamous
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Curve? .....
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....


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If we cutout mandatory spending


Yes. Just leave the pork ..you know ..the elective spending.
 
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