Middle of the night bailout for Bank of America; TARP investigation of BoA and Citigroup/Jesse Jackson event requested
Are you beyond numb? Bush the pre-socializer says farewell with a $20 billion, secret middle-of-the-night bailout for Bank of America and an additional government backstop of $118 billion for its assets — all on top of cutting a deal with Barack Obama to give away the second $350 billion of the Crap Sandwich/TARP Big Business bailout.
McClatchy has the late-night scoop, which came in as I was about to hit the sack after midnight. I was so bleary-eyed, I thought it was a joke at first. It’s not.
Legacy:
With a new round of turmoil gripping the financial markets, the Bush administration late Thursday night rushed $20 billion in emergency funding for Bank of America.
Just months ago, Bank of America, based in Charlotte, N.C., appeared to emerge as the nation’s top bank after it stepped in on Sept. 15 to purchase investment bank Merrill Lynch. After Merrill’s fourth-quarter results proved worse than expected, however, the acquisition was in peril and investors have fled Bank of America in droves.
Bank of America’s stock lost 40 percent of its value during the past 10 days — shares closed on Thursday in single digits for the first time in 18 years — and the taxpayer money will be used to ameliorate the losses from its acquisition of Merrill Lynch. Chief Executive Ken Lewis called it “deal of a lifetime” when it was announced.
People familiar with the unfolding events, requesting anonymity to speak freely, said Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, with the knowledge of President-elect Barack Obama’s transition team, pressured the bank to stick to its purchase of Merrill Lynch.
In addition to the $20 billion Bank of America will receive from October’s bailout fund, the Federal Reserve and Treasury Department also will provide a backstop of $118 billion for its assets, which include mostly securities whose collateral are commercial or residential real-estate loans. Most of these assets were assumed by Bank of America in its acquisition of Merrill Lynch.
Hey! Let’s put the Citigroup bailout overseer and serial tax-dodger Tim Geithner in charge! He’ll make it all better. Right, Sens. Hatch and Graham?
The funds rushed to Bank of America come from bailout money that had been promised, but not yet given, to other institutions by the Bush administration. It will fall to the Obama administration to direct new funds to these banks, which saw their promised capital injections usurped by the Bank of America crisis.
Bank of America expects to shed as many as 35,000 jobs nationwide as the banking sector crisis deepens. One top-level executive, who’d been handed a pink slip Thursday, told McClatchy that morale is at rock bottom.
“It’s terrible,” said the executive, who asked that his name not be used because details of his departure were still being worked out. “Everyone is worried, from the lowest employee to the highest.”
Bank of America and Merrill Lynch already had received $25 billion in Wall Street bailout money last year, and the new round of aid is sure to anger the public and lawmakers in Congress. They’re angry that the money injected into the banks came without strings attached and that there are few measures to gauge whether the banks are actually lending the money as was intended.
Despite the fact that the Bush administration gave almost $350 billion to banks and other financial institutions, the financial sector continues to be rocked by uncertainty. Citigroup, another of the nation’s largest banks, said this week it expects to shrink by a third as it lops off parts of its business and resizes itself for a much weaker economy. It was rescued by the federal government in November.
Federal regulators have only just begun:
The F.D.I.C. announced separately that it would soon propose to extend its guarantee on supporting new consumer lending to 10 years, from 3 years.
“The U.S. government will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks,” regulators said.
With losses mounting in the financial industry, other banks may eventually feel compelled to turn to the government for assistance, and the program could to used for other big banks. Taxpayers could end up guaranteeing hundreds of billions of dollars of banks’ toxic assets.
“The financial services sector still needs more equity,” said Frederick Cannon, the managing director at Keefe, Bruyette & Woods. “TARP was announced in mid-September and most of the initial decisions were based on the state of the economy then. The economy has gotten a heck of a lot worse.”
Government officials said that they did not have new money to allocate for this assistance, so they used funds that was already allocated from the $350 billion bailout fund for other banks or for future stabilization programs. The officials said that even though Citigroup’s stock had tumbled since November, that bank’s stock price might not be the best indicator of whether the program was working.
We are so, so screwed.
Where’s that epitaph? Oh, yeah. There it is:
“I’ve abandoned free-market principles to save the free-market system.”
***
Meantime, how’s some of the money these banks have soaked up being spent? The National Legal Policy Center wants to know. They’re demanding that the TARP inspector general investigate the squandering of tax dollars on Jesse Jackson’s latest shakedown scheme:
Today the National Legal and Policy Center (NLPC) asked Neil M. Barofsky, the Special Inspector General for the Troubled Asset Relief Program (TARP), for a formal review of the sponsorship by Bank of America and Citigroup of the Rainbow/PUSH Wall Street Conference currently taking place in New York City. The January 13-16 event is one of two of Jesse Jackson’s annual fundraisers.
According to official conference materials, Citigroup is a “Gold Sponsor,” a designation costing $50,000. Bank of America is identified as a “Silver Sponsor,” a designation costing $30,000.
Both Citigroup and Bank of America are major recipients of TARP funds.
Taxpayers are now Citigroup’s largest shareholder after infusions of $45billion. Bank of America has already received $25 billion. According totoday’s Wall Street Journal, it is seeking billions more in order to make possible its acquisition of Merrill Lynch.
NLPC’s Complaint reads, in part:
“When the TARP was presented to Congress, Secretary Henry Paulson and others argued that the situation was dire, and that the failure of major financial institutions posed a systemic risk to our economy. The stated goal was to unfreeze credit so that banks can make loans to businesses and individuals. It was never contemplated that banks use their capital to make donations to organizations founded by a controversial figure like Jesse Jackson.
It should be noted that shareholders have made objections to corporate donations to Rainbow/PUSH and the so-called Citizenship Education Fund (CEF) even before the onset of the financial crisis. CEF is a 501(c)(3) organization founded by Jesse Jackson that co-sponsors the Wall Street Conference. In recognition of these objections, the New York Stock Exchange itself ended its financial sponsorship of the event in 2005.
***
Reminder: BoA is also the Bank of Illegal Aliens in America.
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- Deal for the second half of the TARP funds! Christ, what is happening??? | Robert Opyd (baghdad-bob)
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Is it possible that Paulson did NOT engineer the buyout of a failed Meryl Lynch at prices that gave golden parachutes to his friends in management?
The best part of government spending is that there is always someone slicing a piece or 2 of the pie for themselves!
What a nice guy. Nationalizing everything before the inauguration so that the new guy won’t look like a socialist.
“The funds rushed to Bank of America come from bailout money that had been promised, but not yet given, to other institutions by the Bush administration. It will fall to the Obama administration to direct new funds to these banks, which saw their promised capital injections usurped by the Bank of America crisis.”
So they all broke the law. I guess they can argue that it was never constitutional to begin with so they committed no crime!
Obambi’s transition team approved, wonder if they got approval of the critters on the hill too? If not, fur
is going to fly friday they had plans for that next 350 billion and won’t like not being able to leave thier scent.
Feh, we abandoned free market capitalism in the late 1800s. We’ll be okay.
Some day. After we adopt the Top Twenty-Five ideas on Change.gov..
My first and only checking account for most of my life was with Seafirst Bank, which was bought out by Bank of America several years ago. After I learned they were giving credit to illegal aliens, around the time of shamnesty, I closed that account and never looked back. While they’re still in business, (if you can call it that), for the time being, I’m glad that I no longer have a stake in their incompetent business practices.
Well, I should have said: I didn’t think I would be involved any longer, but as an American the government is now forcing it upon me. But I tried my best. It’s not my fault our government is incompetent too.
So as a Bank of America customer should I go ahead and close out my accounts or assume that everything will be fine? WTF? I almost closed them out when the illegal alien debacle went down (thank you for bringing that up, FloatingRock!) and now I wish I had gone ahead and dealt with the hassle then. Any advice on this?
I wonder if a “run on the bank” will be in our future soon if we’re account holders. I live 1 mile from 2 of my bank’s locations. Since the government and MSM think it’s grand to repeat the mistakes of the ’30s, I suppose I should keep my running shoes in good shape.
Here in San Diego on Wednesday, several people picketed BofA in SD. The picketers accused BofA of not using the “bailout” money to help the local builders — most of the picketers’ had businesses dependant upon housing — and were killing local business.
BofA issued a statement saying they “had not requested any bailout.”
Is there any way that we the taxpayers can file a lawsuit to either stop this insanity or at least pursue civil suit (class action?) against those in Congress perpetrating this? There has got to be some recourse besides waiting for 2010 – that will be too late – we are being lead down a path and we are rapidly passing beyond the point of no return.
That Jesse Jackson crap in NYC has been sponsored (hi-jacked and pressured by Jackson) by big business for YEARS. It’s his annual GIMME drive. That jacksass should be in jail for tax fraud, but has never been audited. O’Reilly reported a couple of years ago that Jackson’s PUSH group (3 employees total) submitted IRS tax forms showing over 2 million dollars in travel expenses in one year, with NO receipts. They were allowed, no problem. It DOES pay to be a corrupt Democrat. Jackson is living proof. Among many.
I didn’t watch or listen to Bush’s farewell speech, all I can say is “farewell” and this just adds another step lower for Bush’s legacy. Frankly, I don’t want to see his face again, the man who destroyed America.
But, but, but,
I HAD to kill the US economy in order to save it.
Tarpal Funnel Syndrome.
YES
That is why I’m declaring Idaho a sovereign country.
Citi splits in two, which side keeps our tax $s?????????????
wow is this ever getting bad:
http://biz.yahoo.com/ap/090116/earns_citigroup.html
Well there goes the American Dream. The government has proven once again that it is not in alliance with tax paying Americans. Now if you are like Sharon Jasper who has only worked one year of her 58 years the government is her savior, but as a tax payer, I no longer want to support the likes of her.
Sea,
The answer is NO.
As far as no return: return to what?
Let this all wash out, when the time is right we can get back to REAL America and the constitution as the founders intended.
I for one have no desire to protect or fight to preserve the endless watering down of America do you?
END THE CHARADE walk out of congress REAL GOP Americans!
Mach,
Care to bet which side of Citi split the taxpayers get saddled with?
We got anarchy going on and few care.
media chasing an airline crash where nobody died yes yes chase the red herring no other news.
I think I’ll create my own currency. I’ll call it the FamilyMan Dollar. I’ll back it with gold and we can trade it privately.
Any takers?
GEEES, WHAT A SCREWED UP COUNTRY!
Well, the good news is that Congress *is* going to investigate the college football championship determination process.
http://nbcsports.msnbc.com/id/28674868/
It will be interesting to see how they redistribute players to ensure there aren’t any losers.
OH GOODIE!
That will save western civilization.
How much will that cost us?
The arms of the government are getting longer and longer. I can’t believe that this is the type of government that people actually want. All I know is that it can’t be stopped, even at the ballot box. We have created a monster and it has taken on a life of its own.
Isn’t it obvious to anyone here yet? This at least is easier to take than the alternate. A military coup would be much messier. Instead bring down the country from within, in an orderly manner. Steal everything that isn’t nailed down.
We already know they have absolutely NO INTEREST in what the people want or “demand”. Face the facts…they could bring people into custody and start shooting them and there is nothing any of us could do.
We are already the equivalent of a Banana Republic.
When will we march on the Fed.
Wachovia is Now Part of Wells Fargo…
That was the headline of a recent E-mail I recieved. I do believe Wells Fargo got some of that “Bailout” money.
I was curious, they purchase Wachovias’
assets also right? Or was it just debt because Wachovia was sinking?
WE MUST MARCH, people. LETS GET INTO ACTION! WE MUST GET THIRD WORLD ON THESE PEOPLE
I’m getting the uncomfortable feeling that I’m living through some horror movie. We the few freedom loving normal people are being attacked by hordes of mutants who have lost the ability to take care of themselves.
Mc,
fargo only purchased part of wachovia.
Fam,
back those fambucks with ammo count me in
…with a government more than willing to do the job! Talk about usurpation of power!
Mercy… Count ME IN !
I’ve been Screaming about the Southern Border since 9/11… Gee, see ALL the GOOD thats gotten me?
HEY MICHELLE
Do you have any stories of banks that have remained solvent by adhering to conservative business practices? I think we all need some assurance that someone is still practicing real capitalism.
So WE are paying shakedown money to promote shake downs? With a President Obama coming on board there will little or no action on this. Corporations have been paying shakedown money to the various thug organizations forever-as of late in the name of charity or such. It WAS tax deductible- now they just get the taxpayer to pay it up front.
Back to the Conservative Underground.
Man, I wish I had some cash I could convert into gold and silver. The US Dollar will be worth a lot less soon.
What truly disturbing about this is that it’s becoming clear that this type of bailout is NOT working for Citigroup. They did the same thing… lots and lots of money… as Les Grossman would say… plus a $300 million backstop.
And I repeat…it’s NOT working for Citigroup.
Yet they continue to drop off dump trucks full of money at the doorsteps of these mismanaged banks.
The politicians could care less whether or not these bailouts work. All they care about is being owed favors by these institutions. Dodd, Franks and sadly a lot or republicans really don’t give a $hit about the money or us. They are all just setting themselves up to make millions in the very near future.
Family Man… there are some banks like you are looking for… there was just a story about one in the midwest. Maybe we can compile a list of banks that have sounds policies and refuse or don’t need bailouts. Someone has to have thought of this already. Time for some searches because I’m pulling my money out of Citigroup and looking to put it elsewhere. BofA isn’t an option. Maybe TD Bank (formerly Commerce Bank).
Which all goes to reinforce what we all know — Politicians are Aristocratic, self-serving A-Holes that care more about their “image and control” than they do the welfare of this Country.
The Jackson shakedown — who’s next “La Raza” (or did they already get thiers?)
Sorry.. that $300 BILLION backstop for Citigroup….that is not working.
Conservatives need to put our money where our mouths are.
Does anyone have a list?
Disclosure:
I’m a BofA customer… Savings, Checking, and CD’s… In other words, I use the bank for it’s intended purpose.
Some people (you know who you are) seem to think, banks have the obligation to lend money – my money, to some Dead-Beat who may, or may not, pay it back.
This wasn’t a Republican’s “Bright Idea” was it.
Fast forward to now, when this “Bright Idea” meets it’s inevitable outcome – the bank running short on funds – the money that I, and millions of other people entrusted to the bank.
And now, I got to sit here, and read the whining, and the cry-babying, about the taxpayer having to pay me my money back.
If you want Crying Towels, just e-mail me, and we’ll set up an account.
Try your local credit union. 9 times out of 10 you’ll get more favorable rates and terms there anyway.
I am beginning to think we would have been better off if all of these banks, businesses, etc. would have just collapsed and started over. And when the terrorists launch their next attack on us, this administration will never be ready. And that attack will probably cross the Rio Grande River due to the inability and unwillingness to stop the illegal crossings. Nobody wants to stop it because everyone thinks that these illegals will vote for them and keep them in their congressinal seats longer so they can continue to scam the American people. Keep your ammo ready.
rush calls this bank the BANK OF AMIGO…I wonder how much of this is due to their giving loans to illegals…for houses, credit cards, etc??
You must have forgotten Frank. Former president Bill Clinton has already told us that all money comes from the government.
In Erich Maria Remarque’s book “The Black Obelisk”, you can read the results of printing money. It takes place in post-war Weimar-Republic Germany in 1923, when inflation was unbelievable. The government kept printing MORE and MORE money, until it was virtually worthless. People were paid twice a day (11 AM and 4 PM) because the value of the mark changed at noon and 5 pm. It took a wheelbarrow of cash to buy a loaf of bread. The book is an eye-opener, and it looks like we’re going to revisit history again at the rate we’re going. Good thing the Democrats (and enabling Republicans) don’t read history. Too violent, probably, and not PC.
My blog entry for today:
Some Simple Numbers
$56,400,000,000,000 – Current U.S. debt and liabilities that WILL HAVE TO be paid in the future
$1,200,000,000,000 – Estimate deficit for 2009
$1,000,000,000,000+ – Estimated deficits for years to come according to Obama – This DOES NOT include the $800,000,000,000 in the current “stimulus” package.
There are only three ways to pay for this mess:
Taxes – Raising taxes to the amount to pay these debts would utterly crush the economy. Wouldn’t work anyway.
Borrow – We’ve been doing that, mostly from the Chinese. They recently said they are getting tired of funding our debt.
Print Money – We’ve been doing that, too. Will probably do that a LOT more soon. Will lead to massive inflation.
What Obama and the liberals plan on doing over the next four years will only make things worse. Hang on for a very bad ride.
I said the other day I think I’m becoming a secessionist. I wasn’t joking. Of course, I live in VA, which is overrun with PC libs from the northeast, so it won’t happen.
Va got clobbered for seceding before, but I don’t think the USA has the stones now.
Besides, the country is on the verge of collapse, just pretend not to notice.
My calculator won’t display that large of a number.
I see a new growth industry for larger calculators/sarc
I’ll close my eyes, cover my ears and go LA LA LA LA LA LA LA.
HEY!
That help for a few seconds.
don’t worry, everything will be OK..after all OBAMA is now running things…trust him, trust him, trust him….you just need a little mark to show your devotion…
soon we’ll be part of the european union…and they’ll ‘take care’ of us….
I saw on the FOX ticker yesterday (or maybe it was Wed), that the Zimbabwe Government just printed a 5o billion Zimbawean dollar note. As of that report it would buy 2 loaves of bread.
As far as solvent banks, try your local community bank. My bank (Security State Bank of Basin, Wy) still requires proof of income and credit worthiness to get a loan. I financed a new tractor last spring and they actually required a down payment. Imagine that.
I read that as “how much in golden parachutes can we get away with?”
Listen up, “bradley”
Any Republican, who pitched a b*tch, was hammered into submission with “You’re a Racist” or “You’re cold-hearted toward the poor”
This is known as “coercion,” “intimidation,” and “extortion”
Your implication, that Conservatives or Republicans willingly went along with this, defies logic.
I saw one economist say recently that the government has a 4 trillion dollar problem, and just 1 or 2 trillion won’t solve it. These bailouts will NOT work. What people ignore is that they are stealing money from all of us to do it. That means taking the money OUT of the private sector, thus plunging us from a recession to the worst depression in our history.
RE#10: On January 16th, 2009 at 7:59 am, bansharia said:
Sea,
The answer is NO.
As far as no return: return to what?
Return to the conservative and federalist principles of our founding fathers (who are probably corkscrewing their way through the earth).
I just read a book on Lincoln. He said that one of the OBLIGATIONS of citizens is to revolt. It is our responsibility to remove corrupt politicians.
Can you hold off until after the mens NCAA basketball tournament in March? I think Syracuse might be good enough this year to make a deep run and I’d hate to have a little civil war screw it up.
Lincoln said that? I knew Jefferson and friends felt that way, but I thought Lincoln was a preserve the Union at any cost kind of guy.
We won’t be able to find a John Brown before then.
I’ll tell you EXACTLY what they are doing…
They are PURPOSELY RUINING the Economy so we can CONVERT OUR CURRENCY with Canada and Mexico (Mexican Govt. is collapsing you know), To the AMERO!!!
We will then be JUST LIKE the European Union… May sound off the wall, BUT this is whats taking place, and everyone is standing around, watching the Stock Market.And the Fine Folks at the United Nations are Salivating…Our Constitution will be worthless (like they follow it now lol). So, THAT IS WHATS COMMING… Be a good sheep OK?
He was, which included preserving the constitution and integrity.
Now we have Obama channeling Lincoln, so everything will be just fine. /sarc
Whew, for a minute there I thought the government might be leaving us a slight opening to possibly recover this nation within a couple of decades. Thanks for putting yet another nail in Uncle Sam’s coffin, Big Gov!
We can make GWB the scapegoat for this but it remains to be seen if the Congressional Democrats who created this crisis will be prosecuted alongside their dim-witted Wall Street accomplices.
Before confidence can be restored in the markets, the public needs to be assured the the rule of law will prevail here. The best course of action now is to concentrate on bringing the malefactors to justice, every last one of them. The gross criminality and malfeasance here is so thick you can cut it with a knife. Time to get busy.
You’ll all get a kick out of this. I closed my BOA accounts a few days ago for logistical reasons, in that they have no serious presence in Chattanooga. I noticed the next day that I received a “Low Balance Threshhold” notice, so I called them. The customer service rep told me I was $.01 overdrawn and I needed to fix it before the account could be formally closed, all the while talking in a zombie-like monotone. I informed her that it was probably an interest accrual that had not posted because the bank teller made the final transaction. “Oh, no.” she said “You need to deposit that$.01 to your account because they’re going to hold you to it.” I told her that was ridiculous and she need to close the account. She said she would then hung up on me.
I have zero confidence in the banking industry. They’re either incompetent, crooked, or some combination of the two.
“Shoot the lawyers first”, then shoot the politicians.
Never mind most politicians are lawyers. /sarc
Sorry chap.
That’s what I’ve been thinking they were up to McCloud (#58).
Since the Mexican economy will never come up to the U.S. and Canadian level, just bring them down to third world level and then unionize the three of them together.
That way all those third world sh$$hole countries will finally love us.
It’s becoming “1984″ on steroids.
Stock up on supplies and reload more ammo.
The only good lawyer is my lawyer.
On January 16th, 2009 at 10:55 am, RedDog said:
… gross criminality and malfeasance here is so thick you can cut it with a knife. Time to get busy.
I’m with Red Dog on this, any ideas how to start the revolution???
Bush is part of this planned collapse….why do you think this debacle was initiated just before the election??? I know it sounds crazy…I know many think that is just a conspiracy theory…Like those folks seated on that plane as it was going down…
Is this really happening?
Yes, I’m afraid it really is……
And take a look see at Kissingers new column in the International press….The New World Order brought out in the open once again.
http://www.iht.com/articles/2009/01/12/opinion/edkissinger.php
Where’s the bailout for Circuit City?
RedDog said:
…“You need to deposit that$.01 to your account because they’re going to hold you to it.” I told her that was ridiculous and she need to close the account. She said she would then hung up on me.
For eight months, Wells Fargo sent me a statement on my ‘closed’ account that showed $.01. Let’s see, 8x$.42 = incompetence – no to mention the cost of producing the document.
incompetence is rewarded….Why do you think we have the people in congress now? More illiteracy, more foreigners who don’t speak english….
El STUPIDO…OLE!
Mr. K and I started withdrawing all of our BofA time deposits (at time of renewal) as soon as we heard about BoA issuing credit cards to illegals.
As far as what’s going on in WDC…
Every….Everrrrryy politician holding office should be voted OUT next opportunity to do so. They are all either crooked or chicken but all are dumb!
As far as Obama’s cabinet is concerned:
Geithner is a tax cheat…plain and simple – so he’s a crook.
Holder is just plain dumb…figuring out after the fact that maybe he shouldn’t have pardoned Mark Rich…good grief, he went to law school, he’s supposed to be steel-trap mind sharp! How can such a mediocre mind become a lawyer??
I’m fed up and probably sounding dumb myself….but I’m not being payed by the taxpayers!..Rant off…phew..
payed should be paid! That’s what happens when I rant!! LOL
The Face of a TRAITOR to His Country!
http://www.iht.com/articles/2009/01/16/business/16banking.php
This is the same bank that welcomed illegals by issuing credit cards to them. My sympathy meter doesn’t even register where BofA is concerned.
may all who have allowed this to pass burn in he double hockey sticks….
We The People need to demand that this kind of behind closed doors middle of the night crapola be stopped….open government Of, By, and For the People not Of By and For the business….otherwise you might as re-write the Preamble to the Constitution to the following:
“We the Big Businesses of the United States, in order to form a more profitable corporate culture, establish Corporate Justice, promote the general Corporate Welfare, and secure the Blessings of Liberty to our bottom line and our Posterity, do ordain and establish this COnstitution for the United States of Corporate America”.
I’ve had this published in at least 3 papers over the last few years and several of them liberal papers…which I still find rather interesting that they would even put it into print….
Include Miller and Absolute on that list too.
Giving BofA billions in the middle of the night as Ramos and Compeon sit in solitary confinment.
Makes me sick!
On my last visit to BOA in Dalton, Ga, there were spanish language banners everywhere and all the tellers were bilingual. The carpet and poultry industries there have heavy hispanic populations. Hard for any business to ignore, legal or not….
The illegals were bussed in by the carpet manufactureres and poultry industries.
Then they would brag about being American made……yeah right…but heavily populated by illegal alien workers…there is lawsuit against Mohawk over the hiring of illegals…not sure what stage it is at right now…just being stalled til they take over perhaps??
Hubris in the board room:
As a resident of North Carolina, I pay some attention to the fortunes of Charlotte’s two megabanks, Wachovia and Bank of America. The unlikely rise of Charlotte as a banking center competitive with New York has been a source of pride hereabouts and tremendously important to the local economy.
I was always amazed at the rise of these two giants which, of course, grew by continually gobbling smaller and weaker institutions. But after a while, I came to feel that all of this was driven by imprudent, prideful ego and ambition. “Greed,” yes, but in my imagination, it came to be more about “ego and ambition.”
It seemed obvious to me that there was a lack of due diligence in these decisions, although I concede that I only read the newspapers and do not know anything, really, about the analytical work that precedes these deals, except that they go very fast. How much due diligence could there be?
And, of course, no observer of the modern business scene can neglect the fact that the men who run these enterprises are completely beyond the possibility of personal financial pain. They will never be less than fabulously wealthy, regardless of what messes they make.
Some readers here may recall that it was the acquisition of Golden West, with all its bad paper, that brought down Wachovia. A bold and audacious move on the part of Wachovia; a disaster that brought down their company.
And now we find that Charlotte’s other megabank, Bank of America, is being saved from choking on the Merrill Lynch deal only by this latest taxpayer bailout. Once again, a voracious appetite and untempered ambition led to to the brink of disaster.
But — as I say — the big boys do not really feel the consequences except to their egos. At worst, they may have to retire to their private yachts and planes, personal chefs and chauffeurs, and their multiple estates. I guess they will be a little moody as they gaze out over the Mediterranean from their anchorage in Cannes. Life must be tough for them.
I am a capitalist but something is out of whack here. I am not optimistic that the government can fix it, because, clearly, the government has been a big part of the problem. Plus, of course, government is inept and corrupt.
We’re in quite a pickle. (Some of the most responsible comments I am hearing are coming from German Chancellor Angela Merkel, who might be a little more comfortable with Euro socialism than we like but has zero patience with the sort of money-printing frenzy that we have embarked on to save ourselves.)
I managed to cash out a mutual fund retirement plan I was in, but only after I had lost 30% of its value. Before it was done, it had lost over HALF its value. Glad I got out when I did. I then put the cash into gold, solid real gold. Metal, not futures.
It’s my insurance policy, for when we go Weimar.
Yeah, I work at Wells Fargo, and I just got laid off. Of course Wells Fargo foolishly bought Wachovia. I am glad you brought up Golden West, for that was the poison pill. If one follows the money this whole recession/depression started in CALIFORNIA. From there it migrated to Arizona, Las Vegas and Miami. It started from the actualization of the bigger fool theory (I don’t like bubble, because it makes it sound small). Prices rose 20 to 50 percent a year. NOBODY CARED. NOBODY will get the money back either. It did not matter what one paid for property, because a bigger fool would come along and pay more.
Since we had non-prime loans, 100 percent financing and fraudulent appraisals, we had an abundance of fools. Until the price would reach the Max a working couple could pay to buy a house. Then the collapse. Add the stupid Mark to Market rule of the SEC and we have a global collapse.
Where was Bush, Greenspan, Bernanke, Paulson while all this was happenning? Probably figuring out how to get even richer.
I just watched a documentary called “Maxed Out” which concentrates on the abusive marketing of credit to people that the banks know full well cannot service the debt.
Even factoring out the left-leaning point of view in this film, one can’t help but be disgusted by the banking “industry” and its hangers-on.
The collusion (corruption) between the government and the banking industry is nauseating (and all this before the bailout-palooza). Why any of the big-shots at these banks are still employed is beyond me. I’d like to see them stripped of their assets as penalty for dragging us to this point. They ought to struggle like so many of the people left to pay for their mess.
Congress-critters should also be governed by the same ethics regulations that government employees and contractors are governed by. A cop could lose his job and, possibly, wind up in jail for taking anything of value yet the goofballs in Congress take scads of lucre and it’s all “legal”.
Only a few months ago CITI group was crying foul because they could not buy the troubled Wachovia from the Feds because Wells Fargo Paid big money and snatched the deal?
The fools are not capable of managing what hey had, but wanted more of the troubled assets on their books!
It would be interesting to find out how much money these crooks hauled home at the end of 2008 for their incompetance..