Fed OKs Goldman, Morgan as bank holding companies

[cottonzway]

<!--GALLERYINCLUDE-->http://www.reuters.com/article/newsOne/idUST KX00302620080922

WASHINGTON (Reuters) - The Federal Reserve approved applications on Sunday from Goldman Sachs and Morgan Stanley to become bank holding companies, putting them directly under the regulatory supervision of the U.S. central bank, the latest step to restore calm to chaotic financial markets.

To provide increased liquidity to the companies, the Fed agreed to lend to the firms' broker-dealer subsidiaries on the same terms as the Fed discount window for banks and the central bank's Primary Dealer Credit Facility lending window for investment banks.

It said it was making the same collateral deals available to the broker-dealer subsidiary of Merrill Lynch.

(Reporting by Mark Felsenthal)

 

[cottonzway]

Enough is enough. This is NOT an American way to do things. Use whatever term you think applies, but it's not free-market or capitalism.

 

[cottonzway]

http://www.reuters.com/article/ousiv/idUSN19 » 45959820080922?sp=true

NEW YORK (Reuters) - The Bush administration's $700 billion bailout to shore up the battered U.S. financial system looks set to drag into next week as Washington lawmakers haggle over what taxpayers will get for rescuing Wall Street.

Stocks and the U.S. dollar plummeted as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury to buy up toxic mortgage-related debt from financial groups, would work.

"The big detail we want to know is how is the government going to buy these securities, and what they will pay, how that reverse auction will work," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "And the big question is, 'Will this bring us out of the woods?'"

A day after Wall Street's last two big investment banks, Goldman Sachs and Morgan Stanley, ended the swashbuckling era of American dealmaking by securing Federal Reserve approval to become commercial banks, all eyes shifted to Washington.

U.S. lawmakers and Bush administration officials hammered out the details of a deal they hope will end the worst U.S. financial crisis since the Great Depression.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke will begin an intensive two-day round of congressional hearings on Tuesday to hasten approval of the bailout legislation.

The crisis has spilled over into world markets, and the Group of Seven finance ministers and central bank governors promised "heightened close cooperation" to safeguard the international financial system.

Monday's market doubts surfaced after the deal late Sunday effectively scrapped the investment bank model synonymous with Wall Street, ensuring that Goldman Sachs Group Inc and Morgan Stanley will avoid the fate of rivals that either collapsed or were taken over in the brutal meltdown of recent weeks.

Morgan Stanley went a step further, striking a deal with Japan's largest bank, Mitsubishi UFJ Financial Group Inc, on Monday to buy up to a 20 percent stake in the prestigious 73-year-old investment bank, sending Morgan Stanley shares higher before they ended down.

 

[CapnG]

Use whatever term you think applies, but it's not free-market or capitalism.

Actually it is or at least it's the logical extension of unrestricted, free-market thinking. If you take a hands off approach and "let the market decide" it's pertty clear that what the market decides is that it will fuck over the populace any way it can in its pursuit of the almighty dollar. Greed trumps good intentions every time.

 

[cottonzway]

Actually it is or at least it's the logical extension of unrestricted, free-market thinking. If you take a hands off approach and "let the market decide" it's pertty clear that what the market decides is that it will fuck over the populace any way it can in its pursuit of the almighty dollar. Greed trumps good intentions every time.

It's free-market to hand over those kinds of banking powers to private financial institutions (one that our Treasury Head was top guy at) that are themselves insolvent?

Huh?

This is a MESS! This is the most serious financial crisis since 1929.

 

[Gene Steinberg]

It's free-market to hand over those kinds of banking powers to private financial institutions (one that our Treasury Head was top guy at) that are themselves insolvent?

Huh?

This is a MESS! This is the most serious financial crisis since 1929.

Believe it or not, but even Bill O'Reilly has concluded that Bush 43 has destroyed his legacy, implying he'll go down as a worse president than even Jimmy Carter. And that's real, real bad.

Also, all the schmucks in Congress who approved measures to deregulate the financial industry shouldn't get off easy. They should all be carted off to prison for treason, because they betrayed the company and sabotaged its financial backbone, such as it was.

 

[Mogwa]

Believe it or not, but even Bill O'Reilly has concluded that Bush 43 has destroyed his legacy, implying he'll go down as a worse president than even Jimmy Carter. And that's real, real bad.

Also, all the schmucks in Congress who approved measures to deregulate the financial industry shouldn't get off easy. They should all be carted off to prison for treason, because they betrayed the company and sabotaged its financial backbone, such as it was.

The fault lies with us, the voters, who keep returning the same gaggle of half witted villains to congress and the white house year after year. Chris Dodd, Barney Frank, Nancy Pelosi, George Bush, Dick Cheney et al are no more qualified to look after the nation's economy than they are to perform neurosurgery.

This would be a perfect opportunity to dissolve the Federal reserve system, restore sensible fiscal regualtion, and return to the gold/silver standard. How likely is that?

 

[cottonzway]

Here we see Spock with Henry Paulson (nice suit, tie, and hat Mr. Paulson!) assuring the people of Springfield of their plans on the monorail:

 

[Gene Steinberg]

The fault lies with us, the voters, who keep returning the same gaggle of half witted villains to congress and the white house year after year. Chris Dodd, Barney Frank, Nancy Pelosi, George Bush, Dick Cheney et al are no more qualified to look after the nation's economy than they are to perform neurosurgery.

This would be a perfect opportunity to dissolve the Federal reserve system, restore sensible fiscal regualtion, and return to the gold/silver standard. How likely is that?

The list of equal opportunity offenders is endless, on both sides of the aisle. They sold us out.

 

[Kieran]

Well what makes me laugh is George Bush. He actually believe's he is the saviour of the American financial system, what a lot of old crap! .God i hope the American people see what his policies have done to the American economy.Deregulation need's rapid reform it doesnt work. The market does not always correct itself ,new structure's are needed simple facts!

America as a major power financial is comeing to shuddering stop.People might think i am talking rubbish, time will tell, that is all i will say.However this is the taxpayer burden now. Greedy fat cat's will get away this withount ever being prosecuted. Which they should " because the right process's of transaction on the sale of property to people, was not carried out. People given mortgages they couldnt pay was crazy .Plus the equity in those house's was less than the value of the house on the mortgage they took out.

 

[truthseeker]

Believe it or not, but even Bill O'Reilly has concluded that Bush 43 has destroyed his legacy, implying he'll go down as a worse president than even Jimmy Carter. And that's real, real bad.

Also, all the schmucks in Congress who approved measures to deregulate the financial industry shouldn't get off easy. They should all be carted off to prison for treason, because they betrayed the company and sabotaged its financial backbone, such as it was.

You're absolutely right Gene. These schmuchks have allowed it to happen and now they're all quiet about. Why are they not calling for the investigation of CEOs? Why is Chris Cox, the head of SEC, still running around and not being investigated.

Also, isn't it interesting how Goldman Sachs, whose former CEO is Henry Paulson, came out on top in all of this. These bastards are rubbing this country and nobody is bloody doing anything about it!!!!

To top it all off, I just read that CEOs of Lehman Brothers are going to get pretty hefty bonuses for screwing up so badly.

http://www.nypost.com/seven/09212008/news/regionalnews/execs_crash__earn_130099.htm

It's a really nice world we live in!!

 

[cottonzway]

On thing I would like to add. If people really want a better understanding of what is going on I would suggest listening to this man:

http://www.josephstiglitz.com/

He's noted as the top economist in the world and is the former President of the World Bank. I do not agree with a lot of his POLITICS, but I respect his work and he really does understand what the hell he is talking about.

 

[CapnG]

It's free-market to hand over those kinds of banking powers to private financial institutions (one that our Treasury Head was top guy at) that are themselves insolvent?

No, I mean it's the whole "free-market" (as in unrestricted, void of regulations) system that created this mess in the first place.

Giving hard-core capitalists carte-blanche to just make shit up when it comes to housing loans and other investment ideas and then expecting them NOT to run the system into the ground in an orgy of profiteering is like handing a serial killer a knife and saying "Now you don't you go stabbing anyone with this!" and then walking away.

Nobody should be surprised this happened. NOBODY.

 

[Kieran]

On thing I would like to add. If people really want a better understanding of what is going on I would suggest listening to this man:

http://www.josephstiglitz.com/

He's noted as the top economist in the world and is the former President of the World Bank. I do not agree with a lot of his POLITICS, but I respect his work and he really does understand what the hell he is talking about.

That is the other issue that is effecting the American economy. i previously commented on this very same subject in a previous post i believe it was Sarah palin bad for the world. it was hot disputed issue amongest some individuals.

 

[Gareth]

Can someone just clear something up for me...isnt the Federal Reserve a private bank?

 

[cottonzway]

Yes, the Federal Reserve is private. It's complex, but it's part of the central banking system(BIS, IMF, World Bank, ect.) that is made up various other private banks and other financial institutions.

 

[Kieran]

Can someone just clear something up for me...isnt the Federal Reserve a private bank?

Yes , but America has it's own printing press. so it can print has much money as it need's. Most banks dealing with commercial interest's are usally private.

 

[cottonzway]

Rep. Barney Frank says it's "clear" financial bailout bill will pass

That was at the top of Reuters, but no article yet. I'm glad though that child molesting pervert assured us that this fascist takeover of the US economy will take place. Between him, our ghoulsish criminal Treasury head, and the lying sack of shit that was on TV shortly ago lying to us again I feel we are heading in a "good" direction.

 

[cottonzway]

http://www.whitehouse.gov/news/releases/2007/05/20070509-12.html

 

[cottonzway]

http://www.politico.com/news/stories/0908/13663.html

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS



Section 1. Short Title.

This Act may be cited as ____________________.


Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase. The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions. The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.



Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for—

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.



Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights. The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets. The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

© Sale of Mortgage-Related Assets. The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets. The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.



Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time



Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.



Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.


Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.



Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.



Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.



Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets. The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary. The term “Secretary” means the Secretary of the Treasury.

(3) United States. The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.