Posts filed under “Taxes and Policy”

Forbes: Where’s the Ref?

Forbes_home_logo_3I have a short piece in Forbes, discussing the bailout culture, and how things devolved into the current mess:

The credit crunch. Bear Stearns. The housing crisis. Fannie Mae and Freddie Mac. And as of today, Lehman Brothers, Wachovia and possibly even such august firms like AIG and Merrill Lynch.

These are the bailouts of the past 12 months and the potential bailouts of the next 12 months. The U.S. is experiencing a set of financial crises unlike anything since the Great Depression. It has forced long-held ideologies to be closely re-examined, destroyed enormous amounts of wealth, quashed hundreds of thousands of jobs and ruined the reputations of corporate titans and former Fed chairs alike.

Wall Street is now scrambling, anticipating a sale of Lehman Brothers this weekend. It behooves the reader to consider how we got ourselves into this mess, what possible solutions there are to the current problems, and most important, how we can avoid finding ourselves in a similar situation in the future.

The current headache begins and ends with ideology, namely that of former Fed Chairman Alan Greenspan–an acolyte of Ayn Rand, a free-market absolutist, a true believer in the evils of regulation. Many of the present headaches point directly back to the decisions made by the Greenspan Fed. Sure, there is plenty of other blame to go around: an unengaged president, a clueless Congress, a hapless FDIC, a compromised OFHEO, and Phil Gramm–but the biggest and most accusatory finger points directly at Easy Al….

Its a short read, and you may find my conclusions provocative. Go read the whole thing (and be sure to give it a good rating!)

What is so surprising about this is that I am essentially calling out the economic neo-cons on their deregulatory jihad in one of the favored outlets for their rhetorical nonsense.

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Source:
Where’s The Ref?
Barry Ritholtz
FORBES, 09.12.08, 4:45 PM ET
http://www.forbes.com/home/2008/09/12/lehman-greenspan-regulation-opinions-cx_br_0912ritholtz.html

Category: Bailouts, Credit, Taxes and Policy

Take this weekend off, Hank

Category: Bailouts, Taxes and Policy

Lacker & Plosser: No Deal! (at least none funded by US)

Category: Bailouts, Federal Reserve, Taxes and Policy

Paulson: Congress Has No Authority Here

Category: Bailouts, Credit, Legal, Taxes and Policy

Intervention Ain’t What It Used to Be

Category: Markets, Psychology, Taxes and Policy, Trading

Weekend Bailouts and Subsequent Market Reactions

Category: Bailouts, Markets, Psychology, Taxes and Policy

Treasury Takeover of GSEs: 10 Key Points

Category: Bailouts, Credit, Real Estate, Taxes and Policy

Treasury Announcements on Fannie/Freddie

Here are the official statements on the Fannie & Freddie bailouts:

Statement by Secretary Henry M. Paulson, Jr. on Treasury and Federal
Housing Finance Agency Action to Protect Financial Markets and Taxpayers:

Good morning. I’m joined here by Jim Lockhart, Director of the new independent regulator, the Federal Housing Finance Agency, FHFA.

In July, Congress granted the Treasury, the Federal Reserve and FHFA new authorities with respect to the GSEs, Fannie Mae and Freddie Mac. Since that time, we have closely monitored financial market and business conditions and have analyzed in great detail the current financial condition of the GSEs – including the ability of the GSEs to weather a variety of market conditions going forward. As a result of this work, we have determined that it is necessary to take action. (continued after jump)

-Treasury Department, September 7, 2008
http://treasury.gov/press/releases/hp1129.htm

Treasury Department Reports:

FHFA Director Lockhart Remarks on Housing GSE Actions
Fact Sheet: FHFA Conservatorship
Fact Sheet: Treasury Preferred Stock Purchase Agreement
Fact Sheet: Treasury MBS Purchase Program
Fact Sheet: Treasury GSE Credit Facility

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Category: Bailouts, Credit, Federal Reserve, Real Estate, Taxes and Policy

Ackman: Fannie Mae/Freddie Mac Restructuring

September 5, 2008

The Honorable Henry M. Paulson, Jr.
Secretary United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

Re:  Fannie Mae/Freddie Mac Restructuring

Dear Secretary Paulson:

We understand that a Treasury plan for Fannie/Freddie ("the GSEs") may be announced this weekend. We thought you might find useful some further thoughts on potential GSE solutions.

As you are likely aware, we had previously distributed a proposed restructuring plan for the GSEs. In that plan, under a prepackaged conservatorship, equity interests would be extinguished, subordinated debt would be exchanged for warrants, and senior debt would be exchanged for new senior debt and common equity in the newly recapitalized entities. The government would write a put to the new common equity holders which would expire in three years.

It appears, however, that the GSEs may need help more quickly, and conservatorship may not be triggered until the GSEs are formally determined to be undercapitalized. As such, in the event the government needs to inject capital immediately, we suggest you consider the following transaction ("the Transaction").


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Category: Credit, Real Estate, Taxes and Policy

Treasury: Bailout Details Sunday 11 AM

Category: Bailouts, Credit, Real Estate, Taxes and Policy