In the weeks leading up to last week’s release of “stress test” results, there was quite a bit of talk about more bailout money for troubled banks — how much they would need, and how much Washington would force them to take. (Yes, force.) How things have changed. Not only did almost half of the examined banks get a clean bill of health coming out of the tests, but most others came within striking distance of officially-determined stability. Since then, there has been a virtual prison break by TARP-indebted banks …
The Obama Administration tried to portray the plan as no big deal, akin to simply filling in a loophole. The idea was to provide the FDIC with authority to seize failing “non–banK” financial institutions such as holding companies, insurance firms and hedge funds, similar to the powers they already have to take over failing banks. Such power, it argued, is necessary to avoid disruptive failures of huge institutions, which could threaten the financial institution as a whole. In particular, the Administration pointed to the AIG debacle, saying that the proposed …
Is it any coincidence that on the same day that the Obama Administration announces restrictions on executive pay for companies taking government bailout money, Goldman Sachs announced that it is pulling out of the government’s Troubled Asset Relief Program? The investment bank, says CFO David Viniar, is chafing under the restrictions that came attached to its $10 billion loan. The new pay rules, which could be applied to existing TARP participants in a later iteration, may have been the last straw. “We would like to get out from under that,” …
Heritage fellow JD Foster explains what led to the credit crisis and why it cannot be ignored. There are unprecedented problems in the financial markets. The Federal Funds Rate is the No. 1 tool that the Federal Reserve Board has for governing monetary policy. The Federal Funds Rate jumped much higher than the Federal Reserve Board had targeted and the Federal Reserve lost control of it. The Federal Reserve is pumping money into places where it is not working and neglecting places where monetary liquidity is needed. Heritage has written …
