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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?


To: Ron who wrote (162462)3/6/2009 11:22:46 PM
From: stockman_scott  Respond to of 361374
 
Hoenig Hits Treasury for Lack of ‘Decisive’ Action (Update1)

By Steve Matthews and Vivien Lou Chen

March 6 (Bloomberg) -- The U.S. Treasury has failed to take “decisive” action to address the bank crisis, pursuing an ad- hoc approach that leaves management in place and avoids necessary asset writedowns, a veteran Federal Reserve official said.

“We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions,” Kansas City Fed President Thomas Hoenig said in prepared remarks in Omaha, Nebraska. He called for a resolution process for firms deemed too big to fail, allowing their break-up if their complexity makes them unmanageable.

Hoenig’s comments are the most detailed criticism of the Treasury’s actions by a Fed official since the financial crisis began. He joins a growing number of observers, from ex-Treasury Secretary James Baker to former Fed chief Alan Greenspan, to favor temporary government takeovers of financial firms hobbled by distressed mortgage assets.

Fed Chairman Ben S. Bernanke has endorsed the approaches taken by Treasury Secretary Timothy Geithner and his predecessor. The Treasury has spent most of its $700 billion financial stability fund on buying stakes in banks without taking management control.

Geithner’s Plan

Geithner has ordered a so-called stress test for the largest 19 U.S. banks to determine whether they need more capital, and told lawmakers that more congressionally approved funds may be needed. He has stressed that nationalization isn’t the goal.

Hoenig said while policy makers “understandably” want to avoid nationalizing banks, “we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis.”

Hoenig, 62, is the second-longest serving of the Fed district bank presidents, after Minneapolis’s Gary Stern. He next votes on the Fed’s policy-setting Open Market Committee in 2010.

The Treasury’s $700 billion fund “began without a clear set of principles and has proceeded with what seems to be an ad-hoc and less-than-transparent approach,” said Hoenig.

The Standard & Poor’s 500 Financials Index has slumped 40 percent since Geithner announced his outline for bolstering the financial industry. Along with the stress tests, the main efforts include backing a $1 trillion Fed program to restart the market for securities backed by loans and a $1 trillion initiative to remove devalued mortgage debt from banks’ balance sheets.

Repeated Bailouts

Since Geithner’s Feb. 10 speech, the U.S. has been forced to restructure its rescues of both Citigroup Inc. and American International Group Inc.

With Citigroup, the government moved to convert some of the preferred stock it owned in the bank to common shares, gaining a 36 percent stake in the company and boosting Citigroup’s buffer against future losses. While authorities pushed for changes to the makeup of Citigroup’s board, Chief Executive Officer Vikram Pandit remains at the helm. Citigroup shares hit $0.97 yesterday.

Hoenig blasted the practice of keeping managers of failing companies in place.

“If an institution’s management has failed the test of the marketplace, these managers should be replaced,” he said. “They should not be given public funds and then micro-managed, as we are now doing” with “a set of political strings attached.”

Banking regulators need to be willing to write down losses, bring in new managers and sell off businesses if institutions can’t survive on their own, “no matter what their size,” he said.

Temporary Takeovers

Hoenig said the process used in temporarily taking over failing banks can be applied for all financial institutions, citing the Federal Deposit Insurance Corp. takeover of Continental Illinois National Bank & Trust Co. in 1984.

A resolution process can be set up for systemically important banks, bank-holding companies and other financial institutions, using receivership, or “bridge bank” powers to continue to operate them under new management, he said.

Bernanke has repeatedly called on Congress to consider legislation to give U.S. financial regulators the ability to shut down a complex bank-holding company. He has said that while the FDIC has such power to take over and resolve failing deposit- taking institutions, there is no similar framework for firms that span banking to securities trading and insurance.

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net

Last Updated: March 6, 2009 13:57 EST



To: Ron who wrote (162462)3/7/2009 5:48:06 AM
From: stockman_scott1 Recommendation  Read Replies (1) | Respond to of 361374
 
Why I'm Not Now and Have Never Been the Democrats' Rush Limbaugh

by Michael Moore

Published on Friday, March 6, 2009 by Huffington Post

I have watched with mild amusement this week the self-immolation of the Republican Party as it bows before the altar of Rush Limbaugh, begging for mercy, pleading for forgiveness, breathlessly seeking guidance and wisdom from The Oracle.

President Obama and the Democratic Party have wasted no time in pointing out to the American people this marriage from hell, tying Rush like a rock around the collective Republican neck and hoping for its quick descent to the netherworld of irrelevance.

But some commentators (Richard Wolffe of Newsweek, Chuck Todd of NBC News, etc.) have likened this to "what Republicans tried to do to the Democrats with Michael Moore." Perhaps. But there is one central difference: What I have believed in, and what I have stood for in these past eight years -- an end to the war, establishing universal health care, closing Guantanamo and banning torture, making the rich pay more taxes and aggressively going after the corporate chiefs on Wall Street -- these are all things which the majority of Americans believe in too. That's why in November the majority voted for the guy I voted for. The majority of Americans rejected the ideology of Rush and embraced the same issues I have raised consistently in my movies and books.

How did this happen? Considering how, for the past eight years, the Republican machine thought they could somehow smear and damage the Democrats if they said it was "the party of Michael Moore," it appears that the American public heard them loud and clear and decided that, 'hey, if you say Michael Moore is connected to the Democrats, then the Democrats must be OK!'

During this past election, a Democrat in Michigan, Mark Schauer, was running against the incumbent Republican congressman, Rep. Tim Walberg. Schauer asked me to endorse him and campaign for him, and I did. The Republicans were thrilled. They acted like they had been handed manna from heaven. They filled the airwaves with attack ads showing pictures of me and asking voters, 'is this the guy you want influencing your congressman?' The voters of western Michigan said "YES!" and threw the Republican out of office. The newly elected congressman told me his poll numbers had gone up once the Republicans started running ads likening him to me.

There have been over a half-dozen attack documentaries on me (Michael Moore Hates America, Fahrenhype 9/11, etc.), plus a feature film starring Kelsey Grammer and James Woods that had me being slapped silly for 83 minutes. Several books have been written by the Right in a concerted attempt to denounce me. One book, 100 People Who Are Screwing Up America, had me listed at #1. The author was so sure people would know why, he didn't even bother to write a chapter on me like he did for the other 99. You just get to the end of the book and all it says is "#1" with nothing but a big picture of me that takes up a full page.

What made the Republicans so sure that Americans would recoil upon the mere mention of my name, or by simply showing a photo of my face?

The result of this was one colossal backfire. The more they attacked me, the more the public decided to check out who this "devil" was and what he was saying. And -- oops! -- more than a few people liked what they saw. Overnight I went from having a small, loyal following to having millions go to movie theaters to watch... documentaries? Wow.

Yes, the more the Right went after me, the more people got to hear what I was saying -- and eventually the majority, for some strange reason, ended up agreeing with me -- not Rush Limbaugh -- and elected Barack Obama as president of the United States, a man who promised to end the war, bring about universal health care, close Guantanamo, stop torture, tax the rich, and rein in the abusive masters of Wall Street.

Think about this road I've traveled. At the beginning of the Bush years, I was pretty much an outsider, referred to as being on the "far left." I usually found myself holding viewpoints that differed from the majority of the people in this country. When I spoke out against the war -- before it even started -- I was marginalized by the mainstream media and then booed off the Oscar stage in "liberal Hollywood" for commenting about a "fictitious" president. Seventy percent of the public back then supported the war and approved of the job George W. Bush was doing.

But I stuck to what I believed in, kept churning out my movies, and never looked back. The Right and the White House spokespeople came after me time after time. President Bush 41 called me an "a**" on TV, and I became a favorite punching bag at both the 2004 and the 2008 Republican National Conventions in speeches by John McCain and Joe Lieberman. On the front page of this morning's Washington Post, Mark McKinnon, a top adviser to George W. Bush, revealed -- for the first time -- the Bush White House strategy of singling me out in the hopes of turning the country against me and the Democratic Party. Here's what the Post said:

Mark McKinnon, a top adviser in President George W. Bush's campaigns, acknowledged the value of picking a divisive opponent. "We used a similar strategy by making Michael Moore the face of the Democratic Party," he said of the documentary filmmaker.

In the end it all proved to be a big strategic mistake on their part. Thanks to the Republican attacks on me, average Joes and Janes started to listen to what I had to say. Contrary to Richard Wolffe's assessment that "there were no Democrats as far as I can remember who were saying they stood with Michael Moore," Democrats, in fact, have stood side by side with me during all of this. Here's the Congressional Black Caucus supporting me on Capitol Hill in 2004. Here's Terry McAuliffe, the head of the Democratic National Committee, enthusiastically attending the premiere of "Fahrenheit 9/11" with two dozen senators and members of Congress. Here's a group of Democratic congresspeople endorsing my film Sicko in the chambers of the House Judiciary Committee in 2007. And here's President Jimmy Carter inviting me to sit with him in his box at the Democratic National Convention. Far from making me into a pariah, the Republicans helped the Democratic leadership realize that to identify themselves publicly with me meant reaching the millions who followed and supported my work.

Though John Kerry lost in 2004, my focus that year had been to get young voters registered and out to vote (I visited over 60 campuses). And so, just a few short months after the release of Fahrenheit 9/11, America's young voters became the only age group that John Kerry won. They set a new record for the largest 18 to 24-year-old turnout since 1972, when 18-year-olds were given the right to vote, thus sending a signal about what would happen four years later with the youth revolution that ignited Obama's campaign.

After Fahrenheit, I kept speaking out, the Republican machine kept attacking me, and two years later, in 2006, the American public sided with me -- not Rush Limbaugh -- and voted in the Democrats to take over both houses of Congress.

And then, finally, two years after that, we won the White House.

That's the difference -- The American people agree with me, not Rush.

The American public believes that health care is a right and not a commodity.

They want tougher environmental laws and believe that global warming is real, not a myth.

They believe that the rich should be taxed more.

They want to go after the crooks on Wall Street who got us into this mess and the politicians who enabled them.

They want more money invested in education, science, technology and infrastructure -- not in more tax cuts for the wealthiest Americans.

They believe that, whether Democrats or Republicans have been in power, wealthy corporations have been calling the shots for the past few decades and the American people's voices have not been heard as their country has slowly been driven into the ground. Our politicians and our media have been bought and paid for by the highest bidders and we don't trust them anymore.

Finally -- they want us to get the hell out of Iraq and to investigate the criminals who sent us there for fictitious reasons.

Obama and the Democrats going after Rush is a good thing and will not do for him what the Republican attack plan did for me -- namely, the majority of Americans will never be sympathetic to him because they simply don't agree with him.

The days of using my name as a pejorative are now over. The right wing turned me into an accidental spokesperson for the liberal, majority agenda. Thank you, Republican Party. You helped us elect one of the most liberal senators to the presidency of the United States. We couldn't have done it without you.

*Michael Moore is an activist, author, and filmmaker. See more of his work at his website MichaelMoore.com



To: Ron who wrote (162462)3/7/2009 2:40:04 PM
From: SiouxPal  Read Replies (1) | Respond to of 361374
 
LOL'sss



To: Ron who wrote (162462)3/8/2009 12:13:10 AM
From: stockman_scott  Respond to of 361374
 
The Flawed Premise of Mark-to-Market Accounting

monoki.wordpress.com

For well over a year, US banks continue to write down billions of dollars of assets that were once valued much higher than the market prices today quote. But have the write-downs gone beyond the fair value of such financial assets?

The underlying accounting mechanics are complex. Most households aren’t familiar with the dynamics, and because of their complexity, mainstream media is reluctant to push such a mundane story that might enlighten folks. But I will attempt to simplify the inner workings in the current market environment and its adverse effects.

Excerpt from Wikipedia (link):

In finance, the efficient-market hypothesis was developed by Eugene Fama in the early 1960s. It asserts that financial markets are “informationally efficient”, or that prices on traded assets already reflect all known information.

End Wikipedia excerpt.

Today, most market participants acknowledge that the efficient-market hypothesis is flawed, perhaps wholly incorrect, that the markets might indeed be inefficient. However, the Financial Accounting Standards Board (FASB) still embraces this theory. Founded on this flawed hypothesis are the Financial Accounting Standards (FAS) 133, Fair Value Accounting; and FAS 157, Mark-to-Market. Let’s stick with FAS 157 Mark-to-Market.

An example.

Say Bank of America holds subprime mortgaged-backed securities (MBS) on its balance sheet. As we know there’s been a marked uptick in both the delinquencies and defaults of those underlying mortgages. This lessens both the principle value and cash flow stream of the underlying assets of those securitized products, thereby diminishing their overall value. Judging by cash flow analysis, the values might be 60 to 80 cents on the dollar principal (100 is par). However, each quarter Bank of America is required to, by Generally Accepted Accounting Principles and the SEC, ‘mark’ the value of those assets based on current market prices, which might be much less than cash flow value, say, 20-40 cents on the dollar. The difference between the book (par, 100) value and the quoted market value (20 or 40 cents on the dollar), results in a 60-80-cent mark down in the value of the assets. That reduction results in diminished equity on the balance sheet, among other things, and is also recorded as a loss against earnings. This affects valuation of Bank of America in several ways: (1) by reducing equity on the balance sheet it lessens the book value, and those that are fond of price-to-book valuation find the stock less attractive; (2) it adversely affects capital ratios, which triggers a downgrade by the credit rating agencies; (3) a loss recorded against earnings reduce, or at least make less certain, projected earnings, thus, too, reduces stock value, (4) restricts the lending capabilities of Bank of America. The cycle thus becomes self-fulfilling and can repeat quarter after quarter as long as the market prices of those assets continue to decline.

But what if the market is inefficient? What if the credit markets are stalled? Are those market quotes based on reasonable assumptions or panic? What if the quantitative modeling (Gaussian Copula) failed to value extreme risk and default correlation properly (a separate subject to discuss later). Do those price quotes, then, efficiently reflect the intrinsic value of those assets? The simple answer appears to be no, they do not.

So why are we sticking to an accounting standard that based on a debunked hypothesis, flawed itself, and exacerbating the financial crisis the markets are in? I don’t have the answer, but one thing is certain: FAS 157 Mark-to-Market is among the reasons why the financial crisis is so problematic.

Keep pressing,
Chris Monoki