Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: CF Rebel who wrote (118204)	11/24/2011 10:37:00 AM
From: Hope Praytochange	1 Recommendation Respond to of 224748

Government Stress Tests For Banks May Hurt Recovery Posted 11/23/2011 07:00 PM ET Financial System: Federal regulators have ordered Bank of America and other large banks to undergo stress tests to prove they're financially sound. But the source of their stress is government. We've never known a government to attack its banking system, the lifeblood of the economy. But this administration has declared war on banks from Day One, assaulting them on multiple fronts, including: • Suing them to recover as much as $30 billion in losses from subprime securities owned by Fannie Mae and Freddie Mac. • Dumping millions of pages of sensitive bank examination records on the Web so trial lawyers can pore over them to find something to sue banks on. • Prosecuting dozens of banks for alleged lending discrimination, and forcing them to open new branches in unprofitable areas devastated by the recession. • Denying banks billions of dollars in revenue sources while forcing them to raise capital to meet huge reserve requirements. The stress tests will only force them to raise more capital at a time when businesses are already having a hard time securing credit. Among other things, banks will be examined for their exposure to investor requests to buy back soured home loans. Yet it was the government that originally pushed them to make most of those loans. In fact, two-thirds of them ended up on the books of government agencies or entities controlled by the government, according to Peter Wallison, a member of the Financial Crisis Inquiry Commission. Outrageously, many government officials who shook down banks for those risky loans have returned to the scene of the crime. Now they're punishing banks for doing too well what they ordered them to do before. Attorney General Eric Holder, for one, has launched a new witch hunt against allegedly racist banks. Acting as a kind of national loan officer, Holder is dictating lending terms to local mortgage underwriters. He's setting loan quotas and ordering banks to relax their lending standards for minorities to achieve his quotas. Holder's aware that what he's doing is dangerous, because he's forcing banks that he's targeted to stay quiet about it. Defendants are under orders not to talk about the flimsy legal theories his charges of racism are based on. Even though no charges have been proved, several banks have settled to avoid having their names dragged through the mud. An additional 70 banks — including big names like Wells Fargo — are under investigation. Holder's also working closely with the Consumer Financial Protection Bureau, the powerful new bank watchdog agency created by the Dodd-Frank Act. It's planning its own assault on banks. Washington social engineers want to stick banks with all the bills from the crisis they helped cause. Even though the banks have gotten lean and efficient, they can't keep taking these regulatory blows. The American Bankers Association expects financial changes to run as many as 1,000 smaller banks out of business. And already weak financial stocks sold off again Wednesday on news of the new regulatory crackdown. Few are rushing to the defense of banks, which are easy scapegoats. But if government pushes too hard, taxpayers could wind up bailing them out all over again.