Tuesday, March 10, 2009

Zombie Banks

Regulatory reports show 5 biggest banks face huge losses
http://www.mcclatchydc.com/227/story/63606.html

America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.

The banks' potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama's economic team must overcome to save institutions it deems too big to fail.America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.

The banks' potentially huge losses, which could be contained if the economy quickly recovers, also shed new light on the hurdles that President Barack Obama's economic team must overcome to save institutions it deems too big to fail.

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Here comes socialism
http://www.salon.com/news/feature/2009/03/10/banks/

If South Carolina Sen. Jim DeMint isn't declaring that even temporary nationalization of banks is "the same idea as socialization," then his colleague from the same state, John McCain sidekick Lindsey Graham, is telling NBC's "Meet the Press" that Obama needs to consider the idea. Even Alan Greenspan is part of the conversation. The Ayn Rand disciple whose every public utterance for most of his life has been devoted to extolling the virtues of the free market is suddenly pushing nationalization.

Of course, even though the federal government now owns 36 percent of Citigroup, and Citigroup and other massive banks are teetering on the edge of insolvency, the Obama administration swears there's no plan for a government takeover. "This is a very complex set of problems, and bad decisions can result in huge taxpayer expenditures and poor results," President Obama told the New York Times on Friday, bringing up -- and then shooting down -- the idea that bank nationalization would save the financial sector. Treasury Secretary Tim Geithner told PBS's Jim Lehrer last week that nationalization is "the wrong strategy."

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No, the wrong strategy would be the one that will fail. Throwing good money after bad in more bailout bullshit with no oversight, for example.

Obama, Geithner: Stop being a bunch of fucking ponces and get what needs to be done accomplished. Here on this blog I post comments like this one as a veritable countdown to economic catastrophe based on your executive indecision.