Source : http://www.globalresearch.ca
Exit Paulson, enter Geithner with the latest "no banker left behind plan" - aka whatever Wall Street wants, Wall Street gets. Yet, the reception was underwhelming. The Dow plummeted 382 points while investors took shelter in bonds and gold. AP reported that "the new bank rescue plan landed with a thud on Wall Street" as investors worried that no end to the crisis is in sight. Editorial and op-ed commentaries were near unanimously negative and some especially critical.
At a February 9 congressional briefing, lawmakers greeted Geithner with laughter and sarcasm, but most of it is just politics. Bailout opponent Brad Sherman (D, California) asked for details and a dollar amount, but instead got generalities about what he announced the next day - a plan to:
-- "clean up and strengthen the nation's banks;" in other words, spend hundreds of billions more to recapitalize insolvent ones;
-- create a Public - Private Investment Fund to shift toxic assets from them to the public;
-- expand the Fed's Term Asset-Backed Securities Loan Facility (TALF) to provide funding for investors to buy toxic assets; partial government guarantees would be offered as incentive; and
-- use "the full resources of the government to bring down mortgage payments (and) reduce mortgage interest rates;" already tried are foreclosure moratoriums, payment reductions, re-amortizations of delinquent balances, interest rate cuts, and more; yet home prices keep falling; a glut of unsold homes remains; foreclosures mount at a ferocious pace; the Foreclosure Data Bank cites "over 1 million bank foreclosures for sale;" and borrowers with modified loans are re-defaulting anyway.
The Office of the Comptroller of the Currency (that charters, regulates, and supervises national banks) reported that 36% of first quarter 2008 modified loans were delinquent after three months and 58% after eight months. The main problems are over-indebtedness and huge numbers of continuing job losses.Read »