Default 'Off the Table,' Debt Deal Will Be Struck: Geithner

Yahoo/Finance (CNBC) ^ | 7/18/11

[EBH]

Treasury Secretary Tim Geithner told CNBC Monday that he is certain that congressional leaders will strike a deal to raise the federal debt ceiling prior to the Aug. 2 deadline to avoid default.

"Each side has said definitively that default is not an option," he said, "They're not going to play around with this."

"If the United States of America were to default it would be catastrophic for the American economy, for the American financial system, for the average American people, it would be a substantial unfair tax on all Americans and it would bring the world economy ... to the edge of recession again," he said. "There's no alternative for Congress raising the debt limit and that's why you're seeing Republicans as well recognize that reality and take default off the table."

[McGruff]

Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. - Barack Obama(2006)

I don’t trust this President… He doesn’t know how to make those cuts. He’s never had to do this before. He’s always just been one to spend other people’s money even if that money is just borrowed money or printed out of thin air. He’s never had to exercise real executive authority like that. - Sarah Palin (2011)

[Evil Slayer]

Not increasing the debt limit does not = default. Everyone knows this, but the press keeps shoving down our throats the BS that not increasing the debt limit does = default.

You are absolutely right. This kind of "the sky is falling chicken little" happened during the stimulus crises of 2008 as well as the obamacare crises of 2010. It was simply a scare tactic. The sad thing is it worked. We are going through the same thing with the debt ceiling increase versus default. When are the GOP leaders going to finally call their bluff?

[TheOldLady]

Boop His Nose! It's Soft... but Mind the Teeth!

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[kcvl]

His nose is growing...

“Despite what you hear, and this is a complicated place, Washington, people are moving closer together,” Geithner said in a morning interview on CNBC.

Some Republicans – particularly tea party-affiliated House members – have said that the United States could keep operating without raising the debt ceiling, but Geithner cautioned that “there’s no plausible way to run a country … for an extended period of time” without raising the credit limit.

******

So, resign if you can't figure it out!

[EGPWS]

Timmy is putting pressure on the Reps to cave.

No, the idiot is putting pressure on the market to cave and the Republicans are letting him get away with it!

[kcvl]

Remember this...

Financial Crisis Was Avoidable, Inquiry Finds

The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke, who did not foresee the crisis but played a crucial role in the response. It criticizes Mr. Greenspan for advocating deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” under his leadership as a “prime example” of negligence.

It also criticizes the Bush administration’s “inconsistent response” to the crisis — allowing Lehman Brothers to collapse in September 2008 after earlier bailing out another bank, Bear Stearns, with Fed help — as having “added to the uncertainty and panic in the financial markets.”

Like Mr. Bernanke, Mr. Bush’s Treasury secretary, Henry M. Paulson Jr., predicted in 2007 — wrongly, it turned out — that the subprime collapse would be contained, the report notes.

Democrats also come under fire. The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton’s term, is called “a key turning point in the march toward the financial crisis.”

Timothy F. Geithner, who was president of the Federal Reserve Bank of New York during the crisis and is now the Treasury secretary, was not unscathed; the report finds that the New York Fed missed signs of trouble at Citigroup and Lehman, though it did not have the main responsibility for overseeing them.

The report could reignite debate over the influence of Wall Street; it says regulators “lacked the political will” to scrutinize and hold accountable the institutions they were supposed to oversee. The financial industry spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with it made more than $1 billion in campaign contributions.

http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html

******

Too Big To Fail?: 10 Banks Own 77 Percent Of All U.S. Banking Assets

Back during the financial crisis of 2008, the American people were told that the largest banks in the United States were “too big to fail” and that was why it was necessary for the federal government to step in and bail them out. The idea was that if several of our biggest banks collapsed at the same time the financial system would not be strong enough to keep things going and economic activity all across America would simply come to a standstill. Congress was told that if the “too big to fail” banks did not receive bailouts that there would be chaos in the streets and this country would plunge into another Great Depression. Since that time, however, essentially no efforts have been made to decentralize the U.S. banking system. Instead, the “too big to fail” banks just keep getting larger and larger and larger. Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets. Today, the top 10 banks control 77 percent of all U.S. banking assets. Unfortunately, these giant banks are also colossal mountains of risk, debt and leverage. They are incredibly unstable and they could start coming apart again at any time. None of the major problems that caused the crash of 2008 have been fixed. In fact, the U.S. banking system is more centralized and more vulnerable today than it ever has been before.

It really is difficult for ordinary Americans to get a handle on just how large these financial institutions are. For example, the “big six” U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to approximately 60 percent of America’s gross national product.

As a group, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo held approximately 22 percent of all banking deposits in FDIC-insured institutions back in 2000.

By the middle of 2009 that figure was up to 39 percent.

That is not just a trend - that is a landslide.

For example, Citigroup is becoming extremely aggressive about expanding....

Citigroup has been hiring dozens of investment bankers, dialing up advertising and drawing up plans to add several hundred branches worldwide, including more than 200 in major cities across the United States.

The American people were promised that TARP and all of the other bailouts would enable the big banks to lend out lots of money which would help get the economy going for ordinary Americans again.

Well, it turns out that in 2009 (the first full year after Congress passed the bailout legislation) U.S. banks posted their sharpest decline in lending since 1942.

Lending has never fully recovered since the crash of 2008. The big financial institutions like Goldman Sachs, Morgan Stanley and JPMorgan Chase have been able to get all the cash that they need, but they have not passed that generosity along to ordinary Americans.

In fact, the biggest U.S. banks have actually reduced small business lending by about 50 percent since the crash of 2008.

That doesn’t sound like what we were promised.

http://www.benzinga.com/11/07/1771942/too-big-to-fail-10-banks-own-77-percent-of-all-u-s-banking-assets#ixzz1STGcwBN5

[atc23]

[kcvl]

The Cause of the 2008 Financial Crisis

The facts are that approximately 6% of all mortgage loans in United States are in default. Historically, defaults were less than one-third of that, i.e., from 0.25% to 2%.

A huge portion of the increased mortgage loan defaults are what are referred to as ‘sub-prime’ loans. Most of the sub-prime loans have been made to borrowers with poor credit ratings, no down payment on the home financed, and/or no verification of income or assets (Alt-A’s). Close to 25% of sub-prime and Alt-A’s loans are in default.

These loans increased dramatically as a 9/30/99 New York Times article explained, “In a move that could help increase homeownership rates among minorities and low income consumers, the Fannie Mae Corp. is easing the credit requirements on loans that it will purchase from banks and other lenders.”

Why would banks make such risky loans? The answer is that the Clinton administration pressured the banks to help poor people become homeowners, a noble liberal idea. Also the Clinton Justice Department threatened banks with lawsuits and fines ($10,000 per application) for redlining (discrimination) if they did not make these loans. Also ACORN (Obama’s community service organization) was instrumental in providing borrowers and pressuring the banks to make these loans.

To allow Fannie Mae to make more loans, President Clinton also reduced Fannie Mae’s reserve requirement to 2.5%. That means it could purchase and/or guarantee $97.50 in mortgages for every $2.50 it had in equity to cover possible bad debts. If more than 2.5% of the loans go bad, the taxpayers (us) have to pay for them. That is what this bailout is all about. It is not the government paying the banks for the bad loans, it is us!!

Principally Senate Democrats demanded that Fannie Mae & Freddie Mac (FM&FM) buy more of these risky loans to help the poor. Since the mortgages purchased and guaranteed by FM&FM are backed by the U.S. government, the loans were re-sold primarily to investment banks which in turn bundled most of them, taking a hefty fee, and sold the mortgages to investors all over the world as virtually risk free.

As long as the Federal Reserve (another government created agency) kept interest rates artificially low, monthly mortgage payments were low and housing prices went up. Many home owners got home equity loans to pay their first mortgages and credit card debt.

Unfortunately home prices peaked in the winter of 2005-06 and the house of cards started to crumble. People could no longer increase their mortgage debt to pay previous debts. Now, we taxpayers are being told we have to bail out the banks and everyone in the world who bought these highly risky loans. The politicians in Congress (mostly Democrats) do not want you to know they caused the mess.

During the past eight years, the Bush administration made 17 attempts to reform FM&FM, having been made aware by whistleblowers that the books had been cooked by Clinton appointees, James Johnson and Franklin Raines (most recently Barack Obama financial advisors) who gave large bonuses to themselves and other Clinton appointees by falsely showing huge profits.

In 2005, John McCain submitted a Fannie Mae reform bill. Democrats blocked it in Committee from getting to the Senate floor for a vote.

By 2006 there was enough evidence of malfeasance that Raines was forced out. He had paid himself over $90 million. Recently the court ordered him to pay back $40 million in fines, bonuses and stock options that he gave himself based on false financial statements of Fannie Mae profits.

In the 2006 elections, the Democrats took control of the House and Senate. There are plenty of videos on the Internet showing many Democrats including Senate Banking Committee Chairman Democrat Christopher Dodd and House Banking Committee Chairman Barney Frank, responsible with overseeing FM&FM, assuring us that there were no problems with FM&FM right up to their collapse.

Not surprisingly, virtually all the investment banks that are in trouble and being bailed out are run by financial supporters of Obama and other Democrats. Secretary of the Treasury Paulsen was head of Goldman Sachs. The new head of the $700 million bailout is also from Goldman Sachs. This is like letting the fox be in charge of hen house security.

It was announced that our government will infuse capital into the troubled banks. This gives whoever is in power of our government the ability to force the same kind of abuses that have caused this massive banking crisis in the first place.

Barack Obama has received more campaign donations that any other politician in the past three years from Fannie Mae and Wall Street. FM&FC have been virtually private piggy banks of campaign contributions for Democrats for the past 10 years. Yes, a token amount went to some Republicans.

The big excuse for the bailout is that credit markets have frozen up. But it is not true. There is plenty of credit available for good credit risks.

The only way this can be rectified is to allow the people who made the mistakes to take their losses. It is called taking personal responsibility for one’s actions.

http://www.aim.org/guest-column/the-cause-of-the-2008-financial-crisis/

[Lazlo in PA]

Whenever these two stooges talk, I expect the opposite to happen from their proclamations. They are an embarrassment and a joke.

[sam_paine]

@kcvl, I think most everyone on FR or listens to talk radio knows that rundown by heart.

But I think the vast majority of Americans “know” no such thing.

They “know” what they hear on the TV news, with idiot anchorbabes commenting on what Timmy said on the Sunday shows and what the AP/Reuters clips tell them to say.

Again, A J Liebling said, “The freedom of the press applies only to those who own a press.”

Name one “Tea Party” newspaper or media outlet other than a tiny website here or there.

@ABB, do you have any of Liebling’s books?

[tcrlaf]

WHAT???
You mean NO ONE has located the Social Security Lock Box, yet?

HOW CAN THIS BE?

Saint Al Gore told us it was safely locked away?

[Rapscallion]

Where’s my pitchfork, tar-bucket and torch....time to go to Washington.

[jospehm20]

Little timmy the tax cheat should be in a cell with Big Bubba.

[Ouderkirk]

or we will not send out government checks.

It will be social security check that won't get sent out, not welfare checks. Momma gets paid no matter what.

[Rapscallion]

Time for a Tea Party!

[SUSSA]

There is no need to raise the ceiling or to default. If we pay the bond holders and Social Security and the military, we only have to cut 40% from the whole rest of the budget.

Do away with Obamacare and you have to cut $1 trillion less. Totally eliminate the Department of Education, the National Endowments for the Arts and For the Humanities, the Energy Department, the TSA, the BATF and all farm subsidizes and you’re almost there. Eliminate Pell Grants and Stafford Loans.

Eliminate Bushcare and SCHIP, Medicaid, and raise the retirement age from 67 to 70. Stop letting immigrants who never paid into Social Security come here and draw a check.

Cut the Labor Department by 3/4. Cut the EPA by 3/4. Cut the FBI by 40%, Cut the DEA by 50%

Cut all foreign aid except to Israel. Remove all restrictions on drilling for oil and gas and for mining and burning coal.

To increase the government’s income, eliminate all corporate taxes. Cut capital gains taxes to 2%. Eliminate the Earned Income Tax Credit. Cut the IRS by 50%. Economic growth will increase income.

[jpsb]

So we are going to “default” via inflation instead huh. Watch Au and Ag soar.

[jpsb]

Gold is up $13+, silver is back over $40 again.

[Ouderkirk]

or we will not send out government checks.

It will be social security check that won't get sent out, not welfare checks. Momma gets paid no matter what.

[goodnesswins]

HHmmmm....little Timmy (and friends) doesn’t want to see a vote on CUT, CAP and BALANCE???