Posted on 05/13/2013 10:11:18 AM PDT by 1rudeboy
American investment banks dominate global finance once more. That’s not necessarily good for America
FOR a few tense weeks in 2008, as investment-bank executives huddled behind the imposing doors of the New York Federal Reserve, Wall Street seemed to be collapsing around them. Lehman Brothers filed for bankruptcy, Merrill Lynch collapsed into the arms of Bank of America. American International Group (AIG) and Citigroup had to be bailed out and the rot seemed to be spreading. Hank Paulson, the treasury secretary at the time, recalled in his memoir that: “Lose Morgan Stanley and Goldman Sachs would be next in line—if they fell the financial system might vaporise.”
Across the Atlantic, European politicians saw this as the timely comeuppance of American capitalism. Angela Merkel, Germany’s chancellor, blamed her peers in Washington for not having regulated banks and hedge funds more rigorously. European banks saw the crisis as their chance to get one up on the American banks that had long dominated international finance. Barclays quickly pounced on the carcass of Lehman Brothers, buying its American operations in what Bob Diamond, the head of its investment bank at the time, called “an incredible opportunity” to gain entry to the American market. Deutsche Bank, a German giant, also expanded to take market share from American rivals. The dominance that American firms had long exerted over global capital markets seemed to have come to an abrupt end.
Almost five years on it is Europe’s banks that are on their knees and Wall Street that is resurgent.
(Excerpt) Read more at economist.com ...
They're guaranteed. They trade above par. Tell me your definition of toxic.
So, if that is so, why is QE3 necessary?
I don't think it is, but with the idiot we have in the White House........
Agency MBS is guaranteed. Even if the borrower defaults, payments are made to the bond holder.
What with the deficit just growing and growing.
Yes, Bush spent way too much. Obama makes Bush look like a skinflint.
The Fed buying program does not add to the deficit.
Ah, now I follow you --so Bloomberg says the Fed's buying $40B/month in MBS's. Well, sort of.
It's true that back then the FOMC did say they'd buy 'em up to $40B/mo. and the record of what they actually did buy shows they'd started already w/ $800B worth of MBS's and they've been selling some off while they've been buying. What's interesting is that mortgage interest rates have fallen to 3.5% (as was the Fed's reason for all this stuff in the first place) and the low interest rates helped make the default rate drop to 1% (also the Fed's goal) so that means the Fed's current $1.12T holdings is raking in $28B per month profit. That all means also that the MBS's are still selling at face value so as of today they're not "toxic".
OK, the sky might fall tomorrow and if it does then we can call the MBS's "toxic"; until then we can continue cutting a profit.
The agencies buy mortgages, package them and resell them. They charge a fee.
So the private bankers take the responsibility for the $480 billion?
Taxpayer funds aren't used. The Fed has a printing press. What private bankers?
Your number is off, they only made a total of $91 billion last year.
Nope. It's the government.
If they’re printing money, are they not putting that against something on some sort of balance sheet?
The money they create is their liability, their asset is the bond (Treasury or MBS) they buy.
I guess one could say the loans are assets, and the printing of the money are the liabilities
During the crisis they made lots of loans, not now. Just bond purchases.
Your number is off, they only made a total of $91 billion last year.
Huh.
Let's see my number was from the Fed links @ $28B = $1.12T X (3.5% - 1%) --wait a sec, that should also have ÷ 12mo./yr so the $28B is per year. Aw what the heck, $28B/yr is still not "toxic". BTW, where did the $91B come from?
This is all way past my bed time...
It's an "independent" agency.
lol --the President appointed the CEO of General Motors too, but with the Fed it was started by act of congress, the President names all the bank governors and the senate confirms all nominations. The fed's executives report to the Treasury and congress who pays for the Fed's buildings and employee salaries.
Dang, that’s a subscriber only article. np, sometimes the WSJ makes things up anyway which is why it’s always nice to get stuff directly from the source & not hearsay from someone else. Please let me know where the WSJ says that they heard that $91B number. tx.
No it isn't. If it was, why give $89 billion of $91 billion in earnings to the Treasury?
We do not know how much of the system each bank owns, because that has never been disclosed to the American people.
Bull. They have to buy a certain amount of "shares", based on their capital.
The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
See? Not private stock.
Foreign governments and foreign banks do own significant ownership interests in the member banks that own the Federal Reserve system.
No, foreign banks can't buy "shares".
But until the exact ownership shares of the Federal Reserve are revealed, we will never know to what extent the Fed is foreign-owned.
Who is this guy? He's funny!
http://theeconomiccollapseblog.com/
Never mind. LOL!
Yeah, lots of silly people say silly stuff.
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