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Do you know Ally Financial Inc.? You've no doubt seen their commercials. They used to be all over the tube hawking their high-yielding certificates of deposit. Now they're all over the tube with their "no hidden fees" campaign. . . . But Ally isn't funny. It recently announced that it's launching an initial public offering (IPO) of its stock at a price per share of $25 to $28. The shares will be offered by the U.S. Treasury as part of its planned exit of its investment in Ally during the subprime crisis in 2008. I've heard some analysts say this...

As over-leveraged investment houses began to fail in September 2008, the leaders of the Republican and Democratic parties, of major corporations, and opinion leaders stretching from the National Review magazine (and the Wall Street Journal) on the right to the Nation magazine on the left, agreed that spending some $700 billion to buy the investors' "toxic assets" was the only alternative to the U.S. economy's "systemic collapse." In this, President George W. Bush and his would-be Republican successor John McCain agreed with the Democratic candidate, Barack Obama. Many, if not most, people around them also agreed upon the eventual commitment...

One, and maybe the only, of the recent benefits of the FASB's meager attempts at providing balance sheet transparency has been the requirement for banks and financial companies to disclose the difference between the Fair Market Value and the Carrying (Book) value of their assets, especially as pertains to loans held on the balance sheet. And while even the FMV calculation leaves much to be desired, it does demonstrate which companies take abnormal liberties with their balance sheets, instead of performing needed asset write-downs as more and more loans turn toxic. A good example of just such optimism appears when...

Wall Street may have discovered a way out from under the bad debt and risky mortgages that have clogged the financial markets. The would-be solution probably sounds familiar: It's a lot like what got banks in trouble in the first place. In recent months investment banks have been repackaging old mortgage securities and offering to sell them as new products, a plan that's nearly identical to the complicated investment packages at the heart of the market's collapse. "There is a little bit of deja vu in this," said Arizona State University economics professor Herbert Kaufman. But Kaufman said the strategy...

<p>U.S. banks have been dying at the fastest rate since 1992, mainly because of bad loans they made. Now the banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks.</p>

On Wednesday, the Treasury Department announced [1] that nine asset managers (see the list below) had been picked [2] to partner with the government to buy older, hard-to-value mortgage-backed securities. Up to $30 billion in taxpayer money will go toward the effort. The fund managers will raise up to $10 billion, which will be matched by up to $10 billion in TARP money, with $20 billion more available from the TARP as cheap financing to boost the size of the buys.Originally conceived [3] as the whole purpose of the TARP, then a major portion ($100 billion) of the TARP, the...

The U.S. government will "very soon" launch its program to use federal funds and private capital to buy banks' toxic assets, the new overseer of the government's $700-billion bank bailout fund said on Tuesday.

NEW YORK/WASHINGTON (Reuters) - U.S. banks that received billions of dollars of taxpayer money to bolster their capital could place bets on the same toxic assets that got them into trouble in the first place -- and with government support. It is unclear whether U.S. regulators will prevent banks receiving government aid from participating as buyers in the $1 trillion Public-Private Investment Program (PPIP) designed to unclog credit markets and bank balance sheets. But the program, where the government provides much of the financing and shoulders much of the risk, leaves open the prospect that banks, as well as private...

Tim Geithner today was on Meet the Press selling to the public his plan to shore up the toxic assets and alleviate the bank's balance sheets. Right now the banks are crippled because they aer holding assets whose value nobody truly knows, some rough estimates suggest that the value of these mortgage based securities could be 50-70% lower than their original purchase price. At this point banks do not want to let go of these assets because they are partially hoping that prices will rebound and in part because they are waiting for government intervention. The latter is my speculative...

The Obama administration’s long-awaited proposal to remove so-called “toxic” mortgage-backed assets from U.S. banks has finally been unveiled, to huzzahs across the globe. Stocks from Tokyo to New York rallied as investors expressed relief that finally, somehow, the U.S. government was going to take care of the problem. But just what does Treasury Secretary Timothy Geithner intend to do, precisely? According to details of the plan, the government will form public-private partnerships to buy up the assets, putting up $7 in cash and $86 in government loans for every $7 spent by private capitol pools like hedge funds. The expectation...

US banks face big writedowns in toxic asset plan By Francesco Guerrera in New York and Krishna Guha in Washington Published: March 24 2009 23:31 | Last updated: March 24 2009 23:31 The government’s toxic assets plan will force banks such as Citigroup, Bank of America and Wells Fargo to take large writedowns on their loans, requiring them to raise more capital from taxpayers or investors, executives and analysts have warned. Senior bankers say the authorities’ latest drive, announced on Monday, to cleanse financial groups’ balance sheets by encouraging investors to buy troubled residential and commercial mortgages will prompt banks...

President Obama is banking that Treasury Secretary Timothy Geithner's complicated new plan to fix big U.S. banks doesn't transform their toxic assets into toxic political risk. The administration faced a Hobson's choice: fixing banks is a prerequisite to economic recovery; populist rage sharply limits options. Large U.S. banks are believed to be holding $2 trillion in dubious assets, valued perhaps at 50 cents on the dollar. That means they could need $1 trillion in fresh capital to get them lending again. Even close Obama allies such as House Speaker Nancy Pelosi all but shut the door last week to more...

Americans can be forgiven for experiencing a sense of deja vu as they digest the details of Treasury Secretary Timothy Geithner's Public-Private Investment Program (PPIP) for troubled bank assets. What was rolled out on the pages of newspapers this week read like press releases on the various plans over the past year from Mr. Geithner's predecessor, Hank Paulson. The two Treasury secretaries share a touching faith in public-private cooperation to lift the value of troubled assets. This assumes, of course, that those assets are troubled because their true values are obscured by irrational self-doubt and market illiquidity, and not by...

With the braying of 328 yahoos -- members of the House of Representatives who voted for retroactive and punitive use of the tax code to confiscate the legal earnings of a small, unpopular group -- still reverberating, the Obama administration yesterday invited private-sector investors to become business partners with the capricious and increasingly anti-constitutional government. This latest plan to unfreeze the financial system came almost half a year after Congress shoveled $700 billion into the Troubled Assets Relief Program, $325 billion of which has been spent without purchasing any toxic assets. TARP funds have, however, semi-purchased, among many other things,...

I have had a chance to read several pieces analyzing Geithner's plan to deal with the toxic assets. Before I go on, as I have said, there is no magic bullet and so while I will find plenty to criticize, there is likely plenty there for any plan. The plan is an attempt to thread several sharp needles and thus it is loaded with potential dangers.

This feels a little like one of those bold election-night calls. The returns are barely in. All sorts of things could still go wrong. But barring something completely unforeseen—a big "but," granted—I think it might be just about time to call the American economy for Tim Geithner.

Treasury Sec. Timothy Geithner asked Congress Tuesday to give the White House unprecedented powers to seize large insurers, investment firms and hedge funds, leaping beyond its present authority to seize only banks. Geithner argued for such authority during the House Financial Services Committee's hearing on the handling of bonuses paid to executives at American International Group... "The proposed resolution authority would allow the government to provide financial assistance to make loans to an institution, purchase its obligations or assets, assume or guarantee its liabilities and purchase an equity interest," he said. Geithner called on Congress to grant him new powers...

Here is video from last night on CNBC where a panel discussed whether or not Treasury Secretary Timothy Geithner's plan to help banks deal with "toxic assets" is going to work. Joining in the discussion are Peter Morici, University of Maryland; Tim Ryan, SIFMA; and CNBC's Steve Liesman; and guest host David Malpass of Encima Global, filling in for Larry Kudlow. . . . . . (Watch Video)

Treasury's latest plan faces pitfalls Government seeks private partners, but taxpayers bear the risks By John W. Schoen Senior producer msnbc.com March. 23, 2009 After months of speculation and false starts, the Treasury Monday announced a new plan to deal with the so-called "toxic assets" that have been weighing down the financial sector and clogging global credit markets. The announcement by Treasury Secretary Tim Geithner was greeted by a big rally on Wall Street but leaves unresolved some major hurdles that have plagued the rescue plan since October, when the Bush administration first floated an idea to deal with the...

http://dailybail.com/home/must-see-bank-bailout-news-james-galbraith-says-geithner-ban.html We think Geithner is suffering from five fundamental misconceptions about what is wrong with the economy. Here they are: The trouble with the economy is that the banks aren't lending. The reality: The economy is in trouble because American consumers and businesses took on way too much debt and are now collapsing under the weight of it. As consumers retrench, companies that sell to them are retrenching, thus exacerbating the problem. The banks, meanwhile, are lending. They just aren't lending as much as they used to. Also the shadow banking system (securitization markets), which actually provided more funding to...