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Sunday, July 26, 2009


Merkley to Bernanke: "You scare me."

Comments (17)

Oh boy, Merkley takes a potshot and gets a headline.

Merkley wants more oversight of something he has no clue about - where's the surpise in that? That's Congress, besides we already have Dodd/Frank protecting us, erm.

Our option are more disclosure, but I think we are pushing 100+ pages on a mortgage now and we still got into trouble. I guess we could depend on Merkley's judgment, but you think he understands derivatives?

The Constitution gives the federal government the power to issue currency and we're paying this private institution owned in part by foreign banks, for the privilege of having our own money?
When it's all over the Federal Reserve could have been the fatal mistake that eventually strangled America, and the idea that President Obama wants to give them more power rather than less, is truly frightening.
In a very real sense, the United States has become a support mechanism to keep the Federal Reserve going - not the other way around - which is why the Fed cops an attitude if we ask too many questions.

I believe Ron Paul is 100% right on this which is partly why he's portrayed as a lunatic in the media.

The Constitution gives the federal government the power to issue currency and we're paying this private institution owned in part by foreign banks, for the privilege of having our own money?

I feel that way every time I get caught short of cash and have to pay $3 to draw a 20 out of a competing bank's ATM. Sometimes I get $40 so I don't feel like I'm getting burned as badly, but it doesn't help.

Mr. Merkley, rather, please make Mr. Bernacke scared of you.

Hey kids, if you haven't yet, you gotta catch Harry Shearer's "Le Show" closing ditty this weekend about GoldmanSacks. Top contender for Satire Song of the Year.

A teaser:

Balls so big they stretch the slacks
Of Mr. Goldman and Mr. Sacks.

Mojo, it's Goldman Sachs (GS), not Sacks, as in Oliver:

Read the Taibbi piece in Rolling Stone and the Opinionator column in the NYT this weekend, as well as the Saturday piece on Schumer wanting to ban flash trading. There is a stirring in the land to counter the greed encouraged by Reagan and enshrined by Bush '43.

Jeff Merkley is doing a pretty good job, especially for a freshman senator who had to take out another mortgage on his Oregon home to get elected. He already understands more about how our financial system doesn't work than Wyden or Smith ever have.

Now, if only he and his colleagues can do something about the FDIC's Sheila Bair, who has purloined so many billions from this region.

Bernanke defends himself and it's not on C-Span:

I suspect he will not address the question of why AIG, JPM, WFC, and the other "too-big-to-fail"s of Wall St Nation were subsidized with public monies while WaMu's $307B were given, by the FDIC's Sheila Bair, to JPM's Jamie Dimon for $1.9B.

"He already understands more about how our financial system doesn't work than Wyden or Smith ever have."

THe guy couldn't manage his 3 rental properties. Just because he makes a soundbite makes him as qualified as any other Senator.

We do need reform, its just that our team is bringing dull knives to a gun fight with the big boys. If Merkley can come up with something else besides another 50 pages of disclosure on a mortgage, I'd love to hear it.

Typos happen. At least my mistake didn't have 12 zeros & 3 commas in it.

Merkley is a freshman in more ways than one. I doubt he has even a clue as to how the banking and monetary systems works.

Bernanke and the Fed Reserve Board have done an extremely good job of stabilizing the banking system, which was so close to collapsing last fall that it is not even funny. Sure, mistakes were made - most notably Lehman; but overall, Bernanke was faced with fixing a problem he did not create (does Greenspan ring a bell?) and he stepped up with very bold fixes.

"owned in part by foreign banks"

Foreign Banks are not allowed to own stock in the Federal Reserve District Banks.

Ron Paul is considered a lunatic because he advocates dismantling the Fed Reserve without an adequate system to replace it. It should be obvious to any thinking person that we need a central bank to provide liquidity in the banking system, just as most other industrialized nations do. Otherwise, we are back to the serial "panics" experienced back in the period 1880 through about 1910 when we were on the gold standard with no flexibility in the banking system.

We continue to have serial "panics" with the Federal Reserve. We have just renamed them. Now we call them "recession."

Whether there would have been a collapse without TARP we will never know. Whether a banking collapse would have been a good thing or not is something we can surely debate. Institutions which create monumental waste and inefficiency should collapse. See: Economics 101.

Mojo, I wouldn't have called it to your attention had you written GoldmanSucks, which it surely does, along with its shills in government and on CNBC, especially Cramer the certifiable clown.

Give Jeff Merkley a chance to prove his mettle and his worth. In the meantime, consider making him our senior senator by electing Steve Novick at the earliest opportunity.

"We continue to have serial 'panics' with the Federal Reserve. We have just renamed them. Now we call them 'recession.'"

That information is incorrect. The term "panic" was replaced by "depression" (thus the "Great Depression") in an effort to placate the public. A recession has always been a much milder part of what is considered the normal business cycle.

It was never expected that the Federal Reserve would be able to eliminate recessions; on the contrary, by being able to inject liquidity, the Fed's function is to minimize the effects of periodic recessions, which is exactly what it has done.

"Whether a banking collapse would have been a good thing or not is something we can surely debate."

If you think that allowing a complete collapse of the banking system should be a topic of debate, you fit right into Merkley's corner as someone who does not have a clue.

The typical man on the street has no idea of the inter-workings of the financial system and how close they came to failing. How many times did you read what Bernanke and the Fed was doing and asked yourself 'why are they doing that?'

Luckily, Bernanke is a serious student of the Great Deoression - causes, reactions, missteps, etc. and was very mindful of the possible consequences of a less aggressive response.

If you read the Wall Street Journal on a daily basis, you would have a much better understanding of how complicated and intertwined the financial system is.

Let it fail for the sake of debate? A truly unbelievable statement!

Re: "If you think that allowing a complete collapse of the banking system should be a topic of debate"

But, Bankerman, debate does not appear to be primarily over collapse of the entire banking system; rather, more questions have been raised about the government's selection of some institutions for preservation and some for dismantlement. That was surely the case in the segment of Mr Bernanke's unprecedented town meeting edited for airing on The News Hour last evening.

The Fed head said that Lehman's loss was a mistake. He did not mention the taking of solvent WaMu by the OTS and same-day sale by the FDIC's Bair to JPM's Dimon for a risible $1.9B. He has already said that providing public subsidies to failing institutions was something he did not care to do yet did anyhow.

It is not at all clear whether Depression scholar Bernanke or GS fraternity agent Paulson anticipated the financial crisis or comprehended the consequences of each of their separate actions. Or whether one or both did know exactly what he or they were doing, which was to strengthen a few select institutions at the expense of other financial entities. In the taking of WaMu, there is a distinct appearance of regional discrimination: Wall St Nation stole from the distant Great NW.

It is quite clear, however, that Andrea Mitchell's hub and Rand acolyte Alan Greenspan set the system up for great distress and that the failure of regulation launched by Reagan and, hopefully, concluded during the Bush '43 era made financial crisis inevitable. Would we be in our current shape had Paul O'Neill -- from industry (Alcoa) not Wall St -- remained at Treasury? Would O'Neill have been able to withstand the single-minded pressure to weaken or eliminate regulatory agencies? Or were the forces assembled against him so massive that no one could have made a difference?

The burden for the government's recent economic experiment in unregulated greed is being borne by most of us, with the suddenly unemployed and the shareholders in the government-sanctioned dissolutions bearing more than the average portion of distress. The task for our elected representatives is to re-establish controls on our system of greed, a task made more difficult by the increased power of the surviving institutions: GS and JPM, for example.

No single senator knows what can be done about the completed financial coup. Whether the "clues" that at least a few of them have can sum to a solution that benefits those of us who do not share the bounty of the surviving few institutions remains to be seen. Whether, that is, we shall be governed by a few financial institutions in perpetual collusion with a subservient political structure or whether the Jeffersonian ideal of American political democracy shall be restored.

I agree we are in this mess due to de-regulation and unbridled greed. I do believe that Bernanke is trying his best to right the ship; including some moves that he dislikes, but sees no other alternative.

WaMu had been on the Fed's watch list for some time and was in a liquidity crisis when the government stepped in; to say they were solvent is a stretch. The Feds shopped WaMu all weekend before JPM signed on. Even then, the agreement included the injection of $8 billion by the Fed into JPM in order to maintain regulatory capital ratios of the combined banks. If JPM had not agreed to the deal, the FDIC would have ended up operating the bank ala Indy Mac.

You may not like the size of the new banking giants (JPM, B of A, Wells), but remember that the largest banks in the world are not in the US. In order to compete globally, we need banks that can match the big players.

Bankerman, the taking of WaMu was unprecedented, unlike any other event last year or, for that matter, any year. The most common descriptions miss a remarkable story -- one the O, for example, has seemed unable to grasp. (Their hunger for Pulitzers has been noticeably attenuated.) The debilitation and loss of the Seattle P-I severely limited public investigation. I've proffered a brief alternative description here:

WSJ's DealJournal has provided some hints of what has been hidden behind the FDIC's defensive curtain. Work-related travel precludes my providing more at this time, but GOOG -- with which I have no affiliation -- if you are curious.

Bankerman, here's a piece from American Banker that attempted to describe what happened to WAMU:

This piece appeared a few days after the Thursday, 25Sept, seizure and "sale" to JPM. Despite the FDIC's efforts to inhibit public understanding of the sale of $307B of WAMU's assets for $1.9B, a little more is known nearly a year later. Discovery in the bankruptcy hearings, however, has not actually begun; JPM and the FDIC have been delaying matters with motions. (There is a litigation calendar on the site.) Whether we will be allowed to know what actually happened remains to be seen.

We do not know, for example, the contributions from the OTS Western Division's man, whose previous experience included a large, negative role during the S&L crisis of the early '90s. He has been "transferred" since the WAMU seizure.

And we do not know all that the former JPM man who was WAMU's president during the final couple of years did during his tenure. We do know that he promoted the riskier mortgage strategy that weakened the bank's liquidity position. Killinger has absorbed most of the blame, but the JPM grad appears to have been most responsible for that foolhardiness, which has turned out so profitable for the too-big-to-fails.

A couple of things you might ponder, if you are not in Jackson Hole with Bernanke, et al, this weekend:

1) In May, JPM reported that it expects to realize at least $29B in profits on the "toxic assets" it obtained from WAMU for the $1.9B.

2) More recently, JPM said that it intends to integrate much of WAMU's "extensive" art collection into its own and sell or donate the rest. They were talking about the corporate collection, not what was on the walls in the branches. A collection deemed "extensive" suggests a collection worth at least a large portion of $1.9B. The FDIC has not provided its evaluation of the collection.


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