Ohio Sunday Papers – Casinos: State Newspapers No Likey

• Huron County’s 18.3% unemployment rate – Associated Press
• State making more records available online – Columbus Dispatch
• Banks face long climb – Cincinnati Enquirer
• New Schools Fall Short of Strickland’s Standards – Columbus Dispatch
• Editorial: Fool’s Gold (Casinos) – Toledo Blade
• Editorial: False Promises (Casinos) – Columbus Dispatch
• Editorial: Highway Funds, er, Safety – Toledo Blade
• Editorial: Strickland – Let Charter Schools Bloom – The Plain Dealer
• Editorial: Trust in Change (Higher Ed) – Akron Beacon-Journal
• Op-Ed, Dennis Willard: Big Brother, Big Brother, big money – Akron Beacon-Journal
• Op-Ed, David Skolnick: Congressman Ryan Man of the Hour – Youngstown Vindicator
• Op-Ed, Thomas Suddes: Gambling Promoters & Their Self Serving Ideas – The Plain Dealer
• Op-Ed, Jonathan Riskind: Pollution plan fuels bipartisan fight – Columbus Dispatch
• Op-Ed, Joe Hallett: Ohio needs to upgrade Capitol statuary – Columbus Dispatch

G20 Finance Ministers Meeting Upshot in Less Than 30 Seconds

U.S. Treasury Secretary Timothy Geithner met with his 19 counterparts today in the U.K. in advance of April’s Group of 20 meeting.  The G20 represents the 20 largest industrial nations.  Their membership accounts for around 85% of the world’s economic output.

The finance ministers are still split in two camps on economic stimulus.  One camp, led by Germany, believes any further economic stimulus measures should wait until the results begin to come in from member countries on what they’ve already done.  In the case of the U.S., that would mean having some sort of measure of the efficacy of the recently enacted economic stimulus bill.  Other countries, it appears the U.S. is among them, are lobbying for member nations to prime the pump further, now.

There were three things in the communique issued at the end of today’s meeting.  The members are pledging to cooperate on:

1. Increase financial commitments to the International Monetary Fund for helping developing countries out of the recession;
2. Regulation of hedge funds; and,
3. Keep the core focus on getting banks around the world lending again.

Go over to the NYT for more.

Two Highlights from Geithner on Capitol Hill Today

From Reuters:

GEITHNER ON BANK REPAYMENT OF GOVERNMENT CAPITAL:

“I wouldn’t give a penny to help a bank. The only thing we’re doing is we’re trying to make sure that credit is available on a scale and terms necessary for recovery to come back. There is no way we’re going to get recovery with the speed and force we need unless we do better in achieving this goal. Nothing would make me happier than to see strong banks repay the government the capital they took. And we would love to see banks go out there and replace that capital with capital from the private sector, repay us, and allow us to use that where it can be targeted next.”

GEITHNER ON AIG:

“AIG is systemic. I wish it were not the case but AIG is systemic and the least-cost way to the American taxpayer and the American people for dealing with that risk is to help this company restructure.

“The bottom line is we have to make sure, given the severity of this crisis and the fragility of the system that we do everything necessary to protect against the risk that we have a disorderly failure of a major financial institution.”

More Evidence Feds Don’t Know What the Hell They’re Doing in Bank Bailouts

The excerpt below is from a New York Times story about banks that wish to return their bailout money to the federal government because Uncle Sam has some thin strings attached.  Numbered comments are mine …

1. Signature Bank of New York has informed the Treasury it wishes to return the $120 million it received three months ago – the executives there don’t like executive pay restrictions.  Question: Why did these guys get $120 million in the first place if they can just decide to give it back?
2. The story reports that banks are waiting to give money back until the federal government creates a process for its return. Suggestion: Banker – write check, send to Timothy Geithner, U.S. Treasury Secretary; I think he’ll know what to do with it.
3. Here’s another string the government could attach: Any bank which takes bailout money and gives it back because they don’t want to let shareholders vote on executive pay or some other weak reason should be considered to have passed a stress test and forbidden from accepting any government assistance for five years.

WASHINGTON — The list of demands keeps getting longer.

Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.

As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.

The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.

They say they plan to return the money as quickly as possible or as soon as regulators set up a process to accept the refunds. On Tuesday, Signature Bank of New York announced that because of new executive pay restrictions in the economic stimulus package, it notified the Treasury that it intended to return the $120 million it had received from the government only three months ago.

Dear Secy Geithner: It’s Not Just Some Silly Bloggers Waiting for Change

I’ve now read in two different places that U.S. Treasury Secretary Timothy Geithner blames some of his bad pub on those rascally bloggers.

Well, it’s not just the bloggers.  How about Paul Krugman in a column on Monday headlined, Behind the Curve:

So here’s the picture that scares me: It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.

But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked.

O.K., that’s a warning, not a prediction. But economic policy is falling behind the curve, and there’s a real, growing danger that it will never catch up. (emphasis Clips & Comment)

Or, how about Krugman last week in The Big Dither:

Last month, in his big speech to Congress, President Obama argued for bold steps to fix America’s dysfunctional banks. “While the cost of action will be great,” he declared, “I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade.”

Many analysts agree. But among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.

Notice something?  Geithner is mentioned in the Big Dither, but the bullseye for this mess with the banks and AIG is falling squarely on the president in both columns.

Here’s from an op-ed from David Smick in Tuesday’s Washington Post, Tim Geithner’s Black Hole:

Pity Barack Obama’s economic advisers. The blogs are now demanding their scalps, and Treasury Secretary Tim Geithner and his colleagues face a nasty dilemma: There are no solutions to the banking crisis without extraordinary political and financial risks. Thus, they have adopted a three-pronged approach, delay, delay, delay, in the hope that somebody comes up with a breakthrough. …

… The Obama team needs to remember that we got into this mess because of a lack of financial transparency. It’s time to tell the American people what the stock market already knows: that the path to recovery will probably be expensive and politically unpopular, perhaps explosively so. …

… In the end, at least one thing is certain: Our present position is unsustainable. The longer we delay fixing the banks, the faster the economy deleverages, the more credit dries up, the further the stock market falls, the higher the ultimate bank bailout price tag for the American taxpayer, and the more we risk falling into a financial black hole from which escape could take decades.

Here’s the problem with voters, taxpayers.  Or, should I say here’s the problem with at least this voter and taxpayer.  I voted for change.  I was incensed, not so much by the $700 billion Paulson bailout, but by the rabbit hole the money seemed to disappear down.  We were told at the time that there was a national emergency and the government needed to dole out this money and fast.  We were told it would be used to corral some of those toxic assets and allow the banks to get back on track.  Here’s a couple of stock quotes from today’s close:

• Citigroup – $1.05
• Bank of America – $3.75

The Bush Administration either lied to buy time or no one knows what the hell they’re doing.  Don’t forget, Tim Geithner was one of the architects of TARP 1 as head of the New York Fed.

I want one of two things.  First, justice.  That means the pigs who brought this down upon us should experience the ultimate downside of that pure capitalism they love so much – failure.  Or, second, someone in the federal government to take whatever time is needed and explain to the American people as simply as possible why any of these foolish companies are too big to fail and what it will take to make things right.

When Tim Geithner whines about blogs, he’s whining about Americans who are frustrated with a system that is rigged for only the wealthy and privileged among us.  He’s whining about people who do their part, play their role in this economy whose lives are being changed or put on hold because of high tech, high finance gambling on Wall Street.  While the Treasury Secretary ‘dithers’ and prepares to throw more of our money into the maw of AIG or CitiGroup with little transparency or meaningful explanation, he’s blowing his boss’ political capital as well as our tax dollars.

I guess you could sum this up as follows: If we’re in what’s akin to a wartime situation, lay it out for us, don’t talk down to us.  And, since this isn’t war, shed the light of day on where the hundreds of billions of money from the executive branch has gone – every penny – and explain what $4 trillion in “guarantees” from the Federal Reserve means.

Must Read – Understanding the Problem with Banks and the Government

You should read the David M. Smick’s entire column, Tim Geithner’s Black Hole, over at the Washington Post.  Here’s an excerpt:

… The logical alternative — talk show hosts’ solution du jour — is to temporarily restructure or nationalize the banks and leave taxpayers alone. Remove the toxic assets, replace management and cut the too-big-to-fail financial dinosaurs into smaller, nimbler entities. Then reprivatize these smaller banks and let the recovery begin.

Oh, if it were that simple. I suspect Obama’s advisers would like nothing more than to dismantle an irresponsible firm such as Citigroup. They are afraid to do so, for one reason: All the big banks are connected to a potentially lethal web of paper insurance instruments called credit default swaps. These paper derivatives have become our financial system’s new master.

The theory holds that dismantling a big bank could unravel this paper market, with catastrophic global financial consequences. Or not. Nobody knows, because the market for these unregulated financial derivatives, amounting potentially to over $40 trillion (by comparison, global gross domestic product is now not much more than $60 trillion), is the financial equivalent of uncharted waters. …

Eighth Straight Week With At Least One Bank Failure

This week there was only one bank seized by the Federal Deposit Insurance Corp., Freedom Bank of Georgia, Commerce, Ga.

Bair Says FDIC Fund Will Be Insolvent Without Fee Increases

From Bloomberg:

March 4 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.

“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.

Full Text: Ben Bernanke Testimony on Economy and Federal Budget, March 3

(Source: Board of Governors of the Federal Reserve System)

As Prepared for Delivery

Chairman Conrad, Senator Gregg, and members of the Committee, I am pleased to be here today to offer my views on current economic and financial conditions, the federal budget, and related issues.

Recent Financial and Economic Developments and the Policy Responses
Over the past 18 months, the global economy has experienced a period of extraordinary turbulence. The collapse of a global credit boom, triggered by the end of housing booms in the United States and other countries and the associated problems in mortgage markets, has led to a deterioration of asset values and credit conditions and taken a heavy toll on business and consumer confidence.

Read more

It’s Friday, Two More U.S. Banks Fail

The Security Savings Bank, Henderson, Nev. and the Heritage Community Bank, Glenwood, Ill. are apparently too small to save – they were the latest banks to be received by federal regulators Friday.

The two institutions will be acquired – Security Savings by the Bank of Nevada and Heritage Community Bank by MB Financial Bank according to the Federal Deposit Insurance Corp.

Sixteen FDIC-insured banks have failed in 2009; 25 failed in 2008.

FDIC: Bank Earnings Down 84% in 2008; Troubled Bank List Grows to 252

From the FDIC today:

For all of 2008, insured institutions earned $16.1 billion, a decline of 83.9 percent from 2007 and the lowest annual total since 1990. Twelve FDIC-insured institutions failed during the fourth quarter and one banking organization received assistance. During the year, a total of 25 insured institutions failed. The FDIC’s “Problem List” grew during the quarter from 171 to 252 institutions, the largest number since the middle of 1995. Total assets of problem institutions increased from $115.6 billion to $159 billion.

In its latest release, the FDIC cited deteriorating asset quality as the primary reason for the drop in industry profits. Loan-loss provisions totaled $69.3 billion in the fourth quarter, a 115.7 percent increase from the same quarter in 2007. In addition, the industry reported $15.8 billion in expenses for write-downs of goodwill (which do not affect regulatory capital levels), $9.2 billion in trading losses and $8.1 billion in realized losses on securities and other assets.

Banking News

• Problem Bank List Tops 250 – CNN/Money
• ‘Stress Tests’ for U.S. Banking Industry Won’t Live Up to Name – Bloomberg
• U.S. banks post first loss since 1990 – Bloomberg
• NYT Mag Preview: More Than One Way to Take Over a Bank – New York Times

What I’ve Been Waiting to Hear From President Obama on the Banks

In at least a rudimentary way, I’ve understood what Mr. Keynes had to say about business cycles and the need for the government to prime the pump from time to time since my 12th grade economics teacher drilled it into me.  So, the economic stimulus package makes all the sense in the world to me.

What hasn’t made sense is the unfairness of the hundreds of billions going to people who so greedily and so recklessly took us all down this economic road to ruin.  I’m talking about the investment banks, brokerages, insurance companies and others in the financial services industry who leveraged America’s future to hell and back.  Tonight, the president reassured me, and hopefully others, that his Administration will deal with these fools differently:

I understand that when the last administration asked this Congress to provide assistance for struggling banks, Democrats and Republicans alike were infuriated by the mismanagement and results that followed. So were the American taxpayers. So was I.

So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you – I get it.

But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment. My job – our job – is to solve the problem. Our job is to govern with a sense of responsibility. I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.

What Dems and Progressives (and the White House) Might Not Want To Underestimate Regarding Rick Santelli and Tea Parties

CNBC’s Rick Santelli has been roundly thumped from the lefty blogosphere to the White House for suggesting on the air and from the floor of the Chicago Board of Trade that there be a vote on whether taxpayers should help pay for “losers’ mortgages.”  In the absence of a vote, Santelli says that perhaps we need a “Boston Tea Party in July.”

On the other hand, Santelli is the citizen with pitchfork du jour for the right from Rush Limbaugh to the misinformed drones (including Republican members of Congress) who dial him in every day.

We know the Right is wrong on how to get this economy going. They’ve had their chance.  Trickle down is dead and the once exuberant investment class is shaking in their Bruno Maglis.  We’ve found that perhaps banks should be banks and insurance companies should insure and brokerages should buy and sell.  Additionally, it might not hurt to for more regulation – human nature being what it is. Read more

Krugman poking more holes in ideological rants against nationalization of some banks

If you’re a taxpayer of any political stripe would you rather get something or nothing for your tax dollars?  To me that’s one of the simplest ways to sum up why I’m for temporary nationalization of some banks deemed “too big to fail.”  In today’s New York Times, Paul Krugman also points out that we already “nationalize” banks – when the FDIC temporarily seizes banks which fail:

Still, isn’t nationalization un-American? No, it’s as American as apple pie.

Lately the Federal Deposit Insurance Corporation has been seizing banks it deems insolvent at the rate of about two a week. When the F.D.I.C. seizes a bank, it takes over the bank’s bad assets, pays off some of its debt, and resells the cleaned-up institution to private investors. And that’s exactly what advocates of temporary nationalization want to see happen, not just to the small banks the F.D.I.C. has been seizing, but to major banks that are similarly insolvent.

Full Text: Joint Statement on Banking System from Treasury, Federal Reserve, Other Government Regulators

Joint Statement by the Treasury, FDIC, OCC, OTS and the Federal Reserve

Washington, DC– The U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve Board today issued the following joint statement:

Read more

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