GREECE - Financial Bailout Falters

"Greek bailout talks falter amid threat of default" PBS NewsHour 2/17/2015

GWEN IFILL (NewsHour):  The escalating standoff between Greece and other members of the European Union showed little sign of abating today, prompting more questions about whether the country might soon run out of money, whether it would agree to continuing austerity cuts, or possibly leave the Eurozone altogether.

The demand from the E.U. to Greece:  Agree to an extension of a quarter-trillion-dollar bailout program by Friday, or risk losing assistance altogether.

That is not something many Greek citizens want to hear.

COSTAS SKLIROPOULOUS, Greece (through interpreter):  I am angry with the logic of the European Union.  Perhaps we should consider from now on how this country will acquire a different policy, one that could possibly be outside the frame of the European Union.

GWEN IFILL:  Still, some have called on the popular new left-wing government to rein in its resistance to what they have termed an ultimatum.

GEORGE AVGERINOS, Greece (through interpreter):  I would have liked them to be more serious from the very beginning.  When you’re asking with your hand stretched out, you can’t have this attitude.

GWEN IFILL:  European nations have propped up Greek’s unsteady finances since 2010, in exchange for deep spending cuts.  But with unemployment topping 25 percent and shrinking bank deposits, many who voted for the new government blame the austerity itself for the country’s economic ills.

In Brussels today, the Greek finance minister, who campaigned on a promise to scrap the bailout, denounced a plan to extend it as absurd.  But he didn’t rule out a deal.

YANIS VAROUFAKIS, Finance Minister, Greece (through interpreter):  Well, the next step is the responsible step.  Europe will continue to deliberate in order to enhance the chances of, and actually achieve, a very good outcome for the average European

GWEN IFILL:  His German counterpart, speaking on behalf of the Eurozone, said Athens’ goal remains unclear.

WOLFGANG SCHAEUBLE, Finance Minister, Germany (through interpreter):  Greece needs to decide whether they want the program or not.  Nobody understands what Greece wants and if Greece knows what it wants.

"After an election built on promises, what can Greece’s new leadership deliver?" PBS NewsHour 2/17/2015

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SUMMARY:  As bailout talks continue between Greece and other EU members without clear progress, the new Greek government’s election promises seem at odds with economic reality.  Gwen Ifill talks to Jacob Kirkegaard of the Peterson Institute for International Economics and journalist John Psaropoulos about the potential for a rude awakening for Greece and its new leaders.

BANKS - Wall Street Rules

"Is the 2015 spending bill a gift to big banks?" PBS NewsHour 12/18/2014

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HARI SREENIVASAN (NewsHour):  Let’s turn to a story about Wall Street and banks that’s angered many.

As one of its final acts last week, Congress passed a spending bill for 2015.  Tucked into it was a provision to loosen banking regulations on hedges or bets known as derivatives or swaps.  These are financial instruments that essentially allow banks to hedge bets on things that rise and fall in value, such as mortgages, currencies and interest rates.

After the financial crisis, the Dodd-Frank Act required big banks like J.P. Morgan to move some of those derivatives, or bets, to other banking units that don’t have a federal backstop or guarantee from the government.

The idea:  No federal guarantee means no bailout.  But the provision passed last week essentially cancels it and says banks don’t have to move those swaps around anymore.

Liberals were outraged.  The most outspoken voice ahead of the Senate vote, Democrat Elizabeth Warren of Massachusetts.

SEN. ELIZABETH WARREN, (D) Massachusetts:  Who do you work for, Wall Street or the American people?  This fight isn’t about conservatives or liberals; it’s not about Democrats or Republicans.  It’s about money, and it’s about power right here in Washington.

This legal change could trigger more taxpayer bailouts and could ultimately threaten our entire economy.  But it will also make a lot of money for Wall Street banks.

HARI SREENIVASAN:  But others, including Republicans and some Democrats, said that fear was overstated.

COMMENT:  Boy, Los Vegas gamblers would love to have this out.  Gamble all they want with their money, but have the American taxpayer cover any losses.  Like I've said in the past, stock exchanges are the world's biggest gambling casinos.

ECONOMY - Reagan Budget Director on Bailouts

"Former Reagan Budget Director Argues Against Bailouts, for Financial Discipline" PBS Newshour 6/4/2013

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JEFFREY BROWN (Newshour):  Next, another economic meltdown.  That's the dire prediction of a former White House budget director, who argues in a recent book that Wall Street and Washington are broken.

NewsHour economics correspondent Paul Solman has the first of two takes on the government's role in the economic recovery, part of his regular reporting:  Making Sen$e of financial news.

PAUL SOLMAN (Newshour):  Libertarian David Stockman has been a controversial figure since he quit the Reagan administration as budget chief in 1985, blaming it for failing to take deficits seriously.  He became rich and legally embroiled as a leveraged buyout financier.  He faced accounting fraud charges that were later dropped.

Now he's become visible again as author of "The Great Deformation," a hefty screed that attacks the left and right alike.  But, mainly, it attacks government economic intervention.  It begins with the crash of '08.

Stockman thinks it was long overdue.

Significant excerpt

PAUL SOLMAN:  So, you think our economy, perhaps our society as a whole, is on the one hand wussified -- we can't take any pain -- and, on the other hand, controlled by a group of people in whose interests it is to preserve things as they are?

DAVID STOCKMAN, Former Reagan Administration Budget Director:  Sure.  It's two sides of the same coin.

The purpose of Washington is to prop up the powerful.  If you're running a small business in Indiana, they're not going to bail you out.  You have to have size.  You have to have clout.  Essentially, we have a very unfair system today where the bus drivers are paying taxes, so that we can give Social Security to old people that are rich, and we can bail out companies like G.E. Capital and Goldman Sachs and AIG and all the rest of them that never should have been near the taxpayers' dollar.

So we would have had a serious recession, but no Great Depression, no black hole.

WALL STREET - 'Bull By the Horns' Crisis Insider's Look

"Former Regulator Bair Recounts Behind the Scenes of Financial Crisis, Bailouts" PBS Newshour 10/19/2012

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MARGARET WARNER (Newshour): Now, a new book by a former insider takes a critical look at the government's actions during and after the financial crisis. The fallout from the crisis and those decisions is still reverberating on the campaign trail this fall.

Sheila Bair was a key player as head of the FDIC, one of the nation's chief bank regulators. She worked with Treasury Secretary Tim Geithner, Federal Reserve Chairman Ben Bernanke, and former Treasury Secretary Henry Paulson, before stepping down last year.

Her new book is called "Bull By the Horns."

Judy Woodruff sat down with Bair yesterday.

JUDY WOODRUFF: Sheila Bair, welcome.

SHEILA BAIR, former chair, Federal Deposit Insurance Corporation: Thank you for having me. Nice to be here.

JUDY WOODRUFF (Newshour): So let's just -- just to get some background out of the way, who and what do you think is responsible for the financial collapse of 2008?

SHEILA BAIR: Oh, there's plenty of blame to go around.

I think at the end of the day, it was greed. It was just greed that was unchecked by government and government regulators. This idea that this is all caused because the government wanted poor people to have mortgages, that's just not true.

I think expanding access to homeownership for low-income people was a rationalization, but it was not a driver. A lot of people were making a lot of money, making a lot of irresponsible loans to frankly the vulnerable parts of our population that didn't understand these mortgages to begin with, and regulators didn't step in to stop it.

ECONOMY - 4 Years After Bailouts, Banks Still Making Risky Bets

Note "Still Making Risky Bets"...... aka greed overpowers common sense.

"Four Years After Bailouts, Banks Have Bounced Back, Still Making Risky Bets" PBS Newshour 9/14/2012

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SUMMARY: After the fall of Lehman Brothers in 2008, Congress passed the Troubled Asset Relief Program, disbursing money to hundreds of banks, including AIG. Ray Suarez talks to University of Michigan's Michael Barr and Better Markets' Dennis Kelleher on whether the bailouts resulted in financial reform or banks are still too big to fail.

AMERICA - Government Purchase of Troubled Assets

"Making Sen$e of Bailouts: Why the U.S. Government Bought 'Troubled Assets'" PBS Newshour 8/2/2012

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SUMMARY: The Troubled Asset Relief Program was created in 2008 to prevent financial collapse by allowing the U.S. government to buy up troubled assets. But it ended up being used to bailout big banks. Paul Solman talks to Neil Barofsky, author of the new book "Bailout," about his role as the former TARP Special Inspector General.

JEFFREY BROWN (Newshour): And finally tonight, continuing questions about the government bailouts at the height of the financial crisis.

Tomorrow's jobs report will provide the latest snapshot of how the economy is faring. A former government watchdog says some of the key decisions made in 2008 are still resonating now.

ECONOMY - Corzine on Missing MF Global Money, Down the Rabbit Hole With Alice

"Corzine Testifies Before Former Senate Colleagues on Missing MF Global Funds" PBS Newshour 12/13/2011

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JUDY WOODRUFF (Newshour): Former MF Global CEO Jon Corzine was back at the U.S. Capitol today for the second time in two weeks, this time facing a committee of former Senate colleagues.

Their question was a simple one.

SEN. DEBBIE STABENOW, D-Mich.: Where's the money? I mean, how do you answer that? Where is the money from funds that were supposed to be kept separate, customer money?

JUDY WOODRUFF: That money, $1.2 billion worth, vanished when MF Global filed for federal bankruptcy protection in October.

But Corzine insisted again he doesn't know where the funds went.

ECONOMY - AIG, Bailed Out for the Sins of Wall Street?

"AIG Looks to Repay Government, But Will Taxpayers Break Even?" PBS Newshour Transcript (includes video) 9/30/2010

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RAY SUAREZ (Newshour): The federal government and the bailed-out insurance giant AIG announced a deal today for the company to pay back the bulk of its massive debt to the Treasury.

At the height of the financial crisis, the Treasury and the Federal Reserve agreed to spend more than $180 billion if needed to rescue the company. AIG ultimately received more than $130 billion. It still owes over $100 billion. Under the plan, the U.S. Treasury will gradually sell off its majority stake of the company. AIG will also sell more of its insurance units to repay the Treasury.

In an audio recoding on AIG's Web site, the company's chief executive, Robert Benmosche, predicted, taxpayers would ultimately come out ahead.
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ROBEN FARZAD, senior writer, "Bloomberg BusinessWeek": The idea is not for the government to sit out there and be a mutual-fund-like holder of these common shares. I mean, they're not portfolio managers out there.

They did this holding their nose and dragging their feet. They're looking to sell the shares in an orderly manner, but then in an expeditious manner. I mean, look, they want to off-load this stuff and get hard cash back. It's a huge black eye, I mean, the September 2008 kind of gun-to-the-head negotiations, with the entire economy at the brink.

And I think it's critical for Treasury to have this type of a symbolic victory, but I disagree with what Robert Benmosche said in the recording there. I think it's incredibly deceptive to think that the taxpayer and the system is going to be made whole with even $100 billion or $150 billion paid back.

Truth be told, I mean, this exposed the entire systemic rot that was happening. And the government, and the Federal Reserve, and the Treasury, and the New York Fed have stepped in and taken unprecedented measures at multiples the $180 billion bailout sticker price.

You still have the Federal Reserve pursuing quantitative easing, which is going out there and actually conjuring money out of thin air to buy toxic assets, the very likes of these assets that were backed and insured by AIG.

So, while it might make sense from a headline perspective -- yes, the taxpayer is going to make potentially a profit on the $130 billion or $140 billion going out three or four years -- it's certainly cold comfort for an economy that's lost trillions.
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RAY SUAREZ: Well, Louise, let's reel back a little bit and remind people how the federal government ended up owning those 92 homes in the first place. What happened?

LOUISE STORY, The New York Times: Well, if you remember, back in September 2008, it was right after Lehman Brothers failed. The economy was on the brink. There was major panic.

And AIG, one of the things they did that really, really is the reason they failed is, they wrote all these insurance contracts to banks. So banks like Goldman Sachs, and Deutsche Bank, and Merrill Lynch, they had gotten AIG to insure them against losses on their mortgage bonds.

And, sure enough, when the mortgage market went south, AIG was paying out all these insurance claims to the banks. They couldn't afford it. And so the government stepped in and bailed out AIG. This was very controversial, because a lot of the money the government put into AIG went right out the back door to the banks who had contracts with AIG. And that's part of the reason this has been one of the most controversial bailouts.

RAY SUAREZ: So, Roben, an indirect bank bailout to even more institutions than we were aware of when it was happening?

ROBEN FARZAD: Yes. They got -- they got bailed out for the sins of Wall Street. I mean, you talk to old-school AIG executives, and they say that they were a patsy, or that they were crucified for everybody else's sins, that it was a transitive backdoor bailout. And, in reality, that's what it was.

And the thing that held the entire system hostage wasn't just that AIG being allowed to fail would subsume the entire system, but AIG was managing pensioner funds, 401(k)s, insurance plans. Municipalities were backing bonds with AIG. I mean, it was just unthinkable, in the haze of those terrifying days of September 2008 and October, to let this thing just fall and see how the dust cleared afterwards.