According to the following Democratic and Republican congress members, economists, financial experts and journalists, the “too big to fails” (with help from bank-friendly voices in Congress) are trying to make the bailouts permanent: Congressman Brad S…
Posts Tagged ‘financial services committee’
Giant Banks Are Trying to Make Bailouts Permanent. They’ll Succeed Unless We Raise a Ruckus
December 10th, 2009 |
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Congress Actually Stands Up to Banks . . . But What About the Senate?
October 19th, 2009 |
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My friend on the Hill has confirmed the Washington Post’s claim that the big banks have lost their bid for exemption from state regulations.But only in the House. My friend says that the too big to fails are going to try to kill the bill in the Senate…
Wall Street bonuses criticised
July 31st, 2009 |
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Wall Street banks that were bailed out by the government gave executives bonuses regardless of performance, it has been suggested in a report.
The report by New York Attorney Andrew Cuomo’s office said there was "no clear rhyme of reason" for pay and it had been disconnected from performance.
Controversially, Congress is seeking to give government a direct say in what bank bosses are compensated.
Top US banks paid out huge bonuses despite gaining taxpayer bail-outs.
"Compensation for bank employees has become unmoored from the banks’ financial performance" said the report.
The report – prepared over nine months – argues that some banks paid out larger bonuses than their profits, while simultaneously taking exceptional state emergency funds.
Difficult year
Ten banks were given money as part of the government’s $700bn financial stimulus plan.
In 2008 Goldman Sachs paid $4.8bn in bonuses, representing more than twice its income. Similarly Morgan Stanley awarded bonuses of $4.475bn while earning just $1.7bn.
The government provided both firms with $10bn, as part of the its wider Troubled Asset Relief Program (Tarp). Goldman recently reported a better-than-expected net profit of $3.44bn for the three months to June.
Citigroup and Merrill Lynch paid bonuses of $5.33bn and $3.6bn respectively while seeing losses of more than $27m each, said the report.
"Other banks, like State Street and Bank of New York Mellon, paid bonuses that were more in line with their net income, which is certainly what one would expect in a difficult year like 2008".
The proposal in Congress has been opposed by many Republicans who think it gives the state too much control over private firms’ pay.
"The problem with executive compensation is essentially, from the systemic standpoint, that it gives perverse incentives" said Barney Frank, chairman of the House Financial Services Committee.
He said the lack of penalties meant "heads you win, tails you break even".
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.
Harry Moroz: If Not Health Care Reform…
July 24th, 2009 |
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While the media ponders the fall of the Obama administration as do-nothing senators and faint-hearted representatives erect barriers to health care reform, quite a different…
Sheldon Filger: Bernanke to Congress: I Don’t Know to Whom We Gave Half a Trillion Dollars
July 23rd, 2009 |
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The Fed and its chairman have made many errors in judgment, not the least their overly-optimistic pronouncements when the first tremors from the sub-prime meltdown arose.
Bernanke To Congress: Fed Has Exit Strategy
July 21st, 2009 |
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WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke sought to assure Wall Street and Congress Tuesday that the U.S. central bank will be able to reel in its extraordinary economic stimulus and prevent a flare up of inflation when the reco…
US economy improving – Bernanke
July 21st, 2009 |
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Bernanke said the Federal Reserve had an array of weapons at its disposal to withdraw its unprecedented monetary stimulus when the time was right
The state of the US economy appears to be improving and the Federal Reserve is reviewing ways to withdraw its massive monetary policy stimulus when the time is right, Fed chairman Ben Bernanke said today.
Appearing before the House financial services committee for his report on monetary policy, Bernanke said: “The pace of decline appears to have slowed significantly, and final demand and production have shown tentative signs of stabilization.”
However, he cautioned that unemployment was likely to remain high into 2011, and said that this could damage already fragile consumer confidence and potentially undermine what is expected to be a very gradual recovery.
Bernanke said the Federal Reserve had an array of weapons at its disposal to withdraw its unprecedented monetary stimulus when the time was right, even if its balance sheet remained large for a time.
“We also believe that it is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation,” he said.
John Higgins, senior market economist at consultants Capital Economics, said: “The Fed is confident that it has ‘the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner’ and so ‘prevent the emergence of an inflation problem further down the road’. Presumably there is nothing that Bernanke could ever say to convince the more naive monetarists, gold bugs and conspiracy theorists that a surge in inflation is inevitable.
“But while we are not blind to the risk that the Fed could misjudge the timing (in either direction), in principle at least the exit strategy should be much more straightforward and less disruptive than many assume.”
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The week ahead
July 19th, 2009 |
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Iraq’s Kurds go to the polls, and other news
• THE chairman of America’s Federal Reserve, Ben Bernanke, delivers his semi-annual monetary-policy testimony to the House Financial Services Committee in Washington, DC, on Tuesday July 21st. Mr Bernanke may shed more light on how far he believes that America is bouncing back from the financial crisis and economic downturn. Mr Obama recently spoke of signs that the “economic storm” is waning and Timothy Geithner, his treasury secretary, has talked about “very encouraging” indications that confidence is returning to the financial system. The administration has decided not to bail out CIT, a struggling commercial lender, reinforcing its own confidence that the financial system can withstand a bankruptcy filing that could come soon.
For background, see article …