Talks continue over fate of Lehman Brothers, Fed continues to say they won’t bail them out

Posted on September 14th, 2008 by bile
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http://www.reuters.com/…

A meeting between top government officials and the heads of some of Wall Street’s biggest financial firms over the fate of Lehman Brothers broke up on Saturday but was set to resume on Sunday, a spokesman for the New York Federal Reserve Bank said.

“Senior representatives of major financial institutions reconvened on Saturday with U.S. officials at the New York Fed. Discussions are expected to continue tomorrow,” the spokesman said. Small groups were continuing to work into the night on unspecified issues that were raised at the meeting.

Efforts are under way among Lehman executives, potential buyers and government officials to craft a buyout plan for beleaguered Lehman, possibly before the weekend is over.

Lehman has become the latest victim of the global credit crunch but Treasury and the Fed have made clear they do not want to see taxpayer funds committed to any deal involving Lehman.

Among government officials at the meetings were New York Fed President Timothy Geithner, U.S. Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox.

I wasn’t able to pay attention to the market the 11th and 12th as a result of attending the Service Nation Summit so I missed the Lehman Brothers and Merrill Lynch stock plunge. (Morgan Stanley didn’t do well, Fannie and Freddie dropped quite a bit too.) The Fed claims that they won’t step in with credit because Lehman has been doing poorly for some time and have access to the discount window. Seems last reported was that Lehman was perhaps to be broken up in three ways with “Bank of America would acquire the bulk of Lehman Brothers, including its mortgage assets. Barclays, Britain’s third-biggest bank, would take a smaller parcel including Lehman’s asset management and fixed income businesses, while Goldman would take the rest.” However other sources are claiming Barclays has backed out citing it “couldn’t get guarantees from the government or agree on a private-sector deal to mitigate what it called Lehman’s “open-ended” trading obligations.”

It’s going to be interesting to see what comes out. They really want to figure out something before Asia markets open. Tomorrow could be a really nasty day.

In other news JP Morgan is in talks to buy Washington Mutual. With all these buyups and mergers the results remind me more and more of the 1907 panic where its believed that JP Morgan spread rumors of bank insolvency in order to buy their assets up cheap after the bank run which would inevitably occur. The neo-merchentialist/corporatist system we have continues to increase the power and wealth of the bankers and power elite at the expense of all the rest and the public continues to dig their own grave by playing into the hands of the banks and politicians by requesting more regulation and nationalization which only further expands their power.

For those interested in knowing more about the history of banking in the United States, The Great Depression and why the Federal Reserve System is bad:

America’s Great Depression

History of Money & Banking in the United States

The Case Against The FED

I just checked the news and it looks like Bank of America has pulled out too. The Fed is claiming it won’t provide any funds to prevent the collapse. Tomorrow is not going to be pretty. I also noticed that Mr. Greenspan is saying the obvious: “the U.S. credit squeeze has brought on a “once-in-a-century” financial crisis that is likely to claim more big firms before it eases.”

It’s all fine! Do not look behind the curtain!

Posted on July 14th, 2008 by bile
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“You have NOTHING worry about.”

How to distort the truth 101

Posted on July 14th, 2008 by bile
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Redirect blame.

http://money.cnn.com/…

The government seizure of IndyMac Bancorp Inc. late Friday may set off more concern about other banks failing under the weight of the mortgage implosion and credit crisis, but few seem to be in danger, according to Richard Bove, a banking analyst with Ladenburg Thalmann Inc.

Bove said there was likely some truth to accusations that comments from “a prominent senator” that IndyMac was in danger hurt the thrift, one of the largest mortgage lenders in the country.

Sen. Charles Schumer, D-N.Y., raised concerns about the bank in a letter June 26 that has been widely criticized as undercutting investor confidence in IndyMac. The senator defended his actions in a news conference on Sunday, saying his letter merely pointed out problems that regulators allowed to build up for years.

“There are no benefits by having prominent officials claiming that large financial institutions are failing, are insolvent; are incapable of raising funds; or that they should be allowed to fail,” Bove wrote in a note to clients. “This grandstanding does nothing to create confidence in the American financial system.”

“Additionally, there can be no doubt that this recent era of regulation-lite allowed excesses to develop in the financial system. The unwillingness of the supposed protectors of the system to actually protect it is also inexcusable,” Bove said.

Let us look at these two statements separately and together.

There are no benefits by having prominent officials claiming that large financial institutions are failing, are insolvent; are incapable of raising funds; or that they should be allowed to fail.

BS. Prominent officials are just human beings, likely investors, and their opinions matter just as anyone else’s in the market. They may be ignorant of economic theory, they may be completely talking out of their ass but the MSM has thousands of economic gurus doing that every day and few complain.

Additionally, there can be no doubt that this recent era of regulation-lite allowed excesses to develop in the financial system. The unwillingness of the supposed protectors of the system to actually protect it is also inexcusable.

I would hardly call this an era of regulation-lite. There are lots of regulations. The problem is government intervention. As for unwillingness to regulation. I simply don’t believe that. Politicians will do whatever will get them the most power. If regulation is it they will. Economic law be damned.

Together now. Bove should be complaining about politicians interfering and regulating and not them talking. Is it really that difficult to see that cheap money and other market manipulations are the primary causes for this all? The cheap money dumped into the housing market? The unfair advantages given to the GSEs. The evidence seems to scream off the paper/monitor. These guys like Bove want to keep this fascist system going. They are going to blame those who are competitors. And it’s likely to work… like the many times before… and we will all suffer because of it.