October 6, 2011

LAT’s Oliphant Lets Joe Biden Babble Away, Part 3 of 3: How TARP Really Went Down

BidenOct11In a report filed at the Los Angeles Times’s Politics Now blog earlier today, Washington Bureau reporter James Oliphant relayed a number of whoppers delivered by Vice President Joe Biden without anything resembling a challenge. In Part 1, I noted how Biden, who in August described Tea Party sympathizers as “terrorists” and in September as “barbarians,” today spoke in complimentary terms of how much the Occupy Wall Street crowd has in common with them. In Part 2, I dealt with the Veep’s hit at financially struggling Bank of America for having the nerve to try to recover some of what the Dodd-Frank “financial reform” legislation took away by charging some customers a $5 monthly fee for debit-card use.

This final part will deal with Biden’s rendition of how the “bank bailout” portion of TARP operated, which is quite different from the reality. The relevant excerpt from Oliphant, which necessarily overlaps the first two parts, follows (bolds are mine throughout):

… “There’s a lot in common with the tea party,” Biden said. “The tea party started why? TARP. They thought it was unfair we were bailing out the big guys.”

… “Banks are part of the problem in the economy,” he said. “The American people know — they don’t guess, they know — the reason the CEO of the Bank of America, or anybody in that business, is in the business is because they, that guy making 50,000 bucks bailed him out, bailed him out. Put his financial security on the line when his government said we’re gonna come up with a trillion-plus dollars to bail him out.”

Of Bank of America, Biden said, “At a minimum, they are incredibly tone deaf. At a minimum. At a maximum, they are not paying their fair share of the bargain here. And middle-class people are getting killed.”

The fact is that the TARP was twisted by Treasury Secretary Hank Paulson into something completely different than what was intended (or at least as advertised), and that the banks were forced to do his bidding whether they wanted to or not.

Here, from the TARP roll call vote — which both President Obama and Biden supported — is the description of what the law was supposed to encompass:

(A bill to provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes.)

The introductory section of the bill (full text here) makes it clear that congresspersons and senators believed they were voting for a measure involving purchases of “troubled assets,” principally delinquent and defaulted-upon mortgages:

The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘‘TARP’’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.

The bill’s specific definition of “troubled assets” was:

(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and
(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.

But Hank Paulson didn’t do anything even resembling what the TARP law envisioned. Instead, less than two weeks later, as reported virtually uniquely on Tuesday, October 14 by CNBC’s Dylan Ratigan and Charles Gasparino (video here), he (figuratively, we assume) “put a gun to their (big bankers’) heads” and forced them to accept partial government ownership of their institutions:

Host Dylan Ratigan: Well we all know that obscene amounts of risk (were) taken inside of the banking system, leaving some banks crippled, some banks frozen, and other banks with huge opportunities.

Uh, many of the banks didn’t want to be tainted with the government bailout funds because they didn’t want to be mistaken for a fool when they actually felt that they were the smart one that didn’t do it.

Well Hank Paulson said “The heck with that.” He stuck all of them with some of the bailout money. And he said “Listen, we’re going to reset the clock here and move forward.” Charlie, how are the banks that felt they basically didn’t commit the crime, as it were, of excess or reckless risk, uh, respond to the fact that even they will be stuck with this capital?

Charlie Gasparino: Well y’know they were all kind of stupid to some extent …..

….. the Treasury Secretary Hank Paulson put all these egos in the room, and basically put guns to their heads, forcing them to take the money to bolster the banking system.

Some of the firms say they didn’t want the cash, but it’s pretty clear that all of them did need to take the cash, given the continued upheaval in the banking system that crushed shares last week of Morgan as well as Goldman Sachs and just about everybody else.

So this is essentially, uh, Dylan, a case where, y’know, you can deny you have any problems. Even the best-capitalized banks have problems. They own this stuff. And Paulson at one point said, “Listen, if you don’t want it, it doesn’t matter, gun to your head, you gotta take it.”

Ratigan: Yeah, whether you think you’re sick or not, you’re taking the medicine.

Gasparino: Because you’re sick anyway.

Ratigan: Exactly.

Though there is no good reason to doubt what Ratigan and Gasparino reported — no one to my knowledge has ever challenged them — there was virtually no media coverage of this monumental and possibly illegal shift by Paulson, as well as almost no mention of its coercive nature. In terms of coercion, I was only able to find a single Associated Press item, which noted it quite cryptically:

Executives of the country’s biggest banks were summoned to a remarkable meeting at the Treasury Department on Monday to be briefed on the plan. Paulson basically told the bank CEOs that they had to accept the government stock purchases for the good of the U.S. economy.

Apparently, “or else.” It’s not difficult to imagine the tremendous pressure Paulson, his lieutenant at the Federal Reserve in New York Tim Geithner, and any number of other regulators could have brought onto any bank refusing government “investment.”

This is all relevant to Biden’s bailout-related comments because:

  • He contends that “anybody in that (banking) business, is in the business” only because they were bailed out. As Ratigan and Gasparino made crystal clear, some of the banks involved didn’t believe they needed the money. Assuming they’re correct, they weren’t “bailed out.” They were “forced in.” Bank of America was likely one of the institutions which needed the bailout money, but that’s beside the point in the context of Biden’s comment, which smears the entire banking industry.
  • He accuses B of A of “not paying their fair share of the bargain here.” Well Joe, you seem to have forgotten that the bank paid all of their bailout money back, with interest (actually preferred dividends) almost two years ago, and that whatever “bargain” was formally struck is long since over — or should be. But of course, it’s never over when government authoritarians and their supportive mobs are involved.

The LAT’s Oliphant is by no means the only person who is ignoring these pertinent facts, of course. But it’s long past time that someone besides the talking heads in an obscure CNBC video and yours truly note what really happened in October 2008. Like so many others before him, Oliphant whiffed.

Cross-posted at NewsBusters.org.

The Renamed Official Monument of ‘Occupy Wall Street’

Filed under: Economy,Taxes & Government — Tom @ 8:10 pm

(HT to an emailer; others are welcome to use and even to enhance this graphic, but please credit and link back to BizzyBlog if you do)

StatueOfGiveItToMe1011

LAT’s Oliphant Lets Joe Biden Babble Away, Part 2 of 3: The VP’s Ignorant Hit at Bank of America

BidenConfused0609In a report filed at the Los Angeles Times’s Politics Now blog earlier today, Washington Bureau reporter James Oliphant relayed a number of whoppers delivered by Vice President Joe Biden without anything resembling a challenge. In Part 1, I noted how Biden, who in August described Tea Party sympathizers as “terrorists” and in September as “barbarians,” today spoke in complimentary terms of how much the Occupy Wall Street crowd has in common with them.

This part will deal with Biden’s hit at Bank of America and its $5 monthly fee for debit-card use. The relevant excerpt from Oliphant’s writeup follows (bolds are mine throughout):

… (Biden) cited Bank of American’s new monthly $5 debit card fee as a symbol of public unease.

“Banks are part of the problem in the economy,” he said. “The American people know — they don’t guess, they know — the reason the CEO of the Bank of America, or anybody in that business, is in the business is because they, that guy making 50,000 bucks bailed him out, bailed him out. Put his financial security on the line when his government said we’re gonna come up with a trillion-plus dollars to bail him out.”

Of Bank of America, Biden said, “At a minimum, they are incredibly tone deaf. At a minimum. At a maximum, they are not paying their fair share of the bargain here. And middle-class people are getting killed.”

Well Joe — and James Oliphant — if losing money in your enterprise counts towards paying your “fair share,” B of A should be getting tons of praise, as it has been mostly losing money for years (click to enlarge and open in a new window or tab):

BofA2007to2010 BofA4QtrsEnded2Q11

The left graphic shows that the Bank of America lost a combined $5.8 billion in calendar 2009 and 2010. The right graphic, containing the results of the past four quarters through June 30 of this year, shows that the bank has lost over $16 billion during that time.

In a truly free-market situation, the proper response would be that this is the bank’s and its depositors’ problem. But of course it’s not that way in what is probably the most heavily regulated sector of the economy. “Financial reform,” also known as “Dodd-Frank,” and a myriad of congressional and Federal Reserve regulations which preceded it, have greatly constrained banks’ ability to conduct business as they see fit.

Dodd-Frank included an amendment championed by Illinois Senator Dick Durbin which ordered the Fed to dictate maximum merchant fees for debit-card transactions. As shown in a Monday post about the Associated Press’s poor coverage of this matter (at NewsBusters; at BizzyBlog), the Fed’s new limit will cut banks’ debit-card profitability by about half, amounting to an estimated $9.4 billion. B of A’s share of that is likely at least $1 billion. To partially make up for that loss, B of A is instituting a $5 per month debit-card usage fee in any month during which a merchant purchase is made (ATM usage fees, if any, are apparently unaffected). Even if it gets back its regulation-driven losses, which seems doubtful, the bank still hasn’t solved its profitability problem. B of A’s shaky situation makes Durbin’s suggestion that customers should “Get the heck out of that bank” — which is even harsher than Chuck Schumer’s similar statement a few years ago which led to a run on and the closure of IndyMac Bank — incredibly irresponsible.

James Oliphant and most other reporters are pervasively failing to report Bank of America’s fundamental lack of profitability. In the process, they are causing much of the public to believe that the bank’s attempt to recover some revenue in its debit-card business is some kind of exercise in unadulterated greed, when in fact it’s a difficult move by an entity fighting for its survival to stop at least some of the bleeding.

Joe Biden is feeding into this unjustified negative sentiment. James Oliphant and others are letting him. How negligent — and how typical.

If a regulation costing over $9 billion to the auto industry had been proposed in 2008, it’s virtually impossible to believe that the press wouldn’t have pointed out how the Big 3 automakers were already losing money. So why is almost no one reporting that Bank of America has been unprofitable?

Part 3 will deal with Joe Biden’s mischaracterization of the the nature of the “bailouts” which followed the passage of the Troubled Asset Relief Program (TARP) in the fall of 2008, and set some history straight for readers who are unaware of what really happened.

Cross-posted at NewsBusters.org.

LAT’s Oliphant Lets Joe Biden Babble Away, Part 1 of 3: On the Origins of the Tea Party ‘Barbarians’

BidenBarbarians090511In a report filed at the Los Angeles Times’s Politics Now blog earlier today, Washington Bureau reporter James Oliphant relayed a number of whoppers delivered by Vice President Joe Biden without anything resembling a challenge.

Breaking Biden’s bilge into three sections, they involve his claim about the historical origins of the Tea Party, which Biden characterized as a collection of “barbarians” only a month ago (and as “terrorists” two months ago); his hit at Bank of America and its $5 monthly fee for debit-card use; and the nature of the “bailouts” which followed the passage of the Troubled Asset Relief Program (TARP) in the fall of 2008. In this first part, I will go after what Biden said about the Tea Party. An excerpt from Oliphant’s writeup follows (bolds are mine throughout):

Biden likens Occupy Wall Street to tea party, blasts BofA

Vice President Joe Biden likened the Occupy Wall Street movement to the tea party at a forum in Washington on Thursday, saying both were driven by middle-class frustration with government bailouts of corporate America.

“What is the core of that protest, and why is it increasing in terms of the people its attracting? The core is that the bargain has been breached with the American people. The core is that the American people do not think the system is fair or on the level,” Biden said at forum sponsored by the Atlantic magazine and the Aspen Institute at the Newseum in Washington.

“There’s a lot in common with the tea party,” Biden said. “The tea party started why? TARP. They thought it was unfair we were bailing out the big guys.”

(Uh, just out of curiosity, didn’t both Joe Biden and his boss Barack Obama support “bailing out the big guys” and for TARP? Why, yes they did.)

Citizens’ underlying frustrations origins indeed began with TARP, but the frustration didn’t begin jell into organized protests until February of 2009 in direct response to imminent passage of the Obama administration’s stimulus plan. The St. Louis Tea Party tells us that “The 2009 Stimulus helped inpire the Tea Party movement in February 2009.” Oliphant’s own paper noted the following on February 27, 2009:

… a wave of images, blog posts and videos from a nationwide protest has been washing across the Web. The protests, dubbed “tea parties” by participants, were held Friday in several U.S. cities including Portland and Washington, D.C. as a response to what demonstrators see as unfettered spending and encroaching government as represented by President Obama’s economic recovery plans.

An Associated Press photo at the beginning of the item has the following caption: “Protesters rally against the stimulus plan in Hartford, Conn.” The word “bailout” and “TARP” do not appear in the Times’s article. That’s because it was the Obama administration’s “economic recovery plans,” which came to be known as “stimulus,” which drove everyday Americans to demonstrate.

Jim Geraghty’s take on the Tea Party’s origins at National Review in January of this year mentions TARP, but in context the actions of the Obama administration in its early months dominate his treatment, and clearly were the organizing motivator:

You didn’t see the demographics that make up the GOP base – small businessmen, parents, members of the military – marching and waving signs because they were too busy working for a living.

Enter the Obama administration.

Like most successes, at least a thousand figures are claiming fatherhood of the Tea Party phenomenon, but a key moment came Feb. 19, 2009, from an unlikely source: CNBC correspondent Rick Santelli, who launched into an off-the-cuff rant when asked to evaluate the initial moves from the Obama administration to deal with a housing market that had plummeted. “The government is promoting bad behavior!” Santelli shouted, accusing the administration of a plan that amounted to “subsidizing the losers’ mortgages.”

… Listen to a discussion of the debt and deficit at a Tea Party meeting, and you won’t hear a lot of numbers; instead, it is articulated as a moral issue, and a national moral failure. The spending spree of TARP and the stimulus — and a deficit exacerbated by plummeting tax revenues — is spurring Americans to look at the debt as a great horror inflicted upon their children and grand children.

Again, while TARP has been a particular source of concern among Tea Party sympathizers, it is not, as Biden claims, the reason why Tea Party activism began. Instead it began in earnest as a result of the stimulus plan, and the sudden prospect, since fulfilled for three years running, that the nation was facing trillion-dollar budget deficits as far as the eye can see. Assuming he reads and remembers what has been written in his own newspaper, James Oliphant should know that, in my opinion probably does. But he still let Biden’s babble and his sudden fake respect for the “barbarians” in the Tea Party go unchallenged.

The Occupy Wall Street crowd, in total contrast to Tea Party sympathizers, seems singularly uninterested in the size of the government’s annual deficits. The only things the two groups appear to have in common is that their participants breathe in oxygen and breathe out carbon dioxide. As to who the real “barbarians” are, well, that determination has become pretty easy given the conduct of many in the OWS contingent.

Later this evening, Part 2 will deal with Biden’s comments on Bank of America, while Part 3 will address the largely untold story of the original bank bailouts.

Cross-posted at NewsBusters.org.

WSJ Gives Romney Undeserved ‘Either/Or’ Status, and a Pass for Blowing Off Iowa

Filed under: Activism,Taxes & Government — Tom @ 9:53 am

(See update below: Establishment GOP Money-Raiser — “Now we know [Romney] … will be our nominee”)

_________________________________________

How nice of the Wall Street Journal to decide months before primary season begins that we’re in an either/or situation (/sarc):

With Chris Christie’s decision yesterday not to run for President, the Republican nominee is now likely to emerge from the field of nine who are already in the race. At this point that means the contest will probably boil down to Mitt Romney and one, or at most two, of the other contenders who can emerge from Iowa as plausible alternatives and Presidents.

The Journal had to refer to “other contenders who can emerge from Iowa” because it “forgot” to mention that Mitt Romney is blowing off Iowa. He is doing so because the GOP faithful in the Hawkeye State (social conservatives AND Tea Partiers) know that he’s a fake, a phony, and a fraud on every social issue that matters — particularly, as shown yesterday, abortion and same-sex marriage — and on basic economic and personal rights, i.e., RomneyCare.

The fact that Romney is blowing off Iowa should be the red-flag indicator that he’s unacceptable to sensible, constitution-loving GOP voters everywhere.

________________________________________________

UPDATE: I want to offer up a special thanks to Ms. Georgette Mosbacher, leading GOP bundler (and blunderer). On Tuesday, she told CapitalNewYork.com (HT PJ Tatler) the following –

“A lot of us who normally would have been in this presidential race a long time ago, have been waiting for Christie to make a decision,” said Georgette Mosbacher, a Republican uber-fund-raiser and finance co-chair of the Republican National Committee who was among a group of Republican bundlers hoping to convince Christie to enter the race.

… “Quite frankly, it’ll be easier, because now we know who it is who will be our nominee,” she added. “So we will pull our Rolodexes out and get to work.”

(Sidebar: Rolodexes?)

Well, H-E-double-two-sticks, let’s just cancel the primary elections and caucuses right now and avoid all the time, trouble, and expense of, you know, having candidates make their case to actual grass-roots voters. Georgette Mosbacher and her crowd “know” who “our” nominee is, and the large (really vast) majority of the rest of GOP voters who oppose Objectively Unfit Mitt, who has never moved meaningfully above 25% in EITHER of his two presidential election runs thus far, don’t matter.

Thanks, Georgette, for taking all of the mystery out of the person the Republican establishment is behind (i.e., who the establishment is trying to shove down the throats of the grass roots), so that true economic and social conservatives know beyond any doubt who they must stop.

UPDATE 2: Here’s another possible motivation for Georgette’s hijinks, namely that establishment fave Romney is starting to get blown away by a “HermanCain”

A Newsmax/InsiderAdvantage poll shows businessman and radio talk host Herman Cain now leading former Massachusetts Gov. Mitt Romney among likely GOP primary voters in the fight for the 2012 Republican nomination.

The exclusive poll, taken in the past 24 hours, shows Cain vaulting Romney 26 percent to 24 percent. The poll has a margin of error of 4.4 percent.

Initial Unemployment Claims: Back Above 400K SA, Previous Week Revised Up to 395K; NSA 323K, Down 12% from 2010

Filed under: Economy,Taxes & Government — Tom @ 9:30 am

From the Department of Labor:

SEASONALLY ADJUSTED DATA

In the week ending October 1, the advance figure for seasonally adjusted initial claims was 401,000, an increase of 6,000 from the previous week’s revised figure of 395,000. The 4-week moving average was 414,000, a decrease of 4,000 from the previous week’s revised average of 418,000.

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 329,029 in the week ending October 1, an increase of 956 from the previous week. There were 373,681 initial claims in the comparable week in 2010.

Business Insider’s email predicted 410K, as did Reuters, as did Bloomberg. The Associated Press had 411,000. Well, they’ll roughly split the difference if next week’s revision follows the pattern of the past seven months.

Interpretations vary:

  • Reuters — “(the report) hinted at an improvement in labor market conditions.”
  • Bloomberg — “companies may be starting to slow the pace of dismissals.”
  • AP’s Chris Rugaber – ”a sign that the job market remains weak.” Rugaber’s report sticks with AP’s consensus estimate of 56,000 jobs added in tomorrow’s jobs report.
  • Zero Hedge — “the economy is not creating jobs.”

ZH also notes that “this is the 26th consecutive week of claims of 395,000 (or more).” Indeed:

UnempClaims6mosEnded100111

Given that 375,000 is generally considered the highest initial claims level indicating possible meaningful employment growth (I think it’s more like 350K, and that the press has quietly moved the goalposts), and that we’re not there a full nine quarters into an alleged “recovery,” it’s still more than fair to ask “Rebound? What Rebound?

Thursday Off-Topic (Moderated) Open Thread (100611)

Filed under: Lucid Links — Tom @ 8:45 am

Rules are here.

Possible comment fodder follows. Other topics are also fair game.

______________________________

At the Wall Street Journal yesterday“Nearly Half of U.S. Lives in Household Receiving Government Benefit” (BizzyBlog Blast from the Past: May 26, 2011 — “Cliff-Diving Into Dependency, and Trolling for Democratic Votes”)

At Rasmussen — Election 2012: Generic Republican 47%, Obama 41%

Via CNS News“‘Anyone’ Can See Economy’s Improving, DNC Chair Insists; ‘We’ve Begun To Turn The Corner,’ Democrat Says” (Herbert Hoover, early 1930s: “Prosperity is just around the corner.”

Via CNS News: “Obama Has Now Increased Debt More than All Presidents from George Washington Through George H.W. Bush Combined.” Well, he said he wanted to “fundamentally transform America.”

Noel Sheppard at NewsBusters“After Five Weeks MSNBC’s Matthews, O’Donnell, Schultz and Sharpton Still Haven’t Reported Solyndra.” Anybody who has had to watch five weeks of those programs to know that — or has had to read the transcripts — deserves hazard pay.

Second-Best Occupy Wall Street-Mocking Graphic of the Day (HT Instapundit; original credit appears to belong here):

PRESIDENTGOLDMANSACHS

Here’s the best, via a BizzyBlog emailer.

Sarah Palin’s Announcement and Interview With Mark Levin

Filed under: News from Other Sites,Taxes & Government — Tom @ 6:30 am

On his show, Wednesday night, a three-minute announcement and the first seven minutes of his interview:

I had a feeling that her time — this time — had passed a couple of weeks ago. And at this point, she would have divided that anti-establishment vote, and we sure didn’t need that.

Positivity: Adam Beck Brunk, Runner with Cerebral Palsy and Epilepsy, in His Third Year of Cross Country

Filed under: Positivity — Tom @ 5:59 am

From Grundy Center, Iowa (video is at link):

Posted: Oct 02, 2011 8:04 AM EDT

Someone You Should Know — Grundy Center cross country runner finishes what he starts

There are approximately 40 junior high and high school students on the Grundy Center Cross Country Team. One of those students is senior Adam Beck Brunk.

Adam isn’t the fastest runner on the team, but he may be the most determined.

“It’s hard enough for me to do it, and for him to do it, I’m like wow,” said teammate Jonathan McIntire.

Adam suffers from cerebral palsy and epilepsy, but he’s still participated in cross country for three years. He got started just by showing up at Coach Sam Iverson’s, ready to go buy running shoes.

“My goal for him was to finish a race, and he said I want to do 10,” said Coach Sam Iverson.

Adam often suffers seizures while running, which is why he wears pads. He stops, sometimes falls down, but then he gets back up and finishes what he started.

“I fall down, and I get right back up and keep going. The best I can,” said Adam Beck Brunk.

Adam can’t do everything his fellow teammates do in practice, but he always gives 100 percent. At one point, he even told Coach Iverson he needed to push him more because he didn’t finish a race strong enough.

“I don’t hear much complaining about workouts. When we’re going hard and fast, I say look at Adam. He’s doing fine. They just take him in, and help him in any way they can,” said Iverson. …

Go here for the rest of the story.