NEW YORK, Aug 3 (Reuters) - The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron’s in Sunday’s edition.
Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said — at least $1 trillion and more likely $2 trillion.
The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron’s reported.
He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.
July 30 (Bloomberg) — With goodwill like Washington Mutual Inc.’s, it’s no wonder investors are getting such bad feelings about the company’s finances. Shares of the Seattle-based savings and loan have fallen 89 percent the past year to $4.43, leaving the company with a $7.6 billion stock-market value. The stock’s plunge must be a horrible mistake if we are to believe the values WaMu attributes to the assets on its balance sheet.
And because of this Wall Street is celebrating today, but not for long.
Before: Fed: No more bailouts, except Fannie Mae and Freddie Mac
And now the Fed wants to bailout Wall Street?
The taxpayer will pay for it all.
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WASHINGTON (AP) - The Federal Reserve said Wednesday it is extending its emergency borrowing program to Wall Street firms and is taking other steps to ease a severe credit crunch that has hobbled the national economy.
Its name somewhat anachronistically means “assembly of old men.” George Washington famously - and, it must now be admitted, with excessive optimism - characterized it as an institutional saucer intended to cool legislation passed in the intemperate heat of the moment. Its members demand, with entirely unwarranted self-approval, to be called, collectively, the World’s Greatest Deliberative Body.
July 23 (Bloomberg) — Fannie Mae, the largest U.S. mortgage finance company, couldn’t find a buyer who would pay $6,900 for the three-bedroom house at 1916 Prospect St. in Flint, Michigan. So broker Raymond Megie, who is handling the foreclosure sale, advised cutting the price to $5,000.
Megie still couldn’t sell it. “There’s oversupply,” he said. The home sold in 2005 for $110,000.
And the taxpayer will have to pay for all of this and…
“If we’re lucky enough to help 400,000 households,” said Jared Bernstein, a senior economist at the Economic Policy Institute, “I’m afraid it’s a drop in the bucket.” ______________________________________________________________________________________
Bush pledges to sign legislation to help Fannie, Freddie
Congress completed work Saturday on the government’s most sweeping response yet to the nation’s housing crisis, sending to President Bush a bill designed to help homeowners avoid foreclosure, spur home buying and prop up struggling mortgage giants Fannie Mae and Freddie Mac.
This bill will probably pass in Senate tomorrow. You, your children and generations to come will pay for this. All taxes will be spent servicing this debt.
Cost of 5 years of Iraq war:$560 billion Cost of this bill:$800 billion
It will be spent bailing out the same fraudsters who got us into this mess. Call your senator now and demand they vote against this! If you don’t, it will probably pass. If you care for your country and your children’s future, vote this video up.
So in a free market it is justifiable to keep some “potentially situations” secret!?!? Hmmhh. Secret from whom?
“The main case for an exception would be if disclosure could panic investors and lead to fears for a bank’s solvency, the regulator said.” Investors in the U.K. have all the right to panic.
“Under certain circumstances, immediate disclosure would still be required.” These “certain circumstances” will occur when it is too late to panic! _______________________________________________________________________________________
The City watchdog has laid out plans to allow banks to tap the Bank of England for emergency funding without informing the market, in a move which might avoid a repeat of the run on the bank which led to the collapse of Northern Rock.
Under the European Union’s market abuse directive, regulated firms have to disclose price sensitive information.However, the Financial Services Authority yesterday said there were potentially situations where banks would be allowed to keep it secret if they had applied to the Bank.
The main case for an exception would be if disclosure could panic investors and lead to fears for a bank’s solvency, the regulator said. The FSA laid out a series of proposals in a consultation document. It invited industry groups to respond by September 30.
