President of the Federal Reserve Bank of Kansas City, speaks out about growing debt

The only Fed member to speak up and say the US must fix its growing debt problems or risk a new financial crisis was Thomas Hoenig, president of the Federal Reserve Bank of Kansas City.

Mr Hoenig said that rising debt was infringing on the central bank’s ability to fulfil its goals of maintaining price stability and long-term economic growth. “Stunning” deficit projections were putting political pressure on the Fed to keep interest rates low, infringing on its independence at the risk of inflation, he said.

The US budget deficit is projected to be $8,000bn in the next decade. Barack Obama, US president, recently lifted the government’s borrowing authority to $14,300bn.

Thats alot to swallow

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Published in: on February 17, 2010 at 11:11 am  Leave a Comment  
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$15 Billion more to Fannie Mae = Total of $110Billion, so far for Fannie and Freddie

Happy Holidays everyone…Fannie Mae are getting an extra $15Billion in errr ‘bailout’ money from the taxpayers.

Last week the Treasury Dept said it was going to pump a extra $15Billion into Fannie Mae.

That brings Fannie’s total bailout to $59.9 billion [2]; together with its sibling Freddie Mac, the toll has risen to $110.6 billion

Fannie lost $18.9 billion in the third quarter and $56.8 billion for the year so far. The company offered a couple of explanations for its continued downward spiral. First and foremost is simply the deterioration of the housing market: Fannie owns or guarantees nearly $3 trillion in mortgages, and borrowers continue to default in rising numbers. But Fannie also said its losses stem from its efforts, as an arm of the government, to modify mortgages for struggling borrowers.

Those costs will only go up in the future, since the government’s foreclosure prevention [5] program still hasn’t resulted in many permanent modifications [6]. Fannie expects to lose money through the program in a number of different ways. First, Fannie will take a loss when mortgages are modified to lower amounts. But Fannie will also be responsible for paying incentive fees (mostly to mortgage servicers) for completed modifications.

Fannie and Freddie’s bailout funds don’t come from the $700 billion TARP, but rather via a housing bill passed in July 2008 [8]. (We track both in our bailout database [4].) Treasury Secretary Tim Geithner has said that Fannie and Freddie could get as much as $200 billion each.

DAYUM!!!!

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Published in: on November 9, 2009 at 8:15 am  Leave a Comment  
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CIT received $2.3 billion in government aid last year, files for Bankruptcy

Dum, Dum, Dum

CIT group filed for bankruptcy on Sunday afternoon – but under a so-called prepackaged bankruptcy plan that will enable it to emerge from court protection by the end of the year, under the control of its debtholders.

CIT received $2.3 billion in government aid last year, a bailout that came in the form of preferred stock. That will almost certainly be wiped out in the bankruptcy process, the first realized loss in the government’s rescue of the financial system.

CIT was the nation’s largest provider of what is known as factoring, a type of lending used heavily by retailers. The company has spent months trying to reassure its clients that it will remain open for business as stores ramp up for the holiday season. Relatively few other companies serve as factors, and among them are other embattled lenders like GMAC.

Published in: on November 2, 2009 at 11:50 am  Leave a Comment  
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Timmy Geithner says: System ‘back from brink’

Timmy testified Thursday that the financial system has “stepped back from the brink,” allowing the government to wind down some programs designed to calm jittery markets. He said we need to go from rescuing the economy to repairing and rebuilding the financial system”

Not that I thrown a life vest or anything but, the first thing I’m doing is sending Merill Lynch this story, because judging by my 401k no one has told them yet.

He said that Treasury will:

•Not need to tap a $750 billion contingency fund budgeted earlier this year on top of last year’s $700 billion bailout fund. (Looks like they will need that money set aside for Health care)

•End a program this month to guarantee money market mutual funds, a program that once covered more than $3 trillion in fund assets. (The need the extra cash to cover the ear marks)

•Scale back to no more than $30 billion from $100 billion the amount that Treasury will ante up as part of a public-private program to buy toxic loans and investments from financial institutions. (Goody, I get to own more crap stuff)

He then goes on to say that the government wouldn’t make the mistake of declaring premature victory and putting “the brakes on too early.” As unemployment is still too high, the economy is weak, lending is still very low except for those fannie and Freddie Guys and businesses are still finding it hard to get credit.

Looks like I wont be sending Merrill Lynch this story after all. So what was the good news Timmy? I seemed to have missed it

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Swiss have the better Economy, U.S comes in second

Switzerland knocked the United States off the position as the world’s most competitive economy.

Why?

The crash of the U.S banking system left it wide open to be exposed to some serious weaknesses

Even though the Swiss Economy dipped into recession last year, too and had to bail out its largest bank UBS. But its economy is holding up better than many peers and most banks are relatively unscathed by the crisis, which drove U.S. banks into bankruptcy.

Anyone know of any jobs in Switzerland?

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Spend, Spend, Spend. Stimulus still needs to go on.

President Obama has made it clear that the stimulus program should be limited in duration, and that once growth is established it will be necessary to bring deficits down, Geithner said.

The catch?

No specific time for when the United States should begin to shift away from the stimulus, saying only, “when it’s appropriate.”

“Appropriate”?? I guess that means we are screwed on standby

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Update: 84 Bank closures so far in 2009.

Regulators closed banks in California, Maryland and Minnesota on Saturday, pushing U.S. bank failures to 84 this year amid continuing fallout from the worst economic crisis since the Great Depression

piggy

Normally the bank closings should get me more upset, but I just saw my bank balance and its turns out I might actually owe some bank somewhere some money, so I’m eagerly awaiting to see if my back closes and I dont have to pay it back

Published in: on August 31, 2009 at 6:01 am  Leave a Comment  
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