Archive for the ‘Lawrence Summers’ Category

Obama Plans “Big Bang” Financial Clean Up Announcement Next Week; Punish Wall Street

January 31, 2009

The Obama administration is gearing up for a “big bang” announcement next week that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.

By Krishna Guha in Washington
Financial Times

The plan will involve an overhaul of the troubled asset relief programme – the $700bn bail-out fund – including strict curbs on compensation at banks receiving public aid. The Tarp overhaul is intended to restore public confidence in what is a deeply unpopular programme and ensure that taxpayer money is not used to fund excessive pay, bonuses and dividends to shareholders.

An outside view of the New York Stock Exchange on Wall street. ...

“There will definitely be a cap of some sort on bonuses,” said a Wall Street executive who has taken part in talks with the authorities. “The political climate is such that there is a need to punish Wall Street.”

The announcement will follow Friday’s news that the US economy contracted at an annualised rate of 3.8 per cent in last year’s final quarter – less than analysts were expecting, but still the worst quarter since 1982. The fall was cushioned by ballooning inventories, which suggest the economy could shrink faster than expected in the first quarter.

The “big bang” approach reflects the belief of Tim Geithner, Treasury secretary, and Lawrence Summers, National Economic Council director, that the Bush administration was wrong to dribble out policy initiatives. Mr Geithner intends to present a “comprehensive” plan that policymakers hope will command market confidence.

Read the rest:
http://www.ft.com/cms/s/0/15f37800-ef05-
11dd-bbb5-0000779fd2ac.html

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Obama’s Open Records Pledge Tested

January 29, 2009

U.S. government guarantees on securities totaling $419 billion for bank bailouts provide an early test of President Barack Obama’s pledge to be open with taxpayers about what they have at risk in the credit crisis.

Bloomberg News asked the Treasury Department Jan. 26 to disclose what securities it backed over the past two months in a second round of actions to prop up Bank of America Corp. and Citigroup Inc. Department spokeswoman Stephanie Cutter said Jan. 27 she would seek an answer. None had been provided by the close of business yesterday.

Bloomberg

As Congress debates an $875 billion economic stimulus bill, the guarantees represent a less publicized commitment. The public’s stake has grown along with assurances tying the Treasury to the fate of corporate loans and securities backed by home mortgages, car loans and credit card debt.

“Guarantees are only meaningful if there’s a real chance that someone will have to pay out for them,” said Representative Alan Grayson, a Florida Democrat and a member of the House Financial Services committee that is reviewing the bailouts. “The conception that guarantees cost nothing is a misconception.”

Obama promised a new era of government openness as he took office last week, issuing a statement telling agencies “to adopt a presumption in favor of disclosure” in responding to requests under the Freedom of Information Act. Treasury Secretary Timothy Geithner and Lawrence Summers, head of the National Economic Council, said they would emphasize accountability and transparency in using the second half of a $700 billion bank bailout fund.

Late yesterday, Geithner’s office put hundreds of pages about the fund on the department’s Web site. They did not include documents describing the guaranteed assets.

Read the rest:
http://www.bloomberg.com/apps/news?pi
d=newsarchive&sid=alINrCmj3dgU