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SIGTARP Report: Lenders left Tarp too soon, says audit
(FT/Huffington Post) – SIGTARP’s findings do little to change widespread impressions that the government’s Wall Street rescue handed out billions of dollars in taxpayer funds without extracting lasting change in return, with many institutions able to continue operating much as they had before the crisis.
Citigroup, Wells Fargo, PNC and Bank of America successfully lobbied to leave the federal bailout program early in 2009, even though the Federal Reserve Board and the Federal Deposit Insurance Corporation had recommended they take additional steps to shore up their assets. According to SIGTARP, in 2009, these four banks repeatedly tried to leave the bailout program, also known as TARP, ahead of schedule, claiming that the stigma attached to the bailout would damage investor confidence in their stability.
Bank of America was especially persistent, submitting 11 separate exit proposals to the Federal Reserve Board in less than a month. The banks, particularly Citigroup and Bank of America, also expressed concern that if they stayed in TARP, they would be subject to the program’s restrictions on executive compensation.
Between December 2009 and February 2010, all four banks were allowed to repay their bailout funds and leave TARP, even though doubts remained about whether they’d taken sufficient steps to secure a big enough safety cushion of capital. In the end, the process by which these banks exited TARP was “ad hoc and inconsistent,” the report says.
BofA exited Tarp on December 9 2009, when its share price closed at $15.39. It has since plunged about 60 per cent. It closed at $6.35 yesterday.
Finance regulator crafts new derivatives rules with outside help
(Sunlight Foundation) Oct. 14, 2010 – Morgan Stanley representatives attended sixteen meetings, according to the disclosures. Morgan Stanley recently decided to move parts of its derivatives trading desk from the outside broker-dealer where it is currently housed to the larger umbrella of the bank itself. The bank is also viewed as the bank least hurt by any new regulation of derivatives trading.
The other bank which is expected to feel little pain from new regulation is Goldman Sachs. Goldman representatives also attended sixteen different meetings with the Commodity Futures Trading Commission (CFTC). Among all bank holding companies, Goldman Sachs is the most dependent upon trading for revenue with estimates that $11.3 billion to $15.8 billion of their 2009 revenue–$45.2 billion–came from derivatives trading alone. Goldman’s representatives were often accompanied by Peter Malyshev, a former CTFC staffer-turned-lobbyist.
"But I will not let myself be reduced to silence."
