Round and Round
The NYPost reports the two biggest banking wrecks, CitiGroup and Bank of America, have been aggressively buying toxic assets with bailout money, and goosing the MBS auctions.
You can imagine why this might get people upset. I suspect its rather unavoidable. These banks have investment wings, and they are trolling for opportunities.
“As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post. . . But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.
One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.
Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids . . .”
If anything, this argues against bailouts and in favor of nationalization, firing management, wiping out S/Hs, zeroing out debt, haircutting bond holders, etc.
The games never end, especially when you keep handing the players a new stake after they’ve lost the last one.
And if C and BAC are buying up these assets now, what’s to stop them from selling them to the Treasury at an even higher price when Timmy goes ‘garbage shopping’ with his fancy new plan?
Hand me that duct tape…
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If someone gives you the key to the Treasury, well you might as well use it. This is all beyound disgust. I can imagine someone getting a big bonus based on screwing the taxpayers and country.
Comment by John — 3/26/2009 @ 9:28 am
One of the points that gets missed a lot in this discussion is that the idea of “Bonus” to most American’s is “above and beyond.” Many of those getting 1mill and larger seem to think “Bonus” means “part of my negotiated salary” as in Guaranteed if I do my job.
So while I read that one executive of AIG was disgusted at the lack of support from the AIG CEO over the bonus program, he seemed to miss the point that whether or not he was responsible for the losses, giving out bonuses to a company that is being bailed out BY THE US TAXPAYER, negates any ability to go “above and beyond.” The company has FAILED and bonuses, especially of such a large amount cannot be part of the program. The executives and others in these companies that have failed need to realize this is not “business as usual.” The taxpayer all along has been trying to be heard. Business as usual in a failed company is an insult. In any company that wants the right to pay huge salaries and bonuses had best stay private–and not be owned by the taxpayers.
Comment by Maria — 3/26/2009 @ 10:44 am
Is it me, or are the same snake oil salesmen running the country the same one’s running the companies? Hmm… maybe its time we start electing people who aren’t entrenched in crazy schemes to make other people rich off of We The People.
Comment by Andrew — 3/27/2009 @ 6:56 pm
Funny you should say that Andrew — on the very day when the President met with the CEOs of the big banks. I think that answers your question.
Comment by BMB — 3/27/2009 @ 7:02 pm