Posts Tagged ‘bailouts’

Why no transparency? Here’s the answer

April 6, 2009

Last month I posted about a conversation Terry Gross had with Gretchen Morgenson, a business editor for the New York Times about why the Treasury Department under Obama, in the new era of transparency, is doing the opposite, stonewalling on information about how bailout money is being used.  At that time I posed the question, why?  My first quess was because the government was afraid people would panic if they knew the truth. 

Now William Black, a regulator involved in the saving and loan situation back in the late eighties, affirms my guess in an interview with Bill Moyers.

WILLIAM K. BLACK: Absolutely, because they are scared to death. All right? They’re scared to death of a collapse. They’re afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we’ll run screaming to the exits. And we won’t rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it’s foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, “We just can’t let the big banks fail.” That’s wrong.

Transcript

Depressing but important article on AIG

February 28, 2009

Of all the financial debacles of September 2008, the most infuriating has to be AIG.  One, because as an insurance company it was suppose to be in the business of providing stability for the risk-laden world of financial wheeling and dealing but instead it destroyed that stability and two because its the the debt that keeps on giving.   Taxpayers have spent $150 billion already on this monster and there is talk that we will spend another $100 billion more before the company stabilizes.

Worse, as Joe Nocera explains in his great column about AIG, the government is propping up the insurer’s bad lending practice because if it doesn’t, it risks destroying the fragile modicum of stability in the financial markets.

Article