Banking And The Acquisition Of Toxic Assets By The Us Government

1461 words - 6 pages

October 3congress with and bush agreed on Tarp authority to spend700 billion to purchase toxic assets from financial institutions (inquiry report).
25...0 billion of tarp to under newly formed Capp (explain) and end of 2008 tarp 205bilion in 707 financial institutors...i9k (inquiry report)
Tarp was to reduce availability of credit as well that assisted demand aggregate output and assist employment.

pg. (84 and 85 with regard to tarp and stimulus Thomas Sowell the housing boom and bust)

In 2008 ( ) large Investment banks, insurance companies and (holding companies) cuhs as Aig, Citigroup, Merrill Lynch suffered substantial loss from the subprime mortgage market corporate neglect of risk management (inquiry report )

As of February 2009 the largest recipients of Tarp were JP Morgan (25 billion) wells Fargo (25 billion) Aig (40 billion) Bank of American (45 billion) and citgroup (50 billion) however the government the money was also used for bailing out General Motors and other Non-Financial enterprise. In Adam Smith warned that the fund set aside by British Government for paying off the national debt was "an Obvious and easy expedient " to be "misapplied " to other purpose. And David Ricardo objected similarly on the grounds “we have I fear, neither wisdom enough nor virtue enough “for such a plan and such funds "has encouraged expenditure “and is "delusional" (Housing boom) pg. 84-85



maybe include tarp from his perspective? And focus on tarp? And its effectiveness> (Paul mason meltdown

I think it remains a very bad bill. It is a disappointment, but not a surprise, that the administration came up with a bill that is again based on trickle-down economics. You throw enough money at Wall Street, and some of it will trickle down to the rest of the economy. It’s like a patient suffering from giving a massive blood transfusion while there’s internal bleeding; it doesn’t do anything about the basic source of the hemorrhaging, the foreclosure problem. But that having been said, it is better than doing nothing, and hopefully after the election, we can repair the very many mistakes in it.

— Joseph Stiglitz, Nobel Laureate Joseph Stiglitz: Bail Out Wall Street Now, Change Terms Later, Democracy Now!, October 2, 2008

Deregulation

In September Merrill Lynch had just been taken over and The Federal Reserve Instructed Morgan Stanley and Goldman Sachs to convert themselves o bank holding companies subject to its supervision and gain access to the discount window.pg. 69 Howard the financial crisis)

Since the 1960s attempts were made to get around Glass -Stiegel act prohibiting banks from underwriting securities ; but in 1987 restriction were eased and in 1999 congress passed the Gramm-leach –Bliley act which basically repealed the Glass Stiegel. When the Federal Reserve converted investment banks into financial holding companies with access to the fed funds...

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