dagblog - Comments for "Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?"

thanks for the clarification!

Obey — Mon, 06 Apr 2009 23:49:54 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

thanks for the clarification! ;0)

Either one us might be

flavius — Mon, 06 Apr 2009 23:46:55 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

Either one us might be right.

The starting point of this exchanges was Black's repeated statement that Geithner&co are breaking the law by not putting banks into receivership that should go there. He never specified further the "why" that led to the "should" and Moyers didn't ask him

My supposition is that Black would have said that they should go into receivership because they're insolvent. If so , that rationale was undermined by the change in GAAP. I quite agree that changing the application of an obscure accounting standard doesn't change the real life condition of a bank holding toxic assets. But it
does remove its eligibility for receivership under the law Black quotes.

Sure I could be wrong, Black could have had some other grounds in mind. But if the grounds were technical insolvency,the FASB change eliminates that and also eliminates Black's case for claiming that Geithner is acting illegally.

I don't think anyone has

oleeb — Mon, 06 Apr 2009 22:18:44 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

I don't think anyone has suggested Obama is "trying" to screw us. He is screwing us with these bad policies and appointments, but I don't think anyone claims Obama intends that. I thnk he's basically outsmarted himself by putting two foxes in charge of the henhouse and he's screwing himself in the bargain too (politically speaking).

This idea that we should "trust" these guys because they know more is amazing to me. The banks "know more" than the government so why don't we just let the banks themselves do whatever they want? It's not very logical. But then, why is it that we don't know more? It has been about 6 months and still no substantive information except that which was extracted from the banks (not treasury) against their will. There's a reason so many people smell a rat. It's because there's a rat.

"Krugman and others who

Obey — Mon, 06 Apr 2009 21:21:34 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

"Krugman and others who claimed they were insolvent did so prior to the FASB change at which point I have no doubt banks with a majority of the country's assets were insolvent since the sub prime mortgages exceeded their capital and right now the value of those sub primes is essentially zero."

WHAT?! The FASB change involves changes to how banks must report the value of their assets, not changes to the value of the assets themselves. Their value is a function of expected cash-flow, and fair-value accounting is the closest thing to an honest appraisal of those expectations. If the assets were worth x dollars before, they are worth x dollars now. The FASB decision is irrelevant to the question of solvency. It merely makes it easier for banks to lie about their state of solvency, by parking assets at level 3.

I don't know of anyone who feels confident the big banks are solvent. I do know of a lot of people who think these banks can work their way out of insolvency (for instance Hempton) over the course of a few years were we to suspend fair value accounting. And I know of a lot of people who think we should hand them a lot of money to bring them back into solvency. Geithner has decided to do both - hence the happiness all round.

It looks like the "OR"

GregorZap — Mon, 06 Apr 2009 20:50:23 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

It looks like the "OR" section allows for Obama and whoever to decide a different alternative then conservatorship or rereceivership. This suggests the action is not required, but certainly an option and I could go with it.

On the other hand, there is

cmaukonen — Mon, 06 Apr 2009 19:56:16 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

On the other hand, there is no reason to assume that Citibank Federal Savings Bank is insolvent.

From Wikipedia

A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors.[1] More specifically, a bank fails economically when the market value of its assets declines to a value that is less than the market value of its liabilities. As such, the bank is unable to fulfill the demands of all of its depositors on time.

The failure of a bank is generally considered to be of more importance than the failure of other types of business firms because of the interconnectedness of banking institutions. It is often feared that the effects of a failure of one bank can quickly spread throughout the economy and possibly result in the failure of other banks, whether or not those banks were solvent at the time. As a result, banking institutions are typically subjected to rigorous regulation, and bank failures are of major public policy concern in countries across the world.

While we should listen to

demosaur — Mon, 06 Apr 2009 19:44:50 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

While we should listen to what Black has to say, the issues are also more complex than his appearance on Moyers led people to believe. There is a gap between unethical behavior and criminal behavior. Semantics maybe, but an important distinction to make.

I have to agree with flavius.

pol — Mon, 06 Apr 2009 19:33:44 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

I have to agree with flavius. The Obama administration has far more information about what is going on with this financial crisis than anyone here, including myself, or Misters Black, Moyer or Krugman. I do not believe Obama is trying to screw us all; neither are Summers or Geithner. It's time to do away with the circular fireing squads and let Obama and his team do their jobs.

I think this approach leads

oleeb — Mon, 06 Apr 2009 19:21:44 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

I think this approach leads to being hornswaggled as we are being right now by Geithner and Summers and by extension: Obama. Those guys are no more like people like us than the people they replaced. It's just the Democratic members of the same gang of people who benefit at the expense of the people and the nation.

I think it's more than

oleeb — Mon, 06 Apr 2009 19:19:05 +0000

In reply to Why Haven't we Seen More of Prof. Wm. Black on TPM? Why not Help Focus Attention on What he has to Say?

I think it's more than suspiscion frankly and I haven't noticed Krugman changing his tune on insolvency. The central point that the Krugman's and Black's are making is that the only reason the major banks are not insolvent is the massive, ongoing bailout which is covering up their insolvency as the Japanese did in their crisis in the 90's for very similar reasons.