Finally, Some Disclosure from Companies That Received Bailout Funds

Taxpayers are getting angry, yet again.

And why shouldn't they?

First, it was lavish spa parties thrown by AIG executives whilst blood ran cold on Main Street. Then it was the auto Big Dogs from Ford (F), General Motors (GM) and Chrysler, cups-in-hand, flying to D.C. in their private jets.

Now, in what promises to be the "next big thing" on that ever-enlightening and continuing reality-television program, "Top Execs Go To Washington To Explain Embarrassing Moments," let's all get the popcorn and beer ready for the next episode.

Subtitle: "We Banks Didn't Reveal Specifics Of How We Spent The Bailout Money Because You Didn't Say We Had To, Daddy!"

Next month, as Senators' Dianne Feinstein, D-California, and Olympia Snowe, R-Maine, roll out legislation compelling companies that received money from the $700 billion bailout fund to report exactly how they have spent it, simple logic dictates that this will also lead to a parade of major bank executives onto the "boob tube" in front of the entire nation, as was similar to what happened with those "wild 'n crazy guys" at AIG and Auto Land.

Maybe, Vik Pandit, former-studly star of "If I had To Do It All Over Again, I Swear I Would Have Listened To Charlie Gasparino" - and now producing the hit day-time soap, "Citigroup 10043"(C), will be there. How about, Ritchie Kovacevich and Johnny Stumpf from Wells Fargo (WFC) - whose weekend-rock band recently released the nearly-self-titled, "Ritchie and Johnny Rock Live From The Hait." And, of course, JP Morgan's (JPM) Jamie Dimon, who was recently heard asking one of his employees, "Hey, can you run a check and see if we ever gave any money to that crazy Bernie guy?" could also make an appearance.

So, why are they destined to appear on the TV?

Because Congressional representatives like to get on the TV. All the time. Just like actors do. This, is a given. And bank executives, who probably won't want to be embarrassed on TV in front of a bailout nation of taxpayers, know their date on D.C. reality television is inevitable. This is my prediction, because banks will, at first, resist having to disclose any dirty bailout laundry. And, this, in turn, will cause Congress to turn up the heat to do exactly that.

But, the banks will use their "resistance" as a delay-tactic in order to buy themselves time to actually, finally, get their lending programs in gear- so that, by the time Congressional pressure boils over, the banks' top executives can roll into Washington with a bunch of "Well, look- see? We've already begun to do this. And we already did that. So whatever we haven't yet done, sorry, but, you never said we had an actual time-table to get things going."

Therefore, it is my belief, now that the story of a Congressional witch hunt has broken, lead bank executives are, as we speak, scrambling to "tidy their rooms and make their beds" before Daddy gets home. You know: do everything they were supposed to be doing these last few months. All those things that will immediately kick-start the mortgage, "re-fi," consumer loan and commercial loan sectors - and turbo-charge overall market liquidity.

This couldn't have come at a better time, either. The markets are confused and sad. Taxpayers are extremely nervous. We haven't yet gone completely over the cliff. But, the slowness of banks to get their acts in gear, with impunity, if you will, has made Wall Street players and Main Street folks angry - and everyone wants, nay, demands results.

Period.

Why the government gave the banks all that money in the first place without also insisting on the very disclosures they're seeking now, and why no meaningful oversight over these banks was ever set up from the "git-go," is a whole other story. One that constituents should be demanding of their representatives - en masse.

But, in real-time, this is now. And we'll take what we can get.

And what we're finally gonna get are results. Because "shame" and "world-wide television audiences" don't mix well with corporate executives - especially now that they've all seen the same reality TV show that all we little people have been watching, too.

So, listen up all you good-American spending-wannabees out there (and you know who you are). Santa Claus just came to town, and he just gave us all the biggest, best, baddest and most practical gift he could fit on his sled.

Ssshh, I'll give you a hint (but, don't open it 'til Christmas).
Okay, it has something to do with liquidity.

That's spelled:

"l" for "loans are what banks can really do when they are forced to"

"i" for "I can't believe we gave banks all that money and they haven't used it the way they were supposed to"

"q" for "quit messin' around with my wallet. Else, my wife's gonna leave me.

"u" for "under a moonlit sky, I thought I saw Elvis riding shotgun with Santa.

"i" for "I know bank executives are rich, but, what am I?

"d" for "does this mean we also get iPods for Chanukah this year?

"i" for "I think 2009 is going to be a Good Year after all, just like Kudlow said.

"t" for "trade in your Prius for a brand new Ford Fusion, and show Michael Moore he was all wrong about Michigan.

"y" for "you'd better not be snoopin' under that darn X-Mas tree before we're all gathered to open our presents!

Ho, ho, ho!

Merry Christmas to you all.
Happy Chanukah...And, have a wonderful Happy New Year!

Disclosure: none

Comments

[Paul Killinger:]

Funny how when corporate execs visit DC they're held up to ridicule by the Congress and the press, but when the GOVERNORS meet Obama in Philly (I think it was) to beg for bucks, no one said a THING about THEIR mode of transport.

Maybe Arnold drove one of his classic cars from CA, and Sarah arrived by dogsled. Not to mention Speaker Nancy's private luxury jet that WE'RE picking up the tab for.

If our elected elite were so smart, how come something like 40 of our 50 states, much less the feds, can't balance their budgets? Last I checked, they're in the same bailout line as Detroit and the Wizards of Wall Street.

My own view is college degrees aren't all they're cracked up to be anymore. I suspect most politicians are lawyers or political science graduates, and our esteemed scribes hold degrees in journalism. The guys from Wall Street hold MBA's, mostly from Ivy League schools (as are both our incoming and outgoing Presidents).

Right now, they ALL deserve a grad of F, so far as I'm concerned. The Wall Streeters for melting down the WORLD'S financial system, the Congress for letting them do it, and the press for failing to tell us about it.

2008 Dec 25 11:12 AM

[gordon:]

The banks are doing exactly what I would do if I headed one. Remember, the Fed is paying INTEREST to them on the reserves, you hoard it! Year end bal sheet is paramount, and they never know when the Fed/Treasury will change the rules on them, ie: forcing mark-market on their CDSs/ bad loans. Seems logical to me.

2008 Dec 25 12:29 PM

[gordon:]

correction: the interest the Fed pays banks/excess reserves is now zero, we'll see if
this spurs lending soon.

2008 Dec 25 01:29 PM

[sleepless_o...:]

I should know:

You are right about the blah, blah, blah. However the article is very entertaining and this is Christmas, the time when we need a little entertainment befor we waken to grim reality tomorrow morning.
I appreciate Mr. McDuffy's efforts here.

2008 Dec 25 04:04 PM

[User 323649:]

GM is in a LOT better shape than people think.....GM stock is a HUGE bargain ....Now is the time to buy.

2008 Dec 25 05:27 PM

[Trent Tucker:]

We may be in a recession but we are still in posession of our faculties. So why so many sane people in a recession? It is a pattern of human excess meeting opportunity and now that 100% mortgages and a credit score system that is easily rigged to allow real estate speculation by anyone with a credit score above 700 has melted down the entire global economy, does anyone want to contest the ripple effect often mentioned by, I hate to say this, Reagan. Remember, a rising tide floats all boats? It works in reverse as well. Given chance and opportunity any sane person takes a shot at getting rich. The rules and regs of real estate and mortgage law were altered to allow for that. (100% financing, no down payment, basically the same structure Wall Street uses when it speculates with other peoples money) So many people to take a chance. Main Street has come to Wall Street.. Housing was turned into real estate gambling and what is a true gamblers only discipline? No more money, a recession. Real estate law was altered to allow access to housing for people who previously could not qualify but they didn’t cause this. The speculators who figured out quickly how to gin the mortgage apps. and gambled on rising housing prices with multiple acquisitions caused this . Wall Street joined because they were searching for a new investment world. You see, they have been steadily losing their client base. The larger firms have been losing 15% of their client base annually for years. Previously marketing was able to replace them. The internet changed all that. Enter collateralized mortgages(The Glass Steagall act had to be repealed to allow Wall Street access to mortgages. That happened in 1999). And it just so happened the banks have been exploiting their clients for years with 20% and higher credit card interest rates (be late or have a credit score change and you saw over 30%) and it has now all caught up. A meltdown, fiscal fission, but where did it begin? The rules were changed, (Actually it began when the brokerage firms began exploiting their clients to such extent they could no longer replace their dwindling client base and they had to search for happier hunting grounds) and who makes the rules? There is hardly a recession or depression not caused by government intervention of some kind, Almost every monetary depression or recession of consequence found it origins in the failure of governmental judgement. Or was it a faillure of judgement. Maybe it was a cozy alliance of influence, lobbyist, powerbrokers, whatever you care to call them, I prefer money launderers which actually implemented the changes to benefit the few at the expense of many.. However, change the rules, and the law of unintended consequences comes into play and now the financial industry is melting down as a result of the very changes it lobbied for.(Remember Glass Steagall, repealed 1999 and. written in 1933 to prevent what just happened. Gee, it's worked for 70 years,let's repeal it.). No matter what system of government it is, there has to be the opportunity So, again, where did it begin? Basically in in the backrooms of your, excuse me our, congressmans office as the paid lobbyist of the largest financial firms exerted their influence. to create opportunity where previously there had been none.And why? Because they served their clients so poorly and exploited them so completely they were fleeing the financial firms and the firms were forced to explore other happpier hunting grounds. And don't blame their financial consultants. Management at the firms created this, the brokers just tried to survive it. The brokers are going independent now. They are fleeing the firms as well... When the easter block was abondoned to Stalin the Polish summed it the best, “Under capitalism man exploits man. Under socialism the reverse is true.”-Polish proverb author unknown. Make me believe the Poles know what the definition of is, is Also makes me wonder who their broker was..
Trent Tucker
author Wall Street Dancers
www.strategicbookpubli....

2008 Dec 25 10:26 PM

[Ames Tiedeman:]

Ford still has the highest short interest on the NYSE at over 268 million shares sold short..

2008 Dec 26 10:25 AM

[jackooo:]

Forget the auto ceos coming to DC to be grilled. I would much rather see the common man grill the fools in congress that gave the money away. Pelosi and her jet would be #1.

2008 Dec 26 11:57 AM

[Poor Dude:]

It's "Game Over" for western civilization at this point. It's just that most people haven't quite caught onto the concept yet. And don't/won't know how to react in the "New World Order" that nobody quite anticipated.


They'll adjust to reality, given time.


The bosses of publicly-traded corporations are still handing themselves huge bonuses as the companies they lead operate in the red and are on the verge of bankruptcy.


The "lobbyists" are still headed to Washington, with their briefcases full of cash in hand.


The politicians are still handing out money from the public Treasury, left and right (in exchange for the "campaign contributions" from all those lobbyists).


They are all riding it (and us) to the very end.


If you're bored and have time on your hands, read Ayn Rand's "Atlas Shrugged". It explains the whole process, from start to finish. And we are now entering the "end game", where the lights go out and a new civilization gets its foothold.


I give us through 2009, although the end may very well come sooner than that ....


:(

2008 Dec 26 10:58 PM

[Augustus:]

There is no way to answer the question about "which loans did the Fed money support." Neither can the banker tell you which loan was made with the money you put in your CD. Anyone asking the question is exhibiting that they know nothing about banking.

2008 Dec 28 08:48 PM

[krzymike:]

The Fed forced some banks to take the money - Wells Fargo was one of them. This is more effort at government control of private business. Let the weak fail and the strong survive. The down side would be shorter in duration. Government interference and bailout will only make the recession longer.

2008 Dec 30 01:51 PM

[mike hurd 4...:]

we need to boycott all companies that receive bailout dollars if we want this to stop. congress won't stop it but if the word gets out that "americans" will boycott all companies that receive bailout dollars they won't want them.

Jan 03 10:04 PM

[gtmcduffy@g...:]

On Christmas Eve 2008- I wrote the aforementioned article- and next week- on February 11, 2009, the "bailout bank" CEO's are coming to D.C.

finance.yahoo.com/news...

Get out the popcorn and beer...

Feb 03 05:28 PM