Saturday, Apr 25, 2009
Battling the worst financial crisis since the 1930s, the government has committed more than $11 tril
Forbes: Fed says gov't ready to save stress-tested banks
The Federal Reserve on Friday said the government is prepared to rescue any of the banks that underwent "stress tests" and were deemed vulnerable if the recession worsened sharply. The Fed, in outlining the tests' methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won't be allowed to fail - even if they fared poorly on the stress tests.
The Fed reinforced its view that major financial firms are "too big to fail," and the government must do whatever is necessary to save them, said former Fed examiner Mark Williams.
Posted by devo @ 01:40 PM (489 views) Add Comment
2 Comments
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1. quiet guy said...
Peter Schiff has started his own YouTube channel and posted yesterday.
In his first YouTube video, Schiff asserts that the bank stress tests use 'worst case' scenarios which include:
- 5% GDP growth in 2010 (yes 5% growth - not a fall!)
- 7% drop in house prices in 2010
- 10.5% unemployment by the end of 2010
Remember the numbers above are supposed to be as bad as it can possibly get.
As Schiff points out, these 'worst case' scenarios aren't really all that bad, considering the way things seem to be going now hence the tests do not deserve to be taken seriously.
http://www.youtube.com/watch?v=J5vmYNFWpYA
(talk about banks stress tests start at 02:53)
2. devo said...
If government bailouts truly rescued companies, jobs and the economy, Washington might be able to argue that they worked.
But, unfortunately, despite all the money spent, lent and guaranteed, these companies are going bankrupt anyhow.
The prime example: After throwing billions at failed automakers last December, Chrysler is now just days away from bankruptcy, and General Motors could be close behind.
Under an agreement with the U.S. government, Chrysler must restructure its debt no later than next Friday or file for bankruptcy. But the company’s creditors are stubbornly refusing to accept stock in the failed company in lieu of payment.
Meanwhile, an eerily similar scene is being acted out at General Motors: Despite the $13.4 billion Washington gave the company last December, GM is now facing a June 1 deadline to restructure or to file for Chapter 11.
Think of it: In the next 37 days, it’s likely that not just one, but TWO of our nation’s largest companies ... two of our largest employers ... will go broke despite the biggest auto industry bailouts in history!
The lesson is clear ...
These Bailouts Don’t Save Failed Companies.
But They Do BANKRUPT Our Children!
Martin D. Weiss, Ph.D.