Inspire Political Discourse

Break up the big banks?

Economist, Paul Krugman:

Clearly, there was a massive increase in financial concentration, with a few true behemoths emerging. It’s easy to argue that this creates moral hazard, because the giant firms know that they’re too big to fail – which is also an easy slogan to remember. The idea that size is the problem has gained a lot of credibility from Paul Volcker, who personally embodies the truth of too big to fail (if you’ve ever met him); more seriously, Volcker has argued strongly that the repeal of Glass-Steagall, allowing financial firms to grow big in part by merging conventional banking with investment activities, set the stage for the crisis.

My view is that I’d love to see those financial giants broken up, if only for political reasons: it’s bad to have banks so big they can often write laws. But I’m not sold on the centrality of too big to fail to the crisis, for reasons best explained in terms of the second doctrine.

Economist, Simon Johnson:

There is no social value to having banks above $100 billion in total assets and we all now understand the danger of allowing banks to become 10 times that size – let alone entering the $2-$3 trillion range; we will gradually and responsibly force our biggest banks to become smaller.  This worked for Standard Oil – no one can claim it hurt the oil industry.  And who would really want to go back to having AT&T run a monopoly in any part of telecommunications?

How do we hate thee?

Five of the worst: the banks/financial services firms that brought us to the Brink.

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Obama: Our Capitalist President

Obama is about to rake in the big money for U.S. taxpayers. [begin sarcasm] He's such a communist. [/sarcasm]  Via The Washington Post, bolding is mine.

The Obama administration is making final preparations to sell its stake in the New York bank¹, according to industry and federal sources. At today's prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.

On paper, the government's 27 percent stake has grown in value to $33 billion. The size of the deal in the works has Wall Street buzzing. Only the stock offering by Japan's Nippon Telegraph and Telephone, which raised $36.8 billion in 1987, was larger, according to Thomson Reuters.

¹ One of the largest Citigroup shareholders is Saudi Prince Alwaleed bin Talal².

² Prince Alwaleed is the second largest shareholder in News Corp.

Citigroup and the Gov Reach a Deal

:: Citigroup agreed to exchange up to $25 billion in emergency bailout money that the government provided Citigroup Inc. for as much as a 36 percent equity stake in the bank. The reasoning behing it:

The administration decided to restructure the bailout package for Citigroup again in the hopes that converting $25 billion of preferred shares into common stock would give investors more confidence the bank has sufficient capital reserves to withstand mounting losses on its holdings of mortgages and other loans. While the conversion to common stock will dilute current shareholders' investments, a wider equity base could calm investors since there would be more reserves in place to guard against further losses as the economy sours.

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Political News Summary: Tuesday, January 27, 2009

:: Rush Limbaugh copies GOP liars, makes false claim that ACORN is mentioned in the stimulus and will receive $4.19 billion. What a sad loser cherub-cheeked Rushie is...... From Media Matters:

Summary: Parroting GOP talking points, Rush Limbaugh falsely claimed $4.19 billion of President Barack Obama's economic recovery package "is going to ACORN." In fact, the bill does not mention ACORN or otherwise single it out for funding.

TAGS: Rush Limbaugh, Conservative Pundits, GOP/Republicans, President Obama, LIES,
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Daily Political News Round-Up - Monday, November 24, 2008

►Joe Biden's longtime aide and friend, Edward Kaufman, has been named to replace him in the senate.

“Delaware Governor Ruth Ann Minner announced on Monday that she would name Mr. Kaufman, the senator’s chief of staff for 19 years and a close personal friend, to fill the vacancy through 2010. Mr. Kaufman, 69, said he intended to retire after two years, leaving opening the possibility that Senator Biden’s son Beau, the state’s attorney general, could run in 2010.” NYT

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►According to ABC News, Susan Rice will likely be Obama's UN Ambassador.

“ABC News has learned that Dr. Susan Rice has emerged as the leading candidate to be President-elect Obama's nominee as U.S. Ambassador to the United Nations.” Jake Tapper - ABC News
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►Obama announces economic team appointments - Obama has formally announced the appointments of Tim Geithner as Secretary of the Treasury, Larry Summers as Director of the National Economic Council, Christina Romer as  Chair of the Council of Economic Advisors, and Melody Barnes as Chair of the  Domestic Policy Counsel.  ABC News, live. 12:10pm EST.

View the video and the transcript here.

:: Melody Barnes to Run Domestic Policy Council »Think Progress
:: Obama Introduces His Economic Team  »HUFFPO
:: Obama announces economic team »Jake Tapper - ABC News

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►Yet another big bail-out of a financial services company announced by President Bush this morning. Citicorp is the latest to be added to the taxpayer dole. On the plus side, the stock market reacted favorably to the announcement.

“Nov. 24 (Bloomberg) -- U.S. stocks climbed for a second day after the government said it will guarantee $306 billion of troubled Citigroup Inc. assets and Democratic lawmakers pledged to pass an economic stimulus package by January.” Bloomberg.com

:: Massive effort to rescue Citigroup »HUFFPO
:: Regulators approve a radical plan to help Citigroup »NYT

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►P-E Obama has appointed Professor Christina Romer, of UC Berkeley, to Chair President Elect Obama's Council of Economic Advisers. Great choice, kudos to Obama.

“Romer wrote, if not the book, at least the chapter for Encyclopedia Britannica on the Great Depression [pdf].” HUFFPO

:: Obama names Romer to lead Council of Economic Advisors »NYT
:: Obama appoints Christina Romer »Jake Tapper - ABC News

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►Bronx burough president, Adolfo Carrion Jr., considered for cabinet appointment.

“Adolfo Carrión Jr., the Bronx borough president, is being considered for a senior position in the Obama administration, possibly as secretary of housing and urban development, people involved in the transition said on Saturday. Mr. Carrión was elected Bronx borough president in 2001 and re-elected in 2005. He is one of several prominent Hispanic officials reportedly under consideration for a cabinet post; Gov. Bill Richardson of New Mexico, who is considered the country’s most influential Hispanic politician, is a contender for secretary of commerce.” NYT

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President-elect Obama Formally Announces Economic Team - Video and Transcript

TRANSCRIPT OF OBAMA REMARKS

“Good morning.

The news this past week, including this morning’s news about Citigroup, has made it even more clear that we are facing an economic crisis of historic proportions. Our financial markets are under stress. New home purchases in October were the lowest in half a century. Recently, more than half a million jobless claims were filed, the highest in eighteen years – and if we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year.