Comments on: Awkward story for Barney Frank

By: Seth

Seth — Fri, 31 Jul 2009 16:40:00 +0000

Exhibit A: Clever people are capable bad things. What’s scary is he gets by with it.

I like the Menendez brothers reference, but I think it was Russ or Don who said it even better on one of Stossel’s pieces, something like, “It’s like asking the arsonist to help put out the fire.”

In this case, it might be more like asking the arsonist to be fire chief. You never know when he’s going set your house on fire so he can come to the rescue.

By: vidyohs

vidyohs — Fri, 31 Jul 2009 16:29:50 +0000

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.3200:

BTW there is the link to the entire HR 3200, in searchable links just like the USCODE at the Cornell University site. If you want to look in the proposed healthcare bill for any particular thing, it is easy.

By: Mark T

Mark T — Fri, 31 Jul 2009 16:12:55 +0000

Although the pfd was worthless and a bad investment, federal banking regulators encouraged banks to hold it by treating it as Tier 1 Regulatory Capital, thereby enabling banks to lever 30:1 against it. There was $4B of pfd which meant $120B of debt against it in the banking system. Regulators’ decision to wipe it out on Sep 8 when they took over FMN and FRE was what triggered the great credit crisis — $120B of debt had to be paid down, because by the end of the monthbanks had to report compliance with their capital ratios, so they started to hold back making new loans and calling whatever they could for repayment. A week later, Lehman went down and the AIG bailout. Later in the month, Wa Mu and Wachovia. All stemmed from the mishandling of this preferred. The cost of these two mistakes – encouraging banks to set their table of leverage with FNM and FRE pfd and then yanking the tablecloth out from under them — wound up in the many hundreds of billions. This is a great example of a regulatory catastrophe.

By: vidyohs

vidyohs — Fri, 31 Jul 2009 14:40:00 +0000

For more on government idiocy check out this on Stossel’s Take.

http://blogs.abcnews.com/johnstossel/2009/07/everything-is-rationed.html#comments

By: Methinks

Methinks — Fri, 31 Jul 2009 13:55:00 +0000

No, the problem with the stock prices did not start with the takeover. Stock holders are residual owners of the company and there was no residual left. Fan & Fred were bankrupt. Are bankrupt. Without the the take-over, the stock price would be zero.