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Archive for the ‘Henry Paulson’ Category

Hank Paulson Trusts Neither Wall Street Nor Washington

Posted by Larry Doyle on February 6th, 2014 8:46 AM |

Do you ever wonder if those who ‘find religion’ late in life so to speak are trying to conveniently cleanse their souls before making their way to the pearly gates?

I think in the case of public officials, it is fair to ask if the ‘cleansing process’ is done for purposes of resurrecting an image or if the individual is truly engaging in a meaningful transformation.

I ask these questions this morning as I see a headline cross the news wire that none other than former Wall Street titan and Washington heavyweight Henry Paulson now trusts neither Wall Street nor Washington.

Is that right? Well ol’ Hank would seem to be having a ‘come to Jesus’ moment here. (more…)

Hank Paulson’s Recollections: Mile Wide, Inch Deep

Posted by Larry Doyle on August 29th, 2013 8:17 AM |

Might Hank Paulson have selective amnesia or whatever happened to real journalism?

My former question actually could be posed to most pols, bankers, and regulators over the last number of years.  The latter would apply even longer than that.

Well I guess posing tough questions and demanding answers in this day and age would likely leave journalists writing little more than monologues. What a pity.

I see another example of this shallow journalism on display in written reviews and interviews with former Treasury Secretary Hank Paulson. What brings Paulson back on stage?  (more…)

Did Uncle Sam Intentionally Mislead the American Public?

Posted by Larry Doyle on October 5th, 2009 12:40 PM |

“You can’t handle the truth!!”

While the above line by Jack Nicholson in A Few Good Men may have made for good theatre, it makes for lousy public policy. Regrettably, Uncle Sam has utilized that approach in its initial disbursement of funds via the TARP (Troubled Asset Recovery Program).  That opinion is not strictly mine (although I do agree with it), but rather that of Neil Barofsky, the inspector general charged with overseeing the bank bailouts.

The New York Times sheds light on Barofsky’s feelings this morning in writing, Inspector’s Report on Bailouts Says Treasury Misled Public:

The inspector general who oversees the government’s bailout of the banking system is criticizing the Treasury Department for some misleading public statements last fall and raising the possibility that it had unfairly disbursed money to the biggest banks.

A Treasury official made incorrect statements about the health of the nation’s biggest banks even as the government was doling out billions of dollars in aid, according to a report on the Troubled Asset Relief Program to be released on Monday by the special inspector general, Neil M. Barofsky.

There is NO doubt that Uncle Sam, in the persons of Hank Paulson, Ben Bernanke, Tim Geithner, Larry Summers et al, has little confidence that the American public can handle the truth about the overall health of our banking industry.

That said, the lack of transparency and integrity as highlighted by Mr. Barofsky does not come without a cost. What is that cost? Lessened confidence in our regulators and our markets going forward.

I addressed these very topics of financial regulatory transparency and integrity on my radio show last evening. In the process of interviewing former SEC attorney Genevievette Walker-Lightfoot, I made the following comment in regard to the statement put forth a month ago by SEC Inspector General David Kotz dealing with the SEC’s failures on the Madoff investigation. I said:

If that is the kind of face saving self-serving approach, people are going to call foul on it. The real cost is, and I think we are bearing this cost right now whether with the SEC or with FINRA, if you’re not going to be honest with us how can we fully trust that you’ll be honest on a going forward basis?

Now I’ll grant you I guess we don’t have much choice. What are we going to scrap the entire SEC or scrap the entire FINRA and start from scratch? Some people may say that’s what we want to do, but that’s obviously not going to happen.

It does get to the point where there’s got to be total transparency. There’s got to be total integrity. There’s got to be total accountability and if people haven’t done the job or are incapable of doing the job then you know what, for the long haul – and I’m not talking about the next six months but rather the next ten, fifteen, twenty years – people got to go and other people got to come!!

Genevievette Walker-Lightfoot responded:

“I agree. That’s true.”

How about you, what do you think? Can you handle the truth? Wouldn’t you like to be given the opportunity?

LD

Note: the views expressed by Genevievette Walker-Lightfoot during last night’s show are her own personal views and do not in any way reflect her position as an employee of the Federal Reserve Board.

Did Big Ben Bernanke and Heavy Hank Paulson Break The Law in Buying Ken Lewis’ Silence?

Posted by Larry Doyle on April 28th, 2009 12:15 PM |

The intrigue involved in Bank of America’s takeover of Merrill Lynch goes well beyond standard Wall Street negotiations. Did Fed chair Ben Bernanke and then Treasury Secretary Hank Paulson break the law in the process of pressuring BofA CEO Ken Lewis to complete this bank merger? Bloomberg’s Jonathan Weil has easily distinguished himself amongst all journalists in aggressively addressing this topic. Weil pulls no punches in writing One Nation, Under Banks With Justice For No One.

Lewis, as CEO of Bank of America, possessed material non-public information about Merrill Lynch and was obligated by law to release that information to his shareholders. Lewis unequivocally maintains Bernanke and Paulson pressured him not to release that information which would have potentially derailed the merger. Why didn’t Lewis get Bernanke’s and Paulson’s position in writing? Did Lewis ask for it in writing?  Did Paulson and Bernanke knowingly avoid  a legal quagmire by not contractually committing in writing to increased government support for Lewis’ acquiescence?

Weil provides a clear expose of this situation. I commend him! He writes:

The spectacle of Ben Bernanke and Henry Paulson running roughshod over Kenneth Lewis and his minions at Bank of America Corp. raises a pivotal question for all Americans: Is the U.S. a nation of laws, or a nation of banks?

Let’s start by examining the facts disclosed last week in a letter by New York Attorney General Andrew Cuomo while taking pains to present the actions of each player in this drama in the fairest possible light. (more…)

Goldman and AIG

Posted by Larry Doyle on March 21st, 2009 5:49 AM |

There has been extensive speculation that Goldman Sachs unjustifiably benefited from the weakness at AIG over the last 6 months. While conspiracy theorists can and will have a field day with this story, at its core I think Goldman did what any well run firm should always do — protect its shareholders.

While the stock values of Merrill Lynch, Morgan Stanley, and Bank of America flirted with total disaster, Goldman Sachs traded down but bottomed out at approximately $50 a share. That price does not strike me as indicative of a firm on the brink of bankruptcy. As Goldman now reveals, it had significant exposure to AIG but it also significantly hedged this exposure to AIG via other transactions. Thus, Goldman would have been negatively impacted by an AIG bankruptcy but not fatally impacted. (more…)

AIG Contracts a Brain Freeze

Posted by Larry Doyle on March 17th, 2009 9:27 AM |

Given the public outrage over the millions in bonus payments at AIG, is there any doubt that there has been a massive failure to perform by all involved?

When AIG was on the verge of bankruptcy last September, I am willing to bet the topic of employment contracts was not the lead item on the agenda. In fairly short order, though, as AIG was moving ahead with its attempt to sell divisions and repay the government loan, I have to believe outstanding liabilities, such as employment contracts, became a topic of discussion.  

Let’s bring the main players at that point in the process back to the table. What does Hank Paulson have to say? How about Robert Willumstad, former AIG CEO? How about current AIG CEO, Edward Liddy?

Make no mistake, both the government and AIG executives could have imposed their will to renegotiate – if not outright dismiss – any outstanding contracts. How? When an entity such as the government takes over a company, a change of control occurs. That change of control does not unilaterally extinguish outstanding liabilities, but it certainly opens them for renegotiation. The fact that these contracts were not seriously renegotiated is a massive failure to perform on behalf of the government officials and AIG executives. (more…)

Wall Street’s Next Big Trade…

Posted by Larry Doyle on January 4th, 2009 7:45 AM |

Secretary of the Treasury Henry Paulson has become a household name over the course of 2008. Paulson has been roundly criticized for his mixed messages and inconsistent use of funds from the $700 billion TARP (Troubled Asset Repurchase Program).

While most of us have seen more of Henry than we would have ever cared, allow me to introduce you to another Paulson. John Paulson (no relation to Henry) is one of the most highly acclaimed and profitable hedge fund managers on Wall Street. While investment banks, hedge fund managers, and most asset managers were investing in and promoting sub-prime mortgages and the like, John Paulson was “going the other way.” In 2006, he started shorting sub-prime originators, the ABX (the CDS index that tracked the sub-prime market) and the investment banks that most heavily trafficked in this sector. He personally and the investors in his fund made tidy fortunes in the process.

The reason for my introducing you to John Paulson at this juncture is because he wants to enter the world of community banking. One may wonder why a titan from Wall Street would want to enter into the world of regional and community banking.

This past summer, the first large bank to fail was Indymac Bank located in Pasadena, CA. Since then there have been another 24 banks that have failed with another 200 on the FDIC “watch list.”
(more…)

IT’S EASY TO FIND FAULT…especially if you’re clueless!!

Posted by Larry Doyle on December 11th, 2008 10:10 AM |

Given the pressure applied by the general public on elected officials who passed the $700bln dollar TARP (Treasury Asset Repurchase Program) it is not surprising that those very elected officials are now openly critical of Treasury. Nothing like casting a few aspersions to keep the crowd back home somewhat at bay. This statement is not to say that Treasury has not fumbled in certain aspects of this program. That said, as I  have tried to highlight, there are so many holes to fill that one single, albeit massive, “tourniquet” is not going to cover an entire body riddled with life threatening wounds.

Read how  “Watchdogs Chide Treasury on Bailout“…

For Congress to think that the economy would see near “immediate” positive reaction to the injection of capital into the system is both naive and ignorant. I am going to guess that most Congressmen failed Economics 101.

IMO Treasury should not have played “whack a mole” but should have proactively highlighted the areas of need throughout the system. In properly managing expectations it is always better to be as comprehensive as possible and simultaneously “under-promise and over-deliver”. Paulson and Bernanke along with Paulson’s boy wonder, Neel Kashkari, have played way too much defense and not enough offense. The risk they ran in this regard, though, is that they may have “spooked” the markets and “scared” the public. (more…)






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