The Bank Capital Plan

The WSJ reports that the Treasury will buy roughly $125 billion in preferred shares from 9 top financial institutions as part of $250 billion of new equity purchases:

One central plank of these new efforts is a plan for the Treasury to take approximately $250 billion in equity stakes in potentially thousands of banks, according to people familiar with the matter, using funds approved by Congress through the $700 billion bailout bill.

Treasury will buy $25 billion in preferred stock in Bank of America, J.P Morgan and Citigroup; between $20 billion and $25 billion in Wells Fargo; $10 billion in Goldman and Morgan Stanley; and between $2 billion and $3 billion in Bank of New York Mellon and State Street. It was unclear whether the Bank of America stake included Merrill, which the bank has a deal to acquire.

FDIC has a role:

The FDIC is expected to temporarily guarantee new debt issued by banks and thrifts for three years. One of the major problems plaguing credit markets in recent weeks has been a fear among financial institutions that it is unsafe to lend to each other even for short periods of a few days. U.S. officials hope this debt guarantee will remove that fear and encourage banks to start lending to each other again. That in turn could bring down some critical short-term lending rates, such as the London interbank offered rate, or Libor, which is a benchmark for many consumer and business loans.

The FDIC is also expected to temporarily offer banks unlimited deposit insurance for non-interest-bearing bank accounts typically used by small businesses. This would be voluntary and extend beyond the $250,000 limit per depositor that lawmakers agreed on two weeks ago. Banks might have to pay an additional fee for the coverage, though details were still being worked out. The shift brings U.S. policy more in line with other countries that rushed to offer blanket deposit insurance to try and prevent customers from withdrawing large sums of money from financial institutions.

Big steps.

In Asia the Japanese Nikkei, closed yesterday, plays catch-up by rising 13% to 9,931.

In overnight trading S&P 500 Futures continue their mad dash to 1400, rising another 24 points from the 4:15 close to reach 1041.

From the market action I infer that either the markets like this equity plan or they like something else even more.

Comments

[Rick Ballard]

I can't see how the 173 year long Bush Depression could possibly come to an end before he's dragged down Pennsylvania Avenue in chains.

Di McCain and Obama cut some sort of deal two years ago to appoint the people responsible for this?

[clarice]

Bite your tongue, Rick--

Niters.

[Rick Ballard]

Gulp

Government bond prices plummeted and the yen fell as investors ditched low-risk investments to scoop up heavily oversold shares after U.S. stocks posted record gains overnight. In a single day on Monday, global stocks added $1.7 trillion in market value, according to MSCI.

But, but, but - They told me that Treasuries were safe. They told me that the stock market was finished. Cramer said to sell everything and move into a cave.

Gosh, maybe I better sell my gov stuff and buy equities before they're all gone.

Or maybe it's a big bear trap.

[cathyf]

Well, to be fair, Cramer said the bottom would be at about 8500, and that would be time to buy. (That was when he was panicking before he really panicked.)

[Rick Ballard]

If I have to be fair, then I would note that the idiots at Goldman Sachs said oil would hit $150 before the end of the year and that it did, indeed, hit $147. That would not still make them look like anything but idiots when they've trimmed their number to $80 ye with a proviso that it might hit $50.

Cramer is supposed to be for the person new to the market. Does he ever speak about asset allocation and time horizons? I think he does damage by focusing on trading. Trading and investing are completely separate matters and pimping trading to people who don't have the time to actually do it is a signal disservice. He's scared the crap out of people who might be smart enough to buy at lows and actually reap a long term advantage from doing so.

[cathyf]

I've watched more Cramer than I would choose because my husband and son find him entertaining. His schtick focuses very strongly on the underlying values of the companies, and on searching out undervalued industries and avoiding overvalued ones. So it's not just trading -- that is about investing.

I'm pretty skeptical of all that... My idea of investing is a broad mutual fund and you take whatever the market as a whole is giving out...

[Elroy Jetson]

The market is pricing in an upcoming Obama presidency. Maybe not.
Happy days are here again
the skies above are clear again
So let's sing a song of cheer again
Happy days are here again!!
The song FDR used as his theme in the 1932 campaign.
The foreshadows are giving me shivers.

[bmeuppls]

To answer your question... I suggest they like option B "something else even more..."

From Volokh:

The goal is to inject massive liquidity into the banking system. The government will purchase perpetual preferred shares in all the largest U.S. banking companies. The shares will not be dilutive to current shareholders, a concern to banking executives, because perpetual preferred stock holders are paid a dividend, not a portion of earnings. The capital injections are not voluntary, with Mr. Paulson making it clear this was a one-time offer that everyone at the meeting should accept.

I'll make em an offer they can't refuse...

Next they will awaken with a horse in their beds....

Tip o' the day - invest in Cannoli's...

[sylvia]

Good for the markets. If this was some kind of short sell plot that I like to amuse myself by speculating on, it seems that all the governments beat them at their game by banding together and providing the backup to get through this crisis. I think we can get through this and the worst has passed. Of course, that doesn't mean that real estate is still not very overpriced, but hopefully we can engineer a softer landing than this.

I hope Tom, you bought the stocks you thought about buying last week.

[Pofarmer]

I, for one, do not welcome our socialist overlords. An Obama presidency could play all manner of mischeif with this.

[Pofarmer]

Looking at the markets. You can see an increase starting in the Dow futures about Aug 15th. Anybody remember what was going on then? The chart for the last couple of weeks is pretty breathtaking, not only in it's drop, but in it's volatility.

[hrtshpdbox]

"Cramer is supposed to be for the person new to the market. Does he ever speak about asset allocation and time horizons?"

Well, at least he mentions diversification once in a while (within the equity asset class, of course) - but then he'll shift gears and start selling the sizzle again. Cramer's amusing to listen to despite having a very poor track record (it was a couple of years back that someone, I think Henry Blodgett, demonstrated that Cramer had been one of the very few whose picks had lost money in a very good year for the market). But you sense the damage he's caused when you listen to his call-in's; ordinary folks whose interests, psychically and financially, would best be served by a buy-and-hold strategy, who are now devoting too much time of their lives to buy-buy-buy and sell-sell-sell as per Cramer's latest shout.

[Charlie (Colorado)]

Well, the thing is that Cramer was a trader, so when he churns people through stocks with a hold time of weeks, he thinks he's Ben Graham.

[Charlie (Colorado)]

The chart for the last couple of weeks is pretty breathtaking, not only in its drop, but in its volatility.

Y'think?

[steve sturm]

I thought the big problem wasn't so much that banks were refusing to lend to one another, it was banks not lending to Main Street?

While the system sure works more smoothly if banks are willing to deal with one another, Paulson has lost sight (or perhaps, being of Wall Street, has never accepted) that 'Wall Street' isn't the center of the American economy, Main Street is... and this newest rescue doesn't do anything to deal with banks not wanting to loan to businesses and not wanting to make mortgage loans for fear that they're not going to get repaid. If the 'only' problem was banks not trusting one another, that wouldn't have kept banks from making loans out of their deposit base... which I understood wasn't happening

What's next for Paulson, nationalizing Main Street so banks could get comfortable knowing they're be repaid?

[Pofarmer]

Y'think?

Yep, now go look at a Wheat chart. We've been going through this for MONTHS. And remember, those charts determine a good chunk of my income.

[E. Nigma]

Jim Cramer is to Louis Rukeyser as Barack Obama is to......

Well, you figure it out. History and mental health turn the page, I guess.

[Pofarmer]

Paulson doesn't seem to understand that there's a perfectly well known non-socialist mechanism to get the "banks" to loan money.

[badjane]

We continue to receive as many pre-approved credit card and home equity loan offers as we did before the "crisis." Our college age son does as well.

[ben]

"From the market action I infer that either the markets like this equity plan or they like something else even more."

I think what they like is the fact the world as we know it didn't end, and we are rebounding back from the losses due exclusively from the panic component. Ideally the market will stabilize and reflect the fundamentals component of the crisis only.

[Gmax]

Any one seen a list of the nine firms given the offer they can not refuse? I am assuming:

Citi, Wells, BofA, JPM, MS, GS, Bank of NY and two players to be named later once I get the clouds out of my crystal ball. Or someone can just cut and paste the list!

[ben]

Rasmussen shows McCain 5 points down today again. The improvements in the markets and the Acorn and Mahoney scandals could give McCain an uptick in time to get some "comeback" headlines....I still think if McCain can get within 2-3 points by election day he could win.

[Pofarmer]

C'mon Jane.

Don't fall off the economic apocalypse wagon.

[Gmax]

Mellon Bank and State Street Bank?

What about Main Street instead of Wall Street? Hell its all NY and Calif institutions!

[badjane]

Powerline on Obama's dishonest ads about healthcare. People are buying into this.

LUN

[Pofarmer]

What about Main Street instead of Wall Street? Hell its all NY and Calif institutions!

And this is surprising????

It's all about centralization of power, baby.

[bio mom]

Obama is a very dangerous man because his followers do not just support him as McCain's support him, but they worship him in an almost godlike way. And since the press has taken a total pass on fulfilling their duty as objective watchdogs, they will be in real quandry if they manage to get him elected. They will not be able to criticize him because he has become almost a deity. I don't think this is over the top. There is an elementary school in Wisconsin that distributed to their young students a small book that described Obama's selfless life of service. (No attempt to show true selflessness from McCain's decades of real service of course). This is just a hint of things to come. I don't want a god for president. I want a normal person, foibles and all. I am very worried and very frightened by Obama.

[badjane]

Anyone see Matt Lauer with Josh Brolin? I thought I heard him refer to Bush and his "ape-ish" hand gestures.

[badjane]

That would be Brolin making the remark on Bush, not Lauer.

[Charlie (Colorado)]

I thought the big problem wasn't so much that banks were refusing to lend to one another, it was banks not lending to Main Street?

Well, if you don't pay attention, you'll get behind, won't you?

I'll say it again: there's only one credit market. If the big banks aren't lending to one another, then they aren't lending to Main Street. f people are staying away from the low risk, very short term commercial credit market, they won't get into other lending which is higher risk and longer term.

[glasater]

So the WSJ publishes an article on Zero's 95% Solution and the last para says:

Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.

It is unbelievable that people would be "taken in" by Zero's carp.

[Bob from Ohio]

National City Bank in Cleveland is the 7th largest bank in the US. It is in deep trouble.

Why no Treasury love?

[Charlie (Colorado)]

Bad, remember that those "pre-approved" offers don't actually mean they will actually open an account for you.

Po, you were just mentioning the ag commodities futures markets. How do you suppose those get financed? How do the purchases get cleared?

Yeah, I know, someone at the CBOT has a swimming pool filled with money, it doesn't actually, like, go through any banks or credit markets or anything. That's just for Wall Street.

But in the mean time, the TED spread is down 5 percent and the overnight dollar LIBOR is at a 52 week low.

[badjane]

Thanks Charlie.

One of the other campaign issues discussed often in my travels was insurance. One guy told me that under the McCain plan he would lose his employer sponsered healthcare and would "get" $2500 to spend on insurance from McCain which would then be taxed. (He didn't explain how he would get the $2500.) When asked where he got this info and was he confident of its accuracy, he responded it came from his union and therefore was totally accurate.

[bio mom]

Good article from Stanley Kurtz about links to Wright, Obama, and the Annenberg Challenge.

http://article.nationalreview.com/print/?q=YTQ0YjhlOGVhYjQ0OWRhZjI2MmM4NTQ4NGM5Mjg0MzU=

[badjane]

LUN for the Kurtz article.

[cathyf]

Interesting point, Charlie... Stocks settle over a week, currencies have 2-day settlements, but commodities settle overnight. You have just a few hours from market close to when the banks close to finance that day's pay/collects.

If the markets are lock limit down, then you don't have the opportunity to sell out of a long position, either. If your bank can't get an overnight loan to fund your credit line, then you are quickly busted.

(Note that the reverse is also true -- if the contracts are lock limit up, then you can't buy out of a short position, and are equally busted if your bank can't fund your overnight pay/collects.)

I wonder how much of the volatility in the commodities market comes from market makers being unable to count on their credit lines, and, perhaps more importantly, not being able to count on other market-makers' credit lines?

[matt]

I'm going to take a contradictory position. I don't want McCain to win now, even though I just cast my absentee ballot for him.

I want the clown fro Chicago to have it all drop down on his head at once. Maybe, perhaps, just thinking....it will force the idiots on the Left to begin reconsidering their foolish ways.

As a Californian, we're looking at a fiscal meltdown right around the corner. No real way they can blame the Republicans since they haven't had a majority in 25 years. Ahnold promised a top to bottom review of the budget that was never released. I think it's that bad. Whoever gets stuck with this stinker is going to be running for the hills.

If the One comes into office with the mess we're in right now, my only concern is that he starts playing serious games with our constitutional rights. He can appoint Krugman his Sec Tres.If the republicans can get back to their first principles, maybe they can salvage 2010.

[SunnyDay]

About credit offers, jane. My site is a message board all about credit - people are posting that AMEX, Citi, Chase, and others are cutting credit limits of existing customers with perfect payment records and scores over 700. Home equity lines are being chopped also. The credit card companies apparently have internal scoring models that pinpoint "risky" behavior - based on their own statistics, including where you use your card, where you are located, who your mortgage company is, and other factors that have not been considered before when determining credit worthiness.

The problem with this kind of activity for anyone carrying a balance, is that if AMEX drops your credit line to where it's a few hundred dollars over your balance, your score takes a dive, and then other creditors take adverse action because of what AMEX did. Even people without balances are seeing credit lines cut drastically. AMEX recently increased their reserves 100%.

We have a business credit forum too - small businesses can no longer get even net 30 accounts where they used to. People have posted that they travel for business, pull out a card to pay for a room or rental car, and the card is declined - with no notice, no nothing.

We're getting lots of new members who have never had credit problems before, but get on the net and search because of what's happened to them. Some have accounts that are 15-20 years old.

There's a lot of speculation as to why, but I think if the banks can't maintain the reserves they need, and can't securitize the debt they have, they need to cut their exposure regardless of the individual's good history.

This is based on anecdotal evidence, but we have about 70K members, so we get pretty good info on trends in the consumer credit industry. A lot of what you read from WSJ, Money Mag, etc is based on interviews from our members. We provided background for the PBS expose on credit card practices a year or so ago.

It really is getting tighter, even though people are still getting offers in the mail. Underwriting is a lot tougher, and sometimes it's done AFTER you get the card or credit line.

[Pofarmer]

f people are staying away from the low risk, very short term commercial credit market

If it's that low risk and profitable, why won't other parties step in??

Po, you were just mentioning the ag commodities futures markets. How do you suppose those get financed? How do the purchases get cleared?

Well, Charlie, if I wanna trade anything but options, I have to set up a margin account with my broker. I imagine that the big commercials like ADM and Cargill and Louis Dreyfus pretty much take care of themselves. Don't know what the hedgies and specs do.

I'll say it again: there's only one credit market

And this is a good thing?????

Let. The. Market. Work.

[Rick Ballard]

"National City Bank in Cleveland is the 7th largest bank in the US. It is in deep trouble.

Why no Treasury love?"

It wasn't quite stupid enough to make the finals in the national morons runoff. Here's a very good report showing how inclusion in the B-P Morons List was derived. Go to page 21 and you will find that, although National City may be 7th in size, it is only 14th in exposure. I would note that the list of the 25 institutions with the greatest exposure is incorrect due to the demise and/or ingestion of Lehman (first to die), Merrill and Wachovia). I'm still trying to figure out what HSBC is.

[Pofarmer]

I wonder how much of the volatility in the commodities market comes from market makers being unable to count on their credit lines, and, perhaps more importantly, not being able to count on other market-makers' credit lines?

Cathy

A lot of the volatility in the commodities, especially in wheat, has been directly related to hedge fund involvement. Most recently in Minneapolis, the got some local traders and commercials caught short and basically wouldn't let them out. Just kept running the board. That's how we got $15 wheat last winter. Minneapolis is much more thinly traded than CBOT or KC.
When they come they come in droves, and when they leave they leave in droves. One Hedge fund was reclassified from a commercial to a spec and had to liquidate over 30,000 Contracts of Soybeans alone, and, lately, the large spec banks leaving has driven commodities down, and many of these players won't be back, I hope. Last winter, the volatility got so bad that the large commercials wouldn't do forward contracts for physical goods. Spot market only. In 30 years of pretty closely watching I've never seen that happen. For a long time, corn might trade in a .30-.50 cent range in a year, now it can swing a dollar in a week. Nobody likes that kind of risk, and it's much harder to quantify when the hedges come on board and overwhelm the fundamentals. Best case of this was in about 2006. I was listening to crop report after crop report telling us we were growing more and more beans. So, I'd hear a report, get a little bump and sell, then the market would take off 50 cents. What was happening??? New hedge funds were entering and pumping money into the market because they had begun buying baskets of commodities regardless of the fundamentals. This was kinda the start of the recently past Bull market. If we can get some of these players on the sidelines, maybe at least things will calm down. Feed dealers can't lock in ingredients. Farmers have a more difficult time pricing grain. Fertilizer prices skyrocketed based on $6.50 corn(which today is $3.75), $16.00 beans(which today is $8) and $10.00 wheat(which today is $3.75) What we're seeing now is the whirlwind all this extra capital created when unleashed in the markets. You can make pretty insane amounts of money(or lose it) in a short period, but the hangover isn't all that nice.

Let the market flush these bums out. If the govt wants to intervene, let it intervene on behalf of the smaller banks temporarily hurt by the gyrations of these wheeler dealers. Let the big guys go bust. There is no reason why we should reward the kind of poor management and excessive risk taking that was pushed by these companies. Let em burn.

[Gmax]

My son ( 25 with a degree and a professional job ) was getting a lot of mail here with preapproved offers. I opened up one and called them and telling them I was him started quizzing them about being "preapproved". It does not mean what I took the word to mean, I can assure you.

Preapproved means fill out an application and we will see what we can do for you. I asked the rate since it was not stated. That depends on the application was the reply. I said well how about a range? 13-22% or something like that was the response. How many get the 13% rate? Not many was the honest response.

I would not consider those things anything other that chum on the water to try to draw some sharks into the water.

[Pofarmer]

Home equity lines are being chopped also.

Isn't this normal considering that house prices are dropping?

We have a business credit forum too - small businesses can no longer get even net 30 accounts where they used to.

Are you talking existing lines or new credit? Once again, this sounds pretty normal of lenders who fear a slowing economy.

[badjane]

Thanks GMax. All of the info is greatly appreciated.

O/T How is the gas lease going?

[Gmax]

Fertilizer most likely skyrocketed not do to a commodity price but because the minerals in the fertilizer mixture, the costs of production and the increase costs of transport. How much did oil price spikes have to do with it, well if like a lot things, quite a bit. Everything uses fuel to be delivered and that cost component doubled in a short time.

[clarice]

HSBC is "the world's community bank" ,Rick.

[Gmax]

On the gas lease front

We are signing a deal with Titan. $25K a acre upfront, 25.5% of payment streams generated from the well. If they dont get the well started within 3 years, they must pay another $25K to extend lease for 2 more years. Lots of protections to increase setback of drilling from residences and noise abatement and even some encasement of operating pumps. Pretty outstanding deal. I am to sign early November.

[badjane]

GMax

That is indeed outstanding. Way to go.

[Pofarmer]

Fertilizer most likely skyrocketed not do to a commodity price but because the minerals in the fertilizer mixture, the costs of production and the increase costs of transport.

Fertilizer prices Basically TRIPLED in 3 months. They raised prices because they could. And also because there are few producers, like maybe 5 or 6 or Phosphate and Potash. Other mined commodities, like quarry gravel, haven't increased at anywhere near that rate.

[Rick Ballard]

"HSBC is "the world's community bank" ,Rick"

I think that might be "the world's communisty bank". They have the largest credit to capital exposure ratio and they aren't on the B-P Morons list so they're foreign owned. I'd wager Chicom via Hong Kong. UBS and Deutsche are among the 25 and they won't be getting any help from Uncle Sugar either. It appears to me that Wells Fargo is the big player which is best situated to emerge much stronger. Their credit to capitol ratio did not get any worse with the ingestion of Wachovia. The real bleeder is Citi - no surprise at all.

[Charlie (Colorado)]

I imagine that the big commercials like ADM and Cargill and Louis Dreyfus pretty much take care of themselves.

I imagine unicorns and pink bunnies.

And this is a good thing?????

It's a real thing.

Let. The. Market. Work.

Then stop bitching about commodities being volatile and down.

You don't want the market to work, you want the Bad Guys to get reamed without it touching you.

It ain't gonna happen.

[Charlie (Colorado)]

Dude, fertilizer isn't mined, not since guano went out. It's manufactured, using some mined feedstocks like trona, and some things synthesized in big chemical plants, like ammonia. This takes lots of energy, usually in the form of natural gas, and then it has to get to the farms, which uses diesel.

And what happened to natural gas and diesel prices recently? You remember hearing about an energy crisis?

[glasater]

A lot of the volatility in the commodities, especially in wheat, has been directly related to hedge fund involvement. Most recently in Minneapolis, the got some local traders and commercials caught short and basically wouldn't let them out

Pofarmer--I hear you and have to say my husband and I watched that market closely. He's a retired wheat farmer and our crop was soft white with an occasional barley crop to clean up the ground.

Was listening to Squawkbox Europe going to sleep last night and one fellow was commenting that hedge funds were going to be the wave of the future because the returns were so much better.
Unfortunately I went to sleep before I heard the rest of the conversation.

[glasater]

Charlie @ 11:57--that's exactly right.

[Pofarmer]

Dude, fertilizer isn't mined,

Charlie, are you cracked????

Nitrogen isn't mined.

Phosphate and Potash are most definately mined products, with some chemical treatments after the fact.

Ammonium Sulfate is a byproduct of several different processes. Those are the main 4. Please note, I wasn't referring to Nitrogen prices, never mentioned N. There is more to fertilizer than Nitrogen.

Then stop bitching about commodities being volatile and down.

It ain't gonna happen.

Uhm, Charlie, who's bitching??? Market movement is a way of life for me, it's pretty much what is. I accept that.

That's why this statement.

You don't want the market to work, you want the Bad Guys to get reamed without it touching you.

Is so stupid on your part.

In order for the market to work there will be pain, shared by all. You can't get around it, yet, somehow, you think by propping them up just a little longer that everything will be roses and unicorns, kinda like Obama's energy proposals. You assume that the market can be controlled with no pain for anybody. Go ask the Soviets about that.

[Pofarmer]

O.K.

trona has nothing to do with fertilizer, no wonder I'd never heard of it.

Look up POTASH, or MURIATE OF POTASH.

You can also look up MONOAMMONIUM PHOSHATE and DIAMMONIUM PHOSPHATE to get an idea what I'm talking about.

[Rick Ballard]

Charlie,

Take a look at page 29 of that report I cited above. At 6/30/08 JPM had a gold position (less than a year maturity) worth $56 billion (against assets of $1.4 trillion). None of the other top five except HSBC had taken a gold hedge and HSBC's hedge was $25 billion against assets of only $177 billion. That's a huge bet - 14% of assets versus JPM's 4%. HSBC was betting very heavily on a "flight to gold" (which really hasn't occurred). I wonder why?

[glasater]

When we were farming--we mainly just used N--not so much the other stuff.

Although I see both Charlie's and Po's point of view--I have to say that government has been involved in the farming game since at least the sixties and before (history of the dairy/milk riots back in the twenties)--telling farmers how much they could farm, etc.
Big Ag has been somewhat socialized for years and still the US feeds the world.

[Gmax]

HSBC

If I am not mistaken this is the old Household Financial Corp which was purchase before 2000 by a European bank, a London bank I think. I think Beneficial finance is blended into there too.

[Pofarmer]

Hey Glasater.

You're going to have to go back further than that. The first Ag programs were back in the dust bowl days. The last farm bills were decidedly LESS socialist than their predecessors, in that there aren't any acreage requirements or set asides as there were up untill the late 80's. What we have now is an amalgamated mix. There are quite a few calls for the govt to step back from direct subsidization of Agriculture, but special interests in the Ag community keep the gravy train(well, landowner subsidies really) going.

[Bob from Ohio]

"It wasn't quite stupid enough to make the finals in the national morons runoff."

Nice line.

Thanks for the info.

I guess NCB will get sugar in the next disbursement.

[Rick Ballard]

GMax,

I found it. Hong Kong/Scot - the Taipan's Bank. Very Chinese but I'm not sure about Chicom influence. The size of that gold hedge still doesn't make sense.

[cathyf]

gmax, HBSC is Hongkong and Shanghai Banking Corporation. How controlled they are by the chicoms is hard to figure out...

[bad]

Rick

Take a look on the "Hitch" thread at the 12:49 comment on CPEF, CAC, Obama and Daley and see if I'm on the right track.

[has-been]

HSBC is the world's largest company. LUN.

Originally Hongkong and Shanghai Banking Corp, now hq in London.

[MayBee]

gmax, HBSC is Hongkong and Shanghai Banking Corporation. How controlled they are by the chicoms is hard to figure out...

But it is a London bank.

[MayBee]

Yeah, it was established in Hong Kong when Hong Kong was under British rule.
It still prints much of Hong Kong's currency, but it is headquartered in London now.

[Gmax]

Well its headquartered in London despite the Acronym standing for Hong Kong and Shanghai which of course are now Chicom territory. Not sure exactly what to make of that but HFC was a huge unregulated consumer finance company in the US for well over a 100 years. Beneficial Finance likewise, and that still has to be a big component of the US entity that would be subject to OCC regulation.

[glasater]

Pofarmer--guess that's why I mentioned that dairy situation 'way back when:-)

And the guys in this area who didn't play ball with the gov from the eighties on either sold out or went bankrupt.
I certainly appreciate your point of view and the hard work involved there.

[Pofarmer]

Thanks Glasater.

I think that one of the reason I'm so sensitive to this socialzation in the banking industry is the realization that once they get in it's not particularly easy to get them out, vis-a-vis agriculture. There were quite a few successful producers who operated outside of the govt programs for years. They were mainly involved with more livestock type operations. I know several guys that were never involved up untill the late 90's, when Clintoon changed the game enough that it became suicide not to play.

[MayBee]

Hong Kong is indeed a Special Administrative Region of China, but their currencies are separate, as are their banking regulations. HSBC has, or at least had, a much smaller presence in China than in Hong Kong.

[SunnyDay]

Pofarmer - You are right about HELOC's. I think people are just really surprised by it. It's caught a lot of people in the middle of renovating/remodeling.

The net 30's - everyone, not just new accounts - if they don't already have a paydex. Used to be, you could get net 30's with no paydex, now you can't. Our little "trick" was teaching people how to use net 30 accounts to GET a paydex, so that they could move up to bigger business LOC's.

Now, Experian and Equifax are issuing a report that combines personal and business credit. We can't tell if that's helping or hurting small businesses at this point - it's still very new, so no one knows how it works.

[Rick Ballard]

GMax,

I'll put the tinfoil away - it's HK capitalists who headed for the UK when the lease expired. The risks taken would have to be judged against the consolidated balance sheet, that hedge might be much smaller than JPMs on that basis. I've added it to my "things of which I was ignorant list" as item 12,472,378,273.

The other 24 names on the report weren't a surprise and the report does provide a very clear understanding of how B-P made their determinations.

[Amused bystander]

Sunny. what is the the web link to your firm?

[SunnyDay]

creditboards.com

[SunnyDay]

We started out as a small group of cyber friends in a yahoo group - helping each other deal with errors, ID theft, etc. We decided yahoo was too limiting, so we got a $10 a month website, some free software, and set up a message board in 2003. It just took off. Sometimes I just sit here and stare at it in disbelief.

[steve sturm]

Charlie: banks make loans to entities they think will repay the loans, thus I don't buy your assertion that banks refusing to do business with one another directly dries up lending to Main Street. If they're not lending to Main Street, it is because they don't think Main Street is a good risk, so how does this latest Fed flailing do anything to convince banks that Main Street is good for the money?