Posted tagged ‘Henry Paulson’

Obama To Broaden Financial Bailout

January 9, 2009

Barack Obama’s economic team is broadening the mission of the $700 billion bailout for the financial sector, aiming to unfreeze credit for homeowners, consumers, small businesses and local governments.

From the Associated Press:

The overhaul is aimed at the $350 billion remaining in the Troubled Asset Relief Program and comes amid mounting criticism from lawmakers and watchdogs that the Bush administration has administered the money in an inconsistent way and has not made banks accountable for the money.

The head of a congressional panel overseeing the $700 billion bailout program said Friday that lawmakers need to “take a very hard look” at how banks have used the money and she welcomed Obama’s attempts to better define the program’s mission.

Obama’s selection for Treasury secretary, Timothy Geithner, is developing a “comprehensive set of investment principles,” an Obama transition official said Friday. The official, speaking on the condition of anonymity because the plan has not yet been fleshed out, said the economic team will include measures to mitigate rising foreclosures and will place tougher conditions on financial institutions that receive the money, including limits on executive compensation.

With 11 days left before Obama is sworn in as the nation’s 44th president, the task of requesting Congress for access to the remaining funds will now likely fall on the new Obama administration.

Geithner is expected to face a confirmation hearing before the Senate next Thursday and he can count on being quizzed vigorously on his TARP proposals.

Though the Obama team is not offering any specifics, the mere fact that it is setting goals for the money won support from the head of a congressional panel that is charged with overseeing how the money is being spent.

“These are powerfully important initiatives,” said Harvard law professor Elizabeth Warren. “I’m very pleased that the incoming administration is focused on these issues.”

She offered no specific advice on how to free up more credit. “It’s going to take a variety of tools,” she said. “They may have to move through multiple approaches.”

Porn Industry Seeks Federal Bailout

January 7, 2009

While the government is at it, can they send me a check too!

Today, another major American industry is asking for assistance as the global financial crisis continues: the porn industry!

Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis have announced that they will request Congress to allocate $5 billion for a bailout of the adult entertainment industry.

From the release:

As the 2009 AVN Adult Expo opens in Las Vegas this week, Girls Gone Wild CEO Joe Francis and HUSTLER magazine publisher Larry Flynt are petitioning the newly convened 111th Congress to provide a financial bailout for the adult entertainment industry along the lines of what is being sought by the Big Three automakers, a spokesperson for Francis announced today.

Adult industry leaders Flynt and Francis sent a joint request to Congress asking for $5 billion in federal assistance, “Just to see us through hard times,” Francis said. “Congress seems willing to help shore up our nation’s most important businesses, we feel we deserve the same consideration. In difficult economic times, Americans turn to entertainment for relief. More and more, the kind of entertainment they turn to is adult entertainment.”

But according to Flynt the recession has acted like a national cold shower. “People are too depressed to be sexually active,” Flynt says, “This is very unhealthy as a nation. Americans can do without cars and such but they cannot do without sex.”

While not to the degree felt by banks and automakers, the Adult Entertainment industry has been hit by the effects of the economic downturn. DVD sales and rentals have decreased by 22 percent in the past year as viewers turn to the internet for adult entertainment. It is estimated that roughly half of all internet users visit adult sites, with the number of unique visitors to adult websites (including GirlsGoneWild.com and Hustler.com) has grown to more than 75 million per month.

But the “saltpeter” effect remains.

“With all this economic misery and people losing all that money, sex is the farthest thing from their mind,” Flynt says, “It’s time for congress to rejuvenate the sexual appetite of America. The only way they can do this is by supporting the adult industry and doing it quickly.”

“The popularity of adult entertainment in America has grown steadily for the past half century,” Francis says. “Its emergence into the mainstream of popular culture suggests that the US government should actively support the adult industry’s survival and growth, just as it feels the need to support any other industry cherished by the American people.”

From CNN:

“The take here is that everyone and their mother want to be bailed out from the banks to the big three,” said Owen Moogan, spokesman for Larry Flynt. “The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine.”

Francis said in a statement that “the US government should actively support the adult industry’s survival and growth, just as it feels the need to support any other industry cherished by the American people.”

“We should be delivering [the request] by the end of today to our congressmen and [Secretary of the Treasury Henry] Paulson asking for this $5 billion dollar bailout,” he told CNN Wednesday.

Barack Obama is TIME Magazine’s “Person of the Year”

December 17, 2008

Although there were many qualified people this year, this doesn’t come a surprise to me.

The decision to name the United States’ first black president Person of the Year, announced this morning on The TODAY Show,  followed many weeks of deep discussion and debate among TIME editors and staff members.

From MSNBC:

Could TIME magazine’s 2008 Person of the Year have been anyone other than President-elect Barack Obama?

Maybe not. But what the much-anticipated announcement lacks in the surprise department is offset by Obama’s already undeniable place in history.

In a year when the economy imploded before our eyes, could U.S. Treasury Secretary Henry Paulson have made a provocative choice? How about Hillary Clinton or Sarah Palin, two women who captivated the nation over much of the past year and who both, in their own ways, came so close to the presidency themselves?

Those people were considered, too, as were comedian Tina Fey, Olympian Michael Phelps, Iraqi Prime Minister Nouri al-Maliki, oil executive and renewable energy proponent T. Boone Pickens, French President Nicolas Sarkozy, Georgian President Mikheil Saakashvili and Zhang Yimou, director of the Beijing Olympics’ opening and closing ceremonies.

But in the end, the 44th president of the United States proved to be the irresistible choice.

“I don’t think that Americans want hubris from their next president,” Obama told TIME for the Person of the Year issue, which appears online today and on newsstands Friday. “[But] I do think that we received a strong mandate for change. And I know that people have said, ‘Well, what does this change mean?’ … It means a government that is not ideologically driven. It means a government that is competent. It means a government, most importantly, that is focused day in, day out on the needs and struggles, the hopes and dreams of ordinary people.”

Economy Is Shrinking and Home Prices Continue to Drop

November 25, 2008

The economy shrank more than expected in the third quarter and home prices fell to levels not seen since early 2004 as the government announced new plans to provide $800 billion to boost consumer spending and home buying. Things keep looking bleaker and bleaker each day for the US economy. When will we hit rock bottom?

From the Associated Press:

Treasury Secretary Henry Paulson said key markets for consumer debt such as credit cards, auto and student loans essentially came to a halt in October, and that the new programs are aimed to get lending back to more normal levels.

Meanwhile, data released Tuesday provided further proof the country is almost certainly in the throes of a painful recession.

The Commerce Department’s updated reading on the economy’s performance showed gross domestic product shrank at a 0.5 percent annual rate in the July-September quarter, weaker than the 0.3 percent rate of decline first estimated a month ago, and the worst showing since the third quarter of 2001.

GDP measures the value of all goods and services produced within the U.S. and is considered the best barometer of the country’s economic fitness.

Meanwhile, the Standard & Poor’s/Case-Shiller national home price index released Tuesday tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

In an effort to increase the availability of home loans to borrowers, the Federal Reserve said it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. The Fed also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors.

The $600 billion effort on mortgages came as the Fed also unveiled a new program to help unfreeze the market that backs consumer debt such as credit cards, auto and student loans.

AIG Throws Another $86,000 Executive Party

October 17, 2008

AIG is back in the news yet again today for spending thousands of dollars on its executives, even as the New York-based insurer asked for an additional $37.8 billion loan from the Federal Reserve. This time instead of a spa treatment, a number of top executives attended an English hunting trip.

From the Associated Press:

The news comes as New York Attorney General Andrew Cuomo on Wednesday told the insurance giant to do away with golden parachutes for executives, golf outings and parties while taking government money to stay afloat.

Cuomo said he has the power under state business law to review and possibly rescind any inappropriate AIG spending as long as the Federal Reserve is propping up the huge insurer with almost $123 billion in loans announced since Sept. 16.

“This was an annual event for customers of the AIG property casualty insurance companies in the U.K. and Europe, and planned months before the Federal Reserve Bank of New York’s loan to AIG,” company spokesman Peter Tulupman said Wednesday morning.

In a prepared statement later in the day, the company said, “We will continue to take all measures necessary to ensure that these activities cease immediately. AIG’s priority is to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business.”

AIG officials declined to say which AIG executives attended the trip, which reports have said racked up an $86,000 tab. News of the hunting trip surfaced just days after AIG received an additional $37.8 billion loan from the Federal Reserve, on top of a previous $85 billion emergency loan granted last month.

The company said last week it would stop “all non-essential conferences, meetings and activities that do not clearly maximize value and service given the current conditions.”

Last month, and just days after the U.S. government stepped in to save AIG with a $85 billion taxpayer-funded loan, the company picked up a $440,000 tab for a week-long retreat at a posh California resort for top-performing insurance agents.

Lawmakers investigating AIG’s meltdown said they were enraged that executives of AIG’s main U.S. life insurance subsidiary spent a lavish amount on the retreat, complete with spa treatments, banquets and golf outings. Last week, White House Press Secretary Dana Perino called the event “despicable.”

Government Considering Ownership in Banks

October 9, 2008

Hmmmm. This might not be a good thing. The Bush administration is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.

From the Associated Press:

An administration official, who spoke on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return.

This official said all the new powers granted in the legislation were being considered as the administration seeks to deal with a serious credit crisis that has caused the biggest upheavals on Wall Street in seven decades and continues to roil global markets.

Supporters of this approach, such as Sen. Charles Schumer, D-N.Y., argue that injecting fresh capital into U.S. banks who want to participate in the program would be an effective way to bolster banks’ balance sheets and get them to resume lending. Taxpayers would benefit because the government would receive an equity stake in the bank in return for providing the capital.

“This idea would, at a minimum, complement the administration’s planned approach of buying up troubled assets and may prove to be the most promising tool of all in Secretary Paulson’s kit,” Schumer said in a statement.

A decision to inject capital directly into financial institutions in return for ownership stakes would be similar to a plan announced Wednesday by Britain.

Why Americans Aren’t Buying the Economic Bailout

October 1, 2008

According to Time Magazine, the $700 billion financial bailout package failed because most Americans wanted it to fail. Before the vote, members of Congress were getting calls 100 to 1 against the bill.

From the article:

The question is: why? It’s easy to see why bailing out rich bankers doesn’t feel super, but why, despite all the efforts of all of the country’s leaders to fill them with fear of an economic apocalypse, did Americans not see a failure to act as a serious threat to their livelihoods?

Traditionally, human beings are not great at assessing this kind of risk — a peril that has not yet arrived and that is, in any case, hard to viscerally imagine. Witness people’s reluctance to evacuate before hurricanes, and weather forecasts portend a danger far easier to comprehend than failing investment banks.

But there are methods of communicating risk in a way that stills the heart, with words that inject dread into the populace. And Treasury Secretary Henry Paulson Jr., Fed Chairman Ben Bernanke and President George W. Bush used none of them. “

The case wasn’t made as to why the little guy needs this,” says Paul Slovic, author of The Perception of Risk and a psychology professor at the University of Oregon. “The numbers and vague warnings are too abstract.”

The most effective warnings are like the most effective TV ads: easily understood, specific, frequently repeated, personal, accurate, and targeted. Paulson and his grim reapers managed only to repeat themselves frequently. They were not easily understood, partly because the problem is so complex. They did not personalize or target their warnings.

And, as they themselves admitted, they did not know if their warnings were necessarily accurate, due to the novelty and unpredictability of the crisis.

But their biggest mistake was a lack of specificity. They never clearly told the American people what might happen if Congress did not act. “If you want people to support an action,” says Dennis Mileti, an expert on risk communications who has studied hundreds of disasters of the more conventional kind at the University of Colorado, Boulder, “you need to link the action to cutting people’s losses. And that link isn’t in place.”


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