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« GWB Did Something Right: Meet Your New Best Friend Neil Barofsky | Main | Urban Transportation Vehicle: GM Segway Puma (video) »
Wednesday
Apr082009

Elizabeth Warren Suggests The Bailout Road Less Traveled (Video)

Elizabeth Warren introduces the April oversight report of the Congressional Oversight Panel: Assessing Treasury's Strategy: Six Months of TARP.

“All successful efforts to address bank crises have involved the combination of moving aside failed management and getting control of the process of valuing bank balance sheets,” the panel, headed by Harvard Law School Professor Elizabeth Warren, said in its report.

Elizabeth Warren, head of the Congressional Oversight Panel for TARP, had her moment in the sun today and took the opportunity to question the Treasury's approach (PPIP) to the banking crisis. Her report recommended receivership for the failed banks and liquidation of their assets.  Let's not kid; she is talking about Citigroup and Bank of America.

In the report, Warren’s panel said “it is possible that Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth.”

The official report pdf and video are after the jump.

COP website report

COP Report pdf

More from Bloomberg:

The group said it was offering an examination of “potential policy alternatives” for the Treasury and not endorsing any shift at this time.

Still, it said a bank liquidation would be “least likely to sap the patience of taxpayers” and “provides clarity relatively quickly” to the markets.

“Allowing institutions to fail in a structured manner supervised by appropriate regulators offers a clearer exit strategy than allowing those institutions to drift into government control piecemeal,” the report said.

The report also said that past successful financial rescues were accompanied by governments’ “willingness to hold management accountable by replacing -- and, in cases of criminal conduct, prosecuting -- failed managers.”

bank bailouts, bank bailout, bailout news

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Reader Comments (11)

Can anyone explain how this works? And ,,, (channeling Jim Bunning) what's THE BOTTOM LINE!?

Deposits are protected, right? Does this cost money if there's no run on the bank?

Assets (what assets?) are sold. Shareholders get bagel-ed. Creditors get...pennies?

And derivatives contract counterparties get...? Since Congress is into passing unconstitutional ex post facto laws these days anyway, can't we just nullify the contracts or tax them at 90% or whatever?

What does a big ol' bankruptcy/receivership look like? It's all very abstract to those of us who aren't well versed in this sort of thing.
Apr 9, 2009 at 12:40 AM | Unregistered CommenterJames H
Elizabeth Warren just called PPIP "pee-pip". Then she smirked.

This Harvard lady will eat you alive, Dartmouth boy.
Apr 9, 2009 at 12:48 AM | Unregistered CommenterJames H
@james

A receivership would not be noticable to depositors. Nothing changes. It would look and feel like the takeover of WAMU.

It just means the bank bondholders take haircuts and the siezed banks are liquidated.
Apr 9, 2009 at 2:22 AM | Unregistered Commenterkansas is fucked
Word has leaked on the banking stress tests.

What a surprise. Rosy scenario wins again.

http://www.nytimes.com/2009/04/09/business/09bank.html?_r=1&ref=business
Apr 9, 2009 at 2:24 AM | Unregistered Commenterkansas is fucked
From the NYT article above:

"What they are discovering may come as a relief to both the financial industry and the public: the banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say."

Who are the examiners? What are their credentials? Why should anyone believe them? It was obvious from the start this was going to be a component of a massive "everything is rosy" PR campaign. Sad.
Apr 9, 2009 at 6:00 PM | Unregistered Commenterspideydouble
Dear Taxpayer, We regret to inform you we will be sticking a gun barrel in every one of your orifices. However, this is a Democratic process and you have the right to choose which trigger we pull. We want you to know this will hurt us as much, if not more, than it will hurt you. Signed....Your Government Sponsored BANK
Apr 10, 2009 at 2:10 PM | Unregistered CommenterAin't Bullshittin'
Japanese cherish the elemental amid compounded tragedy

Tokyo (CNN) -- Solace sprouted from the mundane Thursday as Japanese refused to buckle below the weight of mounting tragedies.

In the hardest-hit parts of the disaster-struck realm, thousands of people, innumerable of them frail and senile, settled in into shelters not shrewd when, if ever, they muscle be competent to leave.

They cherished the ordinary. Place in calling for lunch. Or arranging the scarcely any belongings they salvaged preceding fizzy water be illogical washed away their homes.

http://edition.cnn.com/2011/WORLD/asiapcf/03/17/japan.disaster/index.html?hpt=C1
Mar 23, 2011 at 12:35 PM | Unregistered CommenterHaikiUgai
Why Geithner Opposes Elizabeth Warren to Head the CFPB

http://dailyhurricane.com/2010/07/why-geithner-opposes-elizabeth-warren-to-head-the-cfpb.html

[snip]

After much thought and careful consideration (which took about 1.5 seconds) I have a suggestion for how President Obama can resolve this conflict. Warren's in, Geithner's out. Problem solved.
Apr 6, 2011 at 6:01 PM | Unregistered Commenterjohn
Glass-Steagall Reintroduced (Basically) - HR.1489

http://market-ticker.org/akcs-www?post=184237
Apr 14, 2011 at 2:32 PM | Unregistered Commenterjohn
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