Wednesday
Jun102009
Whalen: Regulators Banking A Deal With The Devil (Truth Bomb Clip)
This short clip courtesy of Aaron Task and TechTicker is an absolute must see. For more color on Chris Whalen's comments about TARP payback being a fraud amid the FDIC debt crutch, see this story.
Briefly, Whalen expects most of the large banks to need help again by the 4th quarter of '09 as loss rates begin to accelerate again in most categories. Moreover, he makes our point that as long as hundreds of billions of FDIC-backed bonds are still floating through the sytem, then any talk of being done with TARP is illusory and disingenuous.
Reader Comments (4)
http://www.businessinsider.com/exclusive-the-new-york-fed-has-been-captured-by-citigroup-top-obama-official-complains-2009-6
But the payback news is "evidence bankers are running the show," counters Chris Whalen, managing director of Institutional Risk Analytics, which provides bank stress ratings and advisory services. The banks and Treasury have created a "fantasy-land version of reality" that the industry is healthy again, he says.
Banks and regulators have "done a deal with the devil" by believing they can "pump up confidence" to bring credit spreads down and the Fed can keep rates down by buying Treasuries, the analyst says. The Fed is "fighting a losing battle," Whalen says, arguing the currently favorable rate environment that allows banks to essentially print money by borrowing for next-to-nothing and lending at substantially higher rates will not persist for much longer.
http://finance.yahoo.com/tech-ticker/article/261030/TARP-Payback-Banks-Regulators-Make-%22Deal-with-the-Devil%22-Whalen-Says;_ylt=AvaLxVEuH2cPyAACDo67WHBk7ot4?tickers=XLF,FAS,FAZ,BAC,JPM,GS,MS
http://www.businessinsider.com/banks-still-terrible-at-risk-management-2009-6
http://online.wsj.com/article/SB124451329364796775.html