Does anybody have a secret decoder ring for financial-ese?
Here's what looks like the important part of the Joint statement issued today by th Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve Board and the Treasury Department:
Moreover, we reiterate our determination to preserve the viability of systemically important financial institutions so that they are able to meet their commitments.
Translation: Too big to fail still fully operative!
‘‘We announced on February 10, 2009, a [universally panned as lacking detail] Capital Assistance Program to ensure that our banking institutions are appropriately capitalized, with high-quality capital.
Under this program, which will be initiated on February 25, the capital needs of the major U.S. banking institutions will be evaluated under a more challenging economic environment.
These are the "stress tests." But since we know from Yves that the stress tests can't be anything other than kabuki, given the resources available, and certainly can't detect fraud, this all looks like just another excuse to shovel the banksters more money, doesn't it?
Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital.
They don't have that ability already? If they do, why haven't they already exercised it?
Otherwise, the temporary capital buffer will be made available from the government. This additional capital does not imply a new capital standard and it is not expected [as of today] to be maintained on an ongoing basis. Instead, it is available to provide a cushion against larger than expected future losses, should they occur due to a more severe economic environment [oh, goodie, so this isn't even about recovery now], and to support lending to creditworthy borrowers [yeah, "support" just like TARP did]. Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares [What does that mean? Sounds like money laundering, to me]. The conversion feature will enable institutions to maintain or enhance the quality of their capital.
Yeah, well. The Big Picture, two years in:
1. We still don't know how big The Big Shitpile really is;
2. We still haven't valued the toxic assets; I'm guessing that means their value is zero, otherwise these shysters would have found a way to puff up their prices again;
3. We still don't know where the two trillion we spent on the banksters last year went, or who got it.
Hank Paulson and Timmy Geithner are looking more and more interchangeable every day. And why wouldn't they? They'e got the same golfing buddies.