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[via zero hedge, of course!]

Rep. Mary Jo Kilroy discusses the provisions of the PROFIT act: maximize ROI for the taxpayers, and add transparency. What's not to like?

The PROFIT act now has 10 co-sponsors:

Matt Taibbi asks: Is Goldman screwing taxpayers on TARP negotiations?

Can you guess what the answer is? I knew you could!

Goldman Sachs and its ilk, who received billions in taxpayer money through TARP to keep them in business, have recently posted high quarterly profits. But what do the taxpayers get for our largesse? This is not a non-sequitur, as a post in naked capitalism today makes clear; and at least 6 House Democrats want to do something about the situation. That is the PROFIT act, which Mary Jo Kilroy (D-OH) and six others (Reps. Brad Sherman, John Boccieri, Betty Sutton, Jackie Speier, Marcia Fudge and Alan Grayson) introduced to little fanfare last week.

via Barry Ritholz:

PROFIT Act to Make Taxpayers, Transparency Priority in Bank Bailout Payback

July 16, 2009 4:21 PM

Mary Jo Kilroy, a member of the House Committee on Financial Services, and 6 other co-sponsors file legislation to increase profit for Americans, increase transparency and remove any secrecy from ongoing negotiations between Treasury and banks

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Explaining why the latest floated plan from Obama's "top economic advisors" (is that you, Timmy and Larry?) doesn't make sense.

The proposal is to "stretch" (the NYTimes' word) the bailout funds by converting the existing loans to the biggest banks into common stock. This turns the loans into capital for the banks, thus improving their balance sheets, and good things ensue (or so we are told). Because, uh-oh! the stress test are expected to show that some big banks, including my own personal parasite BoA, are in need of more capital. (I know the feeling!)

Quoth the Times:

Just read this via a twitter I got:

Congressional Panel Suggests Firing Managers, Liquidating Banks

A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.

The Congressional Oversight Panel, in a report released yesterday, also said the Treasury may be relying on too rosy an economic scenario to guide its $700 billion bailout, and declared that the success of the program after six months is “mixed.” Three of the group’s members disagreed with at least some of the findings.

Saw some shit today I hadn't seen since I was young. Not a good sign when the police go rabid. What was it Sarah said? "I don't give a damn about financial records or postings." Of course not. Why would the reality of housing scandals, corrupt police, inner-city drugs, and financial take over be of any significance? As Matt Taibi so eloquently put it “we're officially, royally fucked .”

What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish.

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You know, I'm beginning to lose track of how many different ways Versailles is screwing us. The latest is another round of the government conspiring with Wall Street to try to hide the size of the big shitpile by paying more for assets than they are worth.

Via Yves Smith:

From Andy Lees at UBS (hat tip reader Scott, boldface his):

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I love the blogosphere, because I love headlines like this: "Geithner Plan Smackdown Wrap".

Yes, The Shriller Two is on the case. And it's ugly.   Read more…

The situation as it stands:
Wall Street had been holding its breath, pricing in, and "banking" (betting) on an effective Stimulus Plan, and a new and sensible Bank Rescue Plan. Well, neither are happening, and now we've continued with our regulary-scheduled collapse.

Geithner is a total fucking schmuck, clearly unwilling to properly confront the real problems of his Banker-Buddies' greed, their unwillingness to be honest about the shittiness of their piece of the Big Shitpile, and unwillingness help their borrowers, and those others on the hook in order to help themselves (see Banker's Greed). So many better candidates for the roll, and it's too damned early in the Obama Administration to replace the pinch-faced piece of shit, dammit.

OK. Don't Worry. I have a solid plan to fix Geithner's epic failure.

I am not an economist, but I can do arithmetic.

Because, as Yves points out, it can give the impression that you're making it up as you go along. Via Bloomberg:

The second half of the $700 billion bank rescue plan, which has been known as the Troubled Asset Relief Program. The administration plans to rename it the Financial Stability Plan. ....

Officials have not yet decided on the specific mechanics of the facility, which will be introduced in lieu of the so- called bad bank of earlier proposals....

The Term Asset- Backed Securities Lending Facility will be backed by as much as $100 billion of Treasury funds in case of losses.

Fed officials have yet to start up the TALF, which was intended to be under way this month and could now be renamed....

It's always easier to change names than to change things. There really is only one solution, isn't there?

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Otherwise, not much difference, except possibly for the worse. At least the last time, we had the excuse of ignorance and NOW NOW NOW. Fool me once...

Pravda gives the horrid details. CR reacts: Ouch:

[M]y sense that Team Obama is making this up as they go was confirmed by an e-mail from Robert Radano:

Treasury briefed the Senate Banking Committee tonight regarding Geithner’s plan to be announced, tomorrow…Tuesday.

There is no plan.

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USB did. And I bet a policy like that would concentrate their minds wonderfully about figuring out what toxic assets are really worth (if > $0.00).

A step in the right direction.

The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan...

Executives would also be prohibited from receiving any bonuses above their base pay, except for normal stock dividends. President Obama and Treasury Secretary Timothy F. Geithner plan to announce the executive compensation plan on Wednesday morning at the White House....

Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials are bracing for a huge wave of new losses, largely because of the deepening recession, and many companies that have already received federal money may well be coming back....

"That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus," said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm.

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A detail I missed:

Aides to both men said that on crucial issues like efforts to rejuvenate the economy, the two mostly saw eye to eye, Mr. Gregg having been one of the chief negotiators for the $700 billion bank bailout passed last fall with Mr. Obama’s support.

Where "support" means whipping the bill with the CBC.

I just love all the cute acronyms they use. Is there a MILF fund, perhaps?

Release Date: February 3, 2009

For release at 10:00 a.m. EST
The Federal Reserve on Tuesday announced the extension through October 30, 2009, of its existing liquidity programs that were scheduled to expire on April 30, 2009. The Board of Governors and the Federal Open Market Committee (FOMC) took these actions in light of continuing substantial strains in many financial markets.

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If we're going to nationalize the banks, isn't that the right way to do it? Why shouldn't paying your mortgage, or your auto loan, or your student loan, be exactly like paying your light bill? None of those businesses should be hard, and none of them demand "complex," "innovative," "financial instruments," and they certainly don't require testesterone-driven Merry Banksters sucking enormous bonuses off the company tit. So cut the parasites out of the business and get back to basics.

Anyhow, here's how Bloomberg covers Krugman's column calling for bank nationalization today:

President Barack Obama shouldn’t hesitate to nationalize the banks that need to be bailed out, Noble Prize-winning economist Paul Krugman said.

“If taxpayers are footing the bill for rescuing the banks, why shouldn’t they get ownership, at least until private buyers can be found?” Krugman wrote in a column in the New York Times published today.

Simple answers to simple questions:

At Davos:

If atonement is difficult, retribution may prove “brutally difficult,” Starwood Capital Group CEO Barry Sternlicht said in an interview in Davos. As Sternlicht sees it, “everyone wants a head, and that’s not reasonable. To do that, you’d need to take out the top 20 executives at the 300 biggest financial firms.”

Not reasonable? Why not?

A more informed person than I am just helped me better understand: the assets we'll be buying in TARP 2 are toxic, where the ones we've already bought are merely "worthless." That is, the bank "assets" we purchased in round one had no value, but the next round will be in fact a negative on the government budget sheet. This will becoming an important point in upcoming discussions about various types of "stimulus" and "liquidity."

A very interesting story noticed by Susie. Very, very interesting. Reuters:

United Nations' crime and drug watchdog has indications that money made in illicit drug trade has been used to keep banks afloat in the global financial crisis, its head was quoted as saying on Sunday.

(Notice the lack of agency in that sentence. "Has been used." Used by whom? And when?)

Vienna-based UNODC Executive Director Antonio Maria Costa said in an interview released by Austrian weekly Profil that drug money often became the only available capital when the crisis spiralled out of control last year.

"In many instances, drug money is currently the only liquid investment capital," Costa was quoted as saying by Profil. "In the second half of 2008 [that is, when Pelosi, Obama, Reid, Bush, and Paulson got TARP passed] liquidity was the banking system's main problem and hence liquid capital became an important factor."*

The United Nations Office on Drugs and Crime had found evidence that "interbank loans were funded by money that originated from drug trade and other illegal activities," Costa was quoted as saying. There were "signs that some banks were rescued in that way."

Profil said Costa declined to identify countries or banks which may have received drug money and gave no indication how much cash might be involved. He only said Austria was not on top of his list, Profil said.

Makes you think, doesn't it?  Read more…

Naked Capitalist has a terrific post on the latest TARP maneuvering showing, essentially, that the only institutional* difference between Village Republicans and Village Demorats is the Dems use lube:

The Administration has evidently launched a campaign to warn the American public that the black hole banking industry will need more in the way of recapitalization funding than is currently on offer.... [T]hrowing money at sick banks with no plan as to how to shrink and rationalize the industry** does not strike us as a sound way to proceed (and the TARP II notion of buying bad assets at certain to be inflated prices is a cosmeticized equity infusion and not a real solution).

Perhaps as important, the public is sufficiently outraged over TARP I that something quite different (as in more punitive to incumbent management, stockholders, and in some cases, bondholders) is required to muster Congressional support. I don't have the sense that Team Obama fully appreciates that.

No, but then why would they? Team Obama's priority -- as Obama was quite explicit about in his inaugural speech -- is imposing "shared_{MR SUBLIMINAL [cough]} sacrifice"; that is, not less pain, but more. As we shall see, they're quite open about it.

Naked Capitalist continues:

(The YouTube title for this vid is NYC Wall St. Bailout Protest 25 September 2008. Did you see it on the teebee? Me neither. But it strongly suggests that the consensus on TARP outside the Village is at least as strong as the consensus inside - just in the opposite direction.

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Sounds great, so why not before?

President-elect Barack Obama's economic stimulus plan won't include money for politicians' pet projects and will include provisions aimed at ensuring his administration is open and accountable to taxpayers and Congress, a transition official said Tuesday.

As part of the package likely to cost as much as $775 billion, Obama plans to establish an oversight body to meet publicly and issue reports to Congress on how the money is being spent. The president-elect also plans to create a user-friendly Internet site to allow people to track the flow of dollars.

The official who disclosed the details spoke on the condition of anonymity because Obama planned to make the official announcement during a meeting later with his economic advisers.

So, when Obama was working the phones for the Bush + Reid + Pelosi + Obama + Paulson bailout, why wasn't he pushing for accountability then? It's not lilke he, and the Democrats, didn't have leverage, since the bill had to be passed NOW NOW NOW NOW, right?