Thoughts and Observations of a Minister

Take a look around, make yourself at home.
You will find some of my favorite things, and some of my innermost thoughts.

Poems, quotes, music, preaching, and a few funny things.
Take your time, add your comments, and come back as often as you like.

Saturday, October 25, 2008

When will banks give loans: Joe Nocera Oct 24,2008

“Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?” Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked that question. It came toward the end of an employee-only conference call that had been largely devoted to meshing certain divisions of JPMorgan with its new acquisition, Washington Mutual. Which, of course, it also got thanks to the federal government. Christmas came early at JPMorgan Chase.The JPMorgan executive who was moderating the employee conference call didn’t hesitate to answer a question that was pretty politically sensitive given the events of the previous few weeks. Given the way, that is, that Treasury Secretary Henry M. Paulson Jr. had decided to use the first installment of the $700 billion bailout money to recapitalize banks instead of buying up their toxic securities, which he had then sold to Congress and the American people as the best and fastest way to get the banks to start making loans again, and help prevent this recession from getting much, much worse. In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist. (He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.) “Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.” Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: at another point in the conference call, the same executive (who I’m not naming because he didn’t know I would be listening in) explained that “loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot.It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction. In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. As Mark Landler reported in The New York Times earlier this week, “the government wants not only to stabilize the industry, but also to reshape it.” Now they tell us.Indeed, Mr. Landler’s story noted that Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”Friday delivered the first piece of evidence that this is, indeed, the plan. PNC announced that it was purchasing National City, an acquisition that will be greatly aided by the new tax break, which will allow it to immediately deduct any losses on National City’s books. As part of the deal, it is also tapping the bailout fund for $7.7 billion, giving the government preferred stock in return. At least some of that $7.7 billion would have gone to NatCity if the government had deemed it worth saving. In other words, the government is giving PNC money that might otherwise have gone to NatCity as a reward for taking over NatCity.I don’t know about you, but I’m starting to feel as if we’ve been sold a bill of goods.The markets had another brutal day Friday. The Asian markets got crushed. Germany and England were down more than 5 percent. In the hours before the United States markets opened, all the signals suggested it was going to be the worst day yet in the crisis. The Dow dropped more than 400 points at the opening, but thankfully it never got any worse.There are lots of reasons the markets remain unstable — fears of a global recession, companies offering poor profit projections for the rest of the year, and the continuing uncertainties brought on by the credit crisis. But another reason, I now believe, is that investors no longer trust Treasury. First it says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart. , he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either. (And let’s not even get into the less-than-credible, after-the-fact rationalizations for letting Lehman default, which stands as the single worst mistake the government has made in the crisis.)On Thursday, at a hearing of the Senate Banking Committee, the chairman, Christopher J. Dodd, a Connecticut Democrat, pushed Neel Kashkari, the young Treasury official who is Mr. Paulson’s point man on the bailout plan, on the subject of banks’ continuing reluctance to make loans. How, Senator Dodd asked, was Treasury going to ensure that banks used their new government capital to make loans — “besides rhetorically begging them?”“We share your view,” Mr. Kashkari replied. “We want our banks to be lending in our communities.”Senator Dodd: “Are you insisting upon it?”Mr. Kashkari: “We are insisting upon it in all our actions.”But they are doing no such thing. Unlike the British government, which is mandating lending requirements in return for capital injections, our government seems afraid to do anything except plead. And those pleas, in this environment, are falling on deaf ears.Yes, there are times when a troubled bank needs to be acquired by a stronger bank. Given that the federal government insures deposits, it has an abiding interest in seeing that such mergers take place as smoothly as possible. Nobody is saying those kinds of deals shouldn’t take place. But Citigroup, at this point, probably falls into the category of troubled bank, and nobody seems to be arguing that it should be taken over. It is in the “too big to fail” category, and the government will ensure that it gets back on its feet, no matter how much money it takes. One reason Mr. Paulson forced all of the nine biggest banks to take government money was to mask the fact that some of them are much weaker than others.We have long been a country that has treasured its diversity of banks; up until the 1980s, in fact, there were no national banks at all. If Treasury is using the bailout bill to turn the banking system into the oligopoly of giant national institutions, it is hard to see how that will help anybody. Except, of course, the giant banks that are declared the winners by Treasury.JPMorgan is going to be one of the winners — and deservedly so. Mr. Dimon managed the company so well during the housing bubble that it is saddled with very few of the problems that have crippled competitors like Citi. The government handed it Bear Stearns and Washington Mutual because it was strong enough to swallow both institutions without so much as a burp. Of all the banking executives in that room with Mr. Paulson a few weeks ago, none needed the government’s money less than Mr. Dimon. A company spokesman told me, “We accepted the money for the good of the entire financial system.” He added that JP Morgan would use the money “to do good for customers and shareholders. We are disciplined to try to make loans that people can repay.”Nobody is saying it should make loans that people can’t repay. What I am saying is that Mr. Dimon took the $25 billion on the condition that his institution would start making loans. There are plenty of small and medium-size businesses that are choking because they have no access to capital — and are perfectly capable of repaying the money. How about a loan program for them, Mr. Dimon?Late Thursday afternoon, I caught up with Senator Dodd, and asked him what he was going to do if the loan situation didn’t improve. “All I can tell you is that we are going to have the bankers up here, probably in another couple of weeks and we are going to have a very blunt conversation,” he replied.He continued: “If it turns out that they are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing.
Let’s hope so

Wednesday, October 15, 2008

Now Enforce It.

RIN 3235-AK06"Naked" Short Selling Antifraud RuleAGENCY: Securities and Exchange Commission.ACTION: Final rule.
SUMMARY: The Securities and Exchange Commission ("Commission") is adopting an antifraud rule under the Securities Exchange Act of 1934 ("Exchange Act") to address fails to deliver securities that have been associated with "naked" short selling.
The rule will further evidence the liability of short sellers, including broker-dealers acting for their own accounts, who deceive specified persons about their intention or ability to deliver securities in time for settlement (including persons that deceive their broker-dealer about their locate source or ownership of shares) and that fail to deliver securities by settlement date.DATES: Effective Date: October 17, 2008.

Wednesday, October 8, 2008


Some thing we may want to keep in mind about Judas.
He was chosen by Jesus, in Matthew 10,
I wonder what he was thinking when Jesus called his name?
I wonder if he thought this guy lines up with my political views, I want Israel to be a independent state, not subjects of the Roman empire. Jesus will make this happen.
I wonder what Judas thought when he saw Nicodemus come to Jesus in John chapter 3.
Maybe he thought this was good now they have someone with some money to help with his personal agenda, and missed the message about being born again.
I wonder what Judas thought when he saw Jesus talking to the woman at the well,
perhaps he thought the Samaritans would be strong in numbers when the rebellion to Rome startes.
I wonder what Judas thought when he saw the lame man walk, and the blind man see,
maybe he thought many of these illnesses are just psychological, and Jesus is a good motivator.
I wonder where Judas was when Jesus walked on the water, I guess he was just asleep in the boat.
Judas the one who betrayed Jesus, the one who hanged himself,
Judas was there all the time, but missed the true purpose of Jesus ministry.
He missed it and it cost him eternity.
How many go to church today and never get the message, they are asleep in the boat,
because they are looking for a political angle, or a financial angle, or even just a friendly place to be.
The message of the church today has not changed the gospel.
You must be bone again, you must submit to him totally.
Do you want the abundant life? The peace that passes all understanding.
Ask him into your heart today, and put him first, do not try to change the Bible or the message,
allow the Bible and the message to change you.

Sunday, October 5, 2008

Naked Short Selling That Toppled Wall Street

October 2nd, 2008 by Mark Mitchell
The Wall Street Journal stated in a lead editorial last week that the SEC was“reasonable” to “clamp down” on naked short selling. Well, that was progress ofsorts, though one wonders how it could have taken all these years for thenation’s most important newspaper to suggest that it might be “reasonable” toput an end to criminal activity that has eviscerated hundreds of companies anddestroyed countless lives.And now that this criminal activity has been implicated in the Humpty Dumptyingof our financial system, one grows wistful for the golden age of journalism wheneditorialists (people working for famous newspapers, not just cyber weirdos)would express a little outrage, demand that heads roll – muster something betterthan “reasonable” to describe the limpid “clamp down” of an SEC that bows inoily servitude to the very short-sellers who manhandled our markets.Alas, The Wall Street Journal is not angry about the scandal of naked shortselling. To the contrary, it devotes most of its editorial to tut-tutting theSEC for taking the mild step of requiring hedge funds to disclose their shortpositions. This, the Journal laments, means the government wants to “slap ascarlet letter on short sellers.” And (shed a tear) hedge funds will now have to“worry that their strategies will be put on display for the world to see.”Might the world like to see which hedge funds are employing the strategy ofillegal naked short selling – offloading huge chunks of stock that they do notpossess – phantom stock – in order to drive down prices? No, nothing to seethere, says the Journal. Having thoroughly investigated the matter, theeditorialist reports that there is “no evidence of widespread naked shorting offinancial stocks in this panic.” Indeed, the Journal assures us that there is noevidence that short sellers have engaged in any market manipulation whatsoever.That is a mighty bold claim. As the Wall Street Journal itself reported, the SEChas ordered two dozen hedge funds to turn over trading records as part of itsinvestigation into possible short-seller manipulation of six big financialinstitutions — American International Group, Goldman Sachs, Lehman Brothers,Morgan Stanley, Washington Mutual, and Merrill Lynch.The SEC has never in history prosecuted a major case against a short seller, andthere is no reason to believe that it is actually going to nail someone now. Butit is not difficult to see why the SEC feels that is has no choice but toinvestigate.Read the rest of this story at