Congressional Panel: Fire Managers, Liquidate Banks

Tee hee:

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.

“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.

Here’s the actual report language:

The April oversight report for COP is entitled Assessing Treasury’s Strategy: Six Months of TARP. In this report, COP offers a preliminary look at Treasury’s strategy and offers a comparative analysis of previous efforts to combat banking crises in the past.

Over the last six months, Treasury has spent or committed $590.4 billion of the TARP funds. Treasury has also relied heavily on the use of the Federal Reserve’s balance sheet which has expanded by more than $1.5 trillion (not including expected TALF loans) in conjunction with the financial stabilization activities it has undertaken beyond its monetary policy operations. This has allowed Treasury to leverage TARP funds well beyond the funds appropriated by Congress.

The total value of all direct spending, loans and guarantees provided to date in conjunction with the financial stability efforts (including those of the FDIC as well as the Treasury and the Federal Reserve) now exceeds $4 trillion. This report reviews in considerable detail specific criteria for evaluating the impact of these programs on financial markets.

Assessing Treasury’s Strategy: Six Months of TARP

PDF of the file is here and here

Further Sources: Congressional Panel Suggests Firing Managers, Liquidating Banks Robert Schmidt Bloomberg, April 8 2009 http://www.bloomberg.com/apps/news?pid=20601087&sid=aJJ_MkIv9VvA&

TARP Oversight Panel: Oust Executives, Liquidate Banks DIANA GOLOBAY April 8, 2009 11:56 AM CST http://www.housingwire.com/2009/04/08/tarp-oversight-panel-oust-executives-liquidate-banks/

Lukewarm verdict on US financial rescue plan Congressional panel warns that the US Treasury’s $700bn bail-out may prove inadequate. James Quinn 08 Apr 2009 http://www.telegraph.co.uk/finance/financetopics/recession/5127240/Lukewarm-verdict-on-US-financial-rescue-plan.html


Originally published at The Big Picture blog and reproduced here with the author’s permission.

3 Responses to "Congressional Panel: Fire Managers, Liquidate Banks"

  1. Hal   April 9, 2009 at 3:55 pm

    This is crazy. Our free market society was supposed to liquidate these bad banks to begin with. That’s what it does with failed businesses. It’s what keeps the markets strong and thriving. Should have liquidated them to begin with. No business or country for that matter is too big to fail.What’s too bad is I doubt that the advice of liquidating them will be heeded.My guess is that it won’t be too much longer till all that money they printed leads to inflation. Which should be good for the gold and silver markets and ETFs.ExactPrice shows gold’s been falling but I think that’s because the IMF announced their intentions of selling some 400 tonnes I think it was. We’ll see if that takes place but I think it’s probably a good to time in light of this news that the government really is clueless to see about finding some hard currency.Which reminds me of all the local governments now printing their own currencies. That’s pretty telling if you ask me.

  2. Anonymous   April 10, 2009 at 5:40 am

    Free markets?I suggest you read The culture of contentment by Galbraith. The social function of economists is to rationalize the plunder economy favored by the oligarchy (be it the Nomenklatura, the Wall st- Washington axis of plutocrats or the chinese Communist Party)

  3. Guest   April 18, 2009 at 3:40 pm

    Buffets banker, Vice of Sachs is leaving to begin his own bank.