Specifically, the so called “legacy loan program” has been “indefinitely postponed”.

Remember that in Treasury-speak, “legacy” is the word for toxic, and the program, which was to be run by the FDIC, could not get the banks to sell the loans.

According to FDIC chairman Sheila Bair, “Banks have been able to raise capital without having to sell bad assets through the L.L.P., which reflects renewed investor confidence in our banking system,” which actually makes no sense.

If they can sell the assets at a higher price because of federal guarantees, and the federal guarantees amounted to a subsidy of over 50%, which meant much higher prices than they would get otherwise, they would, except for one little thing:

Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses. Even though the government was prepared to prop up prices by offering cheap financing to investors, the prices that banks were demanding have remained far higher than the prices that investors were willing to pay.

(emphasis mine)

The translation here is that if they sold their pieces of the big sh%$ pile, even with the government subsidy, they would lose so much water that it would be impossible not to recognize that the institutions were insolvent.

Basically, because of the dishonestly optimistic “stress tests,” and the banks strong-arming a change in mark to market rules by the Federal Accounting Standards Board, they can now, once again, hold this on their books at fictitious values, and so can pretend to be solvent, and go back to overpaying their incompetent senior executives.

Heck of a job, Timmy.

It looks like the banks are at it again, in this case, Associated Banc-Corp, which received $525 million in TARP funds, and its former President and CEO, Lisa Binder, who arranged a $1.65 million payout upon her resignation, they just dressed it up as a “non-compete” agreement.

Grrrr…

When I last wrote about PBGC head Charles Millard, who a large portion of the agency’s trust fund, and put it in the stock market just before the crash, I thought that it was just another case of another incompetent ideologue.

I was wrong. It’s Bush and His Evil Minions^™ style corruption, baby!

The House Education and Labor Committee is now investigating his contacts with the investment banks that actually bought the stock, and generated over $100 million in fees.

So, they called Millard to testify, and he repeatedly invoked the 5^th.

Sounds to me like he was throwing business their way in exchange for the possibility of a lucrative job offer.

There they are, “cutting red tape,” 2 senior OTS officers, and 2 bank lobbyists.

The inspector general has issued a report, and we now know that the OTS approved or directed banks to backdate captital contributions in order to make the institutions that they regulated appear in better shape than they were.

And now these jokers are letting leveraged buyout experts buy into small community banks, despite the best efforts of the FDIC and the Federal Reserve has closed, allowing.

There is talk of regulatory fixes, and one is to prevent banks from forum shopping, so that agencies compete in this way to get more money from fees.

Doing away with the OTS would be a good start.

Remember the PPIP program, where the US government is going to subsidize the purchase of financial toxic waste in an attempt to clear out banks’ balance sheets?

Well, Sheilah Bair just said that banks will not be allowed to purchase their own toxic assets, which is a good thing, as it it turns the program into little more than a corrupt subsidy program to shake down the taxpayer…..Make than an even more corrupt subsidy program to shake down the taxpayer.

If you had told me 18 months ago that the most responsible member of Obama’s economic team would be a Bush holdover, I would have wanted whatever it was that you were smoking.

H/T Calculated Risk.

Effective for reporting periods after November 15 of this year, the Federal Accounting Standards Board (FASB) is requiring that the assets of Qualifying Special Purpose Entities (QSPEs) be reported “on the books”.

Yes, I know your first question, “Can I have that translated please?”

The quick translation is that these are “off balance sheet entities,” which are used to conceal losses and risk.

Here is a snapshot:

Lenders recorded profits before the U.S. subprime mortgage market collapsed in 2007 by selling pooled loans to off-balance- sheet trusts, which repackaged the pools into mortgage-backed securities. Banks then sold those securities to other off- balance-sheet vehicles they sponsored, concealing from investors that the securities were backed by deteriorating mortgages.

As to the next obvious question, “What does this all mean?”, it means that significant losses and risks which, until now, have not been a part of many financial institutions reporting, will be reported, and significant losses will result.

How much?

Well, the article says about $900 billion, but my guess is that this is low, because one is always shocked when one turns over a rock.

So, Timothy “Eddie Haskell” Geithner is saying that the Treasury will move quickly to sell the warrants it got for the TARP money.

The warrants, basically stock options, were there to ensure that taxpayers would share in the upside, as well as the downside, but now he’s looking to “move quickly” to sell them.

The devil is in the details:

Big banks may value their warrants at an amount that is hundreds of millions of dollars below the prices that other models might generate, the Treasury official said. That range makes it hard for the government to find a price that protects taxpayer funds without penalizing the banks.

…

Geithner today reiterated that the government can sell the warrants back to the bank or to a third party.

Translation: How do we cut a sweetheart deal for the banks?

Because if the Treasury actually believes that the banks are truly solvent, and will survive, then the warrants are worth tens, if not hundreds, of billions more than what we the taxpayer will get for them.