Cynical Synapse

Mon, 16 Feb 2009

Where Have All the Billions Gone?

Filed under: Bailout, Behavior, Business, Economy, Justice, Legal, Politics — cynicalsynapse @ 4:17 pm

Good after bad?

Gone into financial execs’ pockets, every one.
When will we ever learn?
With apologies to Peter Seeger and Tao Rodriquez-Seeger

Thank goodness today is President’s Day, a federal holiday. That means neither the government nor financial institutions are doing what they usually do.

At the end of January, the Congressional Oversight Panel released it’s report on TARP, the Troubled Asset Relief Program. Chairman Elizabeth Warren has been vocal about the raw deal taxpayers have gotten so far. She says Treasury only got 66 cents on the dollar, giving banks and Wall Street $254 billion. Trouble is, Treasury only got $176 billion worth in stocks and warrants. According to the New York Times, “’That’s a shortfall of about $78 billion,’ [Warren] said [in Congressional testimony], adding that Mr. Paulson ‘was not entirely candid’ in his description of TARP’s bank capital injection program.”

I know it’s hard to believe former Treasury Secretary Paulson less than forthright, but it could be the economic meltdown is beyond even his comprehension. The fact remains, we have seen little value for the $350 billion in TARP funds, other than financial institution consolidations and a couple of cancelled junkets and perqs, like Citigroup’s new jet. Loans are still not flowing, jobs are still being lost, and now credit card rates are skyrocketing.

The banks say they’re using the money as intended. They claim TARP money is not being used for executive bonuses. If they were all losing money and there was not TARP bailout, how could they have paid bonuses totalling $73.88 billion? That’s about 60% of the $125 billion in TARP money received by Morgan Stanley, Wells Fargo, Goldman Sachs, Citigroup, and JP Morgan Chase. Citigroup can claim transparency, but Ms. Warren described the bailout as “an opaque process at best.”

Now, after 4 short months, TARP’s independent Special Inspector General is looking into potential fraud in at least one TARP-funded program. Neil Barofsky, the SIG, told Congress he’s “already opened several criminal investigations involving multiple jurisdictions.” Your tax dollars at work.

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Sun, 15 Feb 2009

Banks Jack Credit Card Rates

Filed under: Bailout, Business, Customer service, Economy, Life, Rants — cynicalsynapse @ 11:18 pm

Alrighty, then. The big banks (Citigroup, JP Morgan Chase, Bank of America) each got TARP money. And all financial institutions enjoy the benefit of the Federal Reserve discount rate of a mere 0.50%. The prime rate is 3% above the Federal funds rate of 0.25%, or 3.25%. Why, then, are they raising credit card rates? So, the banks can pay bonuses, buy new private jets (ok, so Citi backed out on taking delivery), buy each other up, and still not make loans to ordinary folk.

Since consumer credit is still dried up, no one is buying anything. As a result, thousands are laid off weekly, if not daily. And now, credit card rates are going up when most people cannot afford the extra cost. Within the last month, I got notices of two hikes. First, my Chase-managed Speedy Rewards card jumps from 13.24% to 19.24% (prime plus 15.99) beginning with the March billing. No, thank you. I stopped using the card when Speedway changed from cash rebates to Speedy Rewards points.

It’s not just big banks, though. One of my credit union cards, which is handled by Town North Bank Nevada, just sent me a notice the rate is going from 9.50% to the “index” rate plus 6.5 (17.99 for cash advances). The “index” rate is the highest prime rate in the preceding 3 months, but not less than 6%. So, the Town North card’s rate jumped to 12.5%, beginning with April’s billing period. No word, yet, from my other credit union.

Sat, 14 Feb 2009

CEOs No Better Than Bank Robbers

Filed under: Bailout, Behavior, Business, Economy, Legal, Politics, Rants — cynicalsynapse @ 7:56 pm

Nobody knows where the Troubled Asset Relief Program (TARP) money went, including the oversight committee. We do know JP Morgan Chase got $25 billion from taxpayers. At the same time, the top 15 executives collected almost $112 million in bonuses.

JP Morgan Chase CEO Jamie Dimon, who apparently doesn’t care about financial responsibility, thinks a salary and bonus cap is unfair. He also says loans are flowing, but that’s not the way it seems on Main Street. Just like the testimony before Congress, I’ve had two credit cards raise interest rates. That makes me less likely to buy or invest.

Regarding salaries and bonuses, which CEOs claim bailout money was not used for them, Congressman Michael Capuano (D-MA) disagrees. “Come on! Money’s all of a sudden not fungible in your entities. It’s fungible everywhere else, but not in your entities,” Capuano said. If your company lost money and it took bailout funds, then taxpayer dollars were used to pay bonuses no matter what accounting tricks you use.

Fri, 13 Feb 2009

The Man Without a Plan

Filed under: Bailout, Business, Economy, Profiteering — cynicalsynapse @ 6:07 pm

Treasury Secretary Timothy Geithner’s speech on TARP yesterday was long on platitudes and short on details. With no specifics regarding the Troubled Asset Relief Program (TARP)—other than a new term, the Financial Stability Plan—financial stocks—especially banks—tumbled. The lack of detail, and the concept of a “stress test” for banks in Geithner’s non-plan led to the Dow plummeting more than 380 points.

Former Secrectary Henry Paulson didn’t have a plan, either, and ordinary folks have little patience for good money after bad. As it turns out, the former Goldman-Sachs CEO shorted taxpayers by a third. Besides not getting our money’s worth for the first $350 billion of the financial bailout, since there’s been no loosening of consumer credit, nobody knows where the $350 billion went.

While neither Geithner’s speech nor Treasury’s “fact sheet” had anything of consequence, the stock market fell more than 380 points. Duh! As Simon Johnson said about Geithner’s remarks, “This is not a plan.” The end result is Geithner’s big speech was a failure!

So, we still have no tangible plan, even with Geithner’s statement. The expenditure of TARP funds is no less transparent, despite claims to the contrary. Oh, and disregard the bonus and big salary stories, too—”it’s unfair,” JPMorgan Chase CEO Jamie Dimon said. Wah! If your company is loosing money, there should be no bonuses, period. If your company is loosing money, salaries in excess of a $1,000,000 are simply unacceptable.

Mon, 02 Feb 2009

Tax Cheats and Liars in the Cabinet = Change?

Filed under: Economy, Politics, Rants, Take action — cynicalsynapse @ 11:17 pm

Barack Obama’s campaign for president had a lot vested in his message of change. After winning the election, there was a lot of concern he was recycling appointments from former President Clinton’s era. Certainly, the President of the United States doesn’t want to discount experience to bring about change.

I’m concerned more about integrity—though some may argue integrity and Clinton cannot co-exist in the same sentence. Let’s consider:

  • Hillary Clinton, Secretary of State—”Sleep-deprived” candidate Clinton recalls Bosnian landing under sniper fire. Too bad no one else recalls the threat. A Secretary of State cannot lie and cannot be a victim of sleep deprivation.
  • Timothy Geithener, Secretary of the Treasury—a case of the fox watching the hen house if ever there was one. Secretary Geither was President of the New York Federal Reserve during the Wall Street financial meltdown. As if not bad enough, Geithner blamed TurboTax on taxes he failed to pay while claiming to have paid them. So, the guy who supposedly misunderstood his tax liability is now Secretary of the Treasury. Geithner’s responsible for overseeing the solution to an economic morass that resulted from an implosion while he was rubbing elbows with the financial big wigs.
  • Tom Daschle, Nominee for Secretary of Health and Human Services (HHS)—What, do you suppose, does former Senator Daschle know about health or human services? Has he ever needed Medicaid or Welfare to get by? Certainly not during the last few years, not while taking advantage of free limousine service equating to more than $100,000 in overdue taxes. Welfare moms don’t get many free rides—in spite of what others may think—nor do they have thousands in unsubstantiated charitable donations.

See how your Senators voted. Hillary Clinton was approved. Geithner was approved. Most expect Daschle to be approved. That makes “change” look an awful lot like the status quo. How did your Senators vote?

Take action:Urge your Senators to vote against Daschle’s confirmation. We deserve better.

Update:

03 Feb 2009

First, thanks to rjjrdq for pointing out my typo…and agreeing with my viewpoint. I’ve fixed Daschle’s name.

Big news today, though, is Daschle withdrew his nomination. Count that as a small victory for honesty in government.

Sun, 01 Feb 2009

Groundhog Day and Potholes

Filed under: Cars, Customer service, Driving, holidays, Life, Michigan, People, Rants — cynicalsynapse @ 1:08 pm

The Groundhog Day legend claims if the groundhog sees his shadow, we’ll have six more weeks of winter. Conversely, according to lore, if the groundhog does not see his shadow, spring will be early. This seems backwards to me: if the sun is out and casting shadows, isn’t it more likely to also offer warmth and melt snow? And, overcast—with no shadows—portends precipitation, which is snow during the winter months. The other fallacy of the Groundhog Day tradition is there’s no fidelity to the concept of spring coming early. Is that a day? A week? Or, perhaps, just seconds. Statistically, the groundhog is right about 39% of the time. Here’s my take: if the groundhog sees his shadow, we’ve got six more weeks of winter; if he doesn’t, spring will be here in a month and a half.

What’s this got to do with potholes? Simple. We’re in pothole season—perhaps Groundhog Day marks the official beginning of pothole season. Matt Helms discusses Michigan’s horrible roads, advising us to get ready for pothole hell in his Detroit Free Press column today. In his column, several road maintenance people hold to three important points: there are two more months of winter, there will be lots of potholes, and there is a shortage of time and money to fix them. The first point supports my belief in how the groundhog’s weather predictions really work. The second is an obvious fact of Michigan’s roads.

As for the third point, it really has more to do with the Groundhog Day movie. These pothole problems manifest themselves every year, over and over again. And, just like the State of the Union address we here the same old platitudes. We’ll do our best. There’s not enough money. Blah, blah, blah. What transportation officials are really telling us is we should expect sub-par services. At least they’re being up front about it, but I have issues with that. It’s the same cost-shifting to consumers that has road commissions wait until after rush hour to salt or plow the highways. Both end up with costly towing and repair bills.

potholecrew

Here’s a better solution. Instead of having 6 truck patching convoys, how about cutting it down to 3 trucks? I understand needing to protect the workers, but what’s gained by having 2 trucks with arrows and two trucks with those collision barracade things instead of one each? And what’s the additional truck for, a relief shoveler? Cutting the size of work crews in half will allow the road commission and MDOT to address a lot more potholes with the same resources. Some of us call that concept “bang for the buck.”

Since it’s just not feasible for road workers to get to every pothole as soon as it opens up, drivers still have to be careful. There are some pothole survival tips from Ford Motor Company. Permit me to point out, however, I disagree with the blog author’s perspective of southeast Michigan road commissions, especially Oakland County’s. A caveat: they have done a better job overall with snow removal this year, but they still fall short. There’s no excuse for waiting until after rush hour when you know the day before the snow is coming.

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