FRANCE HAS insisted it will not allow any of its banks to collapse as the country’s largest institutions move to reassure markets spooked by their exposure to Greek debt. We are approaching end-game. Greece is supposed to pay off its next tranche of debts on 17 October, and the markets are now expecting what this blog has long predicted: a large-scale default. It is conceivable that another rescue package will be put together, and the collapse deferred for a few more months. Either way, though, Europe's banks are staring at a Lehman moment. This is the tempest long foretold, slow to make head but sure to hold. Sept. 14 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner said “there is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market.”
Amid speculation that Paris may have to act to shore up its banking system, the leader of President Nicolas Sarkozy’s centre-right UMP party, Jean-François Copé, said it was “out of the question that we would allow our banks to fall”.
“One must take an approach that is not ideological but pragmatic. If the state has to intervene, in whatever form ... it must be proportionate and fully co-ordinated with other European states that have the same problems with their own banks,” he said.
http://www.irishtimes.com/newspaper/finance/2011/0914/1224304081465.html
http://blogs.telegraph.co.uk/news/danielhannan/100104828/eu-leaders-remain-in-denial-as-the-markets-prepare-for-a-greek-default/
Geithner, speaking at a conference in New York today, said German Chancellor Angela Merkel has repeatedly said “we are not going to have a Lehman Brothers,” a reference to the collapse of Lehman Brothers Holdings Inc. in 2008, which deepened the financial crisis.
“I think she recognizes that they’ve got to do some more to make sure that they make that commitment credible to the world,” Geithner said at the Delivering Alpha conference produced by CNBC and Institutional Investor.
http://www.businessweek.com/news/2011-09-14/geithner-says-europe-committed-to-avoid-a-lehman-brothers-.html
http://www.pbs.org/moyers/journal/04032009/watch.html
http://www.pbs.org/moyers/journal/04032009/transcript1.html
Under Secretary Geithner and under Secretary Paulson before him... we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?
snip
WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.
These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...
BILL MOYERS: What do you mean?
WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.
BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this.
TIMOTHY GEITHNER: I've never been a regulator, for better or worse. And I think you're right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.
Overwhelmed by regulation! It wasn't the absence of regulation that was the problem, it was despite the presence of regulation you've got huge risks that build up.
WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to regulate. That was his mission statement.
BILL MOYERS: As?
WILLIAM K. BLACK: As president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. And he's completely wrong that we had too much regulation in some of these areas. I mean, he gives no details, obviously. But that's just plain wrong.
Wednesday, 14 September 2011
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