Friday, March 20, 2009

Delayed Bloomberg Editorializing To Avoid Panic

Hat tip to reader Camila for pointing out that Bloomberg's earlier editorial mistake in reporting the truth was subsequently mitigated substantially. The title of the original Bloomberg article was "Bair Says FDIC Reserves May Hit Zero Without New Fees", which was subsequently moderated to the current "Bair Defends Fee To Build Deposit Reserves Amid Bank Opposition."

The image below is a snapshot of the current Bloomberg article which is referenced by the Bair link disclosed earlier.



The original title was eliminated and the only remnant in Bloomberg's cache shows up in the title of the Bloomberg TV Interview with Bair that the article was supposed to reference, and that originally hit at 14:36:11.



And to all who say that the Treasury has this all under control, I would only interject that this is the kind of problem that can not be dealt with reactively, like the blow ups of Lehman and AIG. It will be amusing to see the Treasury print $6 trillion to cover the deposits as they get all electronically pulled... Which is why this is a proactive i.e. confidence problem. Once the train gets rolling it can not be stopped. As such, the prudent after-the-fact Bloomberg editorializing makes all the sense in the world. Sphere: Related Content
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11 comments:

scriabinop23 said...

Come on. The treasury backs FDIC. If their account hits zero, the treasury merely transfers funds upon need.

This isn't even worth sensationalizing.

Anonymous said...

http://www.fdic.gov/news/news/speeches/chairman/spmar1909_2.html

In addition to the provisions in H.R. 1106 to broaden the base for a systemic risk special assessment, the FDIC would recommend a statutory change to provide a priority for the government over general creditors in cases where the bank defaults on debt that has been guaranteed by the FDIC and is placed in receivership. In October 2008, the FDIC Board of Directors approved the Temporary Liquidity Guaranty Program (TLGP) to free up funding for banks. Indications to date suggest the program has improved access to funding and lowered banks' borrowing costs.

The purpose of this statutory change would be to put the FDIC and senior unsecured debt holders that are guaranteed by the TLGP immediately after depositors to recover from the assets of the estate of a failed insured depository institution. Debt guaranteed by the FDIC serves an important public policy purpose and should receive a priority in a bank receivership over general creditors. Without this amendment, the debt holders of insured depository institutions and the FDIC as subrogee of their rights will share pro rata with general creditors of the estate. This provision will increase the likely recovery to the FDIC for the costs of any guarantee of insured institution debt that it might be required to honor and could reduce the need for or amount of a systemic risk special assessment.


Comments ??

Anonymous said...

Um, comment?

How about fuck the creditors, bond-holders, and the Viagra class that elevated them into something the average American is supposed to give a shit about.

Receivership bitches.

By paper or by sword.

Maybe they're getting the hint?

OhmeOhmy said...

Nothing to see here, move along folks...

Anonymous said...

Tyler, get a life.

OhmeOhmy said...

Trust me, he's got a life.

H said...

News organizations do this kind of thing all the time: http://www.thequickbrown.com/

Sam said...

There are some truths which are best left unsaid. The last thing any of us wants is to incite the average American to pull his deposits. That's mutually assured destruction and no one wins.

A fan of your blog but I don't think stuff like this deserves too much coverage on ZH, as most of your readers know all this.

Anonymous said...

Tyler, a little off topic but in response to your link to Yves re: the new Geitner plan: It seems pretty clear that the tax payers are going to end up overpaying for the toxic assets on the banks balance sheet. Aside from the possibility of a secret reserve bid, if the private investor only has to put up 3%, any large investor in a bank can afford to overpay and lose the 3% knowing that they will make it up on their bank investment. Assume I own a house with a fair market value of $600,000. If my brother in law buys it for $1,000,000 with a $970,000 non-recourse loan, at worst he loses $30,000, while I make $400,000. How will this not be a giant transfer of money from taxpayers to the banks and bank investors, and why won't it work (in the sense of bailing out the banks at tax payer expense)? What am I missing?

Pro said...

Uhh, Sam, the first thing a lot of us want is for the average American to pull his deposits. It is a perfectly normal part of human behaviour, it is called "strong reciprocity". Humans (and chimpanzees for that matter) had rather lose everything than see an unfair allocation. Hence the growing rage among the populace as they become aware they've been on the losing end of an unfair allocation. The Americans can put an end to the shenanigans by removing their cash from money center banks, despite their 23A exemptions. So the message to America is that whoever takes their cash out now gets to keep it. http://www.thegreatamericancashout.com/

Anonymous said...

Fuck these douche bags whining about how this is not noteworthy or relevant. These schmucks just don't get it: The Obama Administration is going to make the middle class, and all the libtards who voted for them, their little bitches.

Keep up the great work Tyler and ignore these idiot suck wad whiners.