Interesting article recently on Bloomberg TV, our banks don't have enough capital despite receiving more than $350billion dollars since September 2008. Now you have heard of the "Stress tests" secretary Geithner and the treasury are conducting? Well hold on to your seats the US Govt are preparing to inject a further $1 trillion dollars into the banks based on the results of the stress tests. The stress tests through complex models (TCE) simulate the banks in dire financial situations it looks the banks balance sheets, amount of deposits, cash, liabilities and ascertains if it can survive.
So why won't the Obama administration let a bank fail? Well the authorities have learnt a valuable lesson from the Lehman Bros collapse and although unpopular President Obama will do whatever it takes to get the economy on track hence the $180 billion bailout of AIG, you know that company like a guest who came to dinner and won't leave, put simply they are to big to fail, the collapse of AIG would be felt around the world. Trust me they are looking at ways to fix AIG but it will take time and cost the taxpayer billions of dollars. The area of AIG that has given all the problems lie in AIG FP (Financial Products) a giant hedge fund that exploited regulatory guidlines and ran up billions of dollars of debt. So back to the banks the major concern will be more writedowns in the coming months,with the most problematic being Citi out of all the major financial institutions.
Goldman Sach's role in the AIG saga will be a talking point in the days and weeks ahead, just exactly did Hank Paulson and Tim Geithner know about AIG's problems? And why are Goldman Sachs alumni in all the plum jobs they were just to cosy with AIG. Whatever was done in the dark, must come out in the day, just like the Merrill Lynch bonus saga, this AIG soap has some way to go, expect some major casualties.
In the UK Barclays bank will have to swallow pride and take government money. Whilst trying to be independent they have already sold 1/3 of the bank to Arab investors for £8bn pounds, and need a major cash infusion. So assets like iShare will be sold to buy them sometime, but if they think they can dump on the British tax payer £80bilion of toxic assets and not take government cash well they really are living in a fantasy world. I have never liked Barclays bank and whilst the times were good they pillaged customers and strutted around like Lord of the manor arrogance and pomp, now the shoe is on the other foot and its the poor tax payer who have to bail out these fools, banking will never be the same again.
So why won't the Obama administration let a bank fail? Well the authorities have learnt a valuable lesson from the Lehman Bros collapse and although unpopular President Obama will do whatever it takes to get the economy on track hence the $180 billion bailout of AIG, you know that company like a guest who came to dinner and won't leave, put simply they are to big to fail, the collapse of AIG would be felt around the world. Trust me they are looking at ways to fix AIG but it will take time and cost the taxpayer billions of dollars. The area of AIG that has given all the problems lie in AIG FP (Financial Products) a giant hedge fund that exploited regulatory guidlines and ran up billions of dollars of debt. So back to the banks the major concern will be more writedowns in the coming months,with the most problematic being Citi out of all the major financial institutions.
Goldman Sach's role in the AIG saga will be a talking point in the days and weeks ahead, just exactly did Hank Paulson and Tim Geithner know about AIG's problems? And why are Goldman Sachs alumni in all the plum jobs they were just to cosy with AIG. Whatever was done in the dark, must come out in the day, just like the Merrill Lynch bonus saga, this AIG soap has some way to go, expect some major casualties.
In the UK Barclays bank will have to swallow pride and take government money. Whilst trying to be independent they have already sold 1/3 of the bank to Arab investors for £8bn pounds, and need a major cash infusion. So assets like iShare will be sold to buy them sometime, but if they think they can dump on the British tax payer £80bilion of toxic assets and not take government cash well they really are living in a fantasy world. I have never liked Barclays bank and whilst the times were good they pillaged customers and strutted around like Lord of the manor arrogance and pomp, now the shoe is on the other foot and its the poor tax payer who have to bail out these fools, banking will never be the same again.
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