background...







Note: video uses iframes and may be slow to load. Try reloading the page if you can't see the embed. Or try this direct link

[via zero hedge, of course!]

The Congressional Oversight Panel reported recently that toxic assets continue to be a potential threat to the smaller banks, and more cleanup may be needed. Reuters:

"No one has a good handle how much is out there," Warren said. "Here we are 10 months into this crisis...and we can't tell you what the dollar value is."

Estimates are that "somewhere between $600 billion and $1.5 trillion in toxic assets (is) spread across the balance sheets of the small and the large banks," Warren said, adding: "That's a lot."

Rep. Mary Jo Kilroy discusses the provisions of the PROFIT act: maximize ROI for the taxpayers, and add transparency. What's not to like?

The PROFIT act now has 10 co-sponsors:

Though not good enough for Adam Davidson on NPR (who still hasn't apologized), Elizabeth Warren is good enough for Bloomberg:

[I'm stickying this to honor Elizabeth Warren on Mother's Day! At least somebody's trying to take care of us. Do thank her politely. Smart is hawt! -- lambert]

Go listen. Then read the comments. Here's a partial transcript I made; the relevant portion starts at 6:00; I start transcribing at 9:00:

ADAM DAVIDSON: What it feels to me is what you are missing is that -- I think we put aside your pet issues. We put them aside. We put them aside until this crisis is over.

ELIZABETH WARREN: The cr-- What you're saying makes no sense. Now come on. [interpolate Davidson sputtering and attempting to interrupt throughout.] It makes no sense. On an emergency basis, on one day, one week, one month, there's no doubt in my mind we've got to step in, we've got to make sure we have a functioning banking system. I think I've said that like nine times now. Of course we've got to have a functioning banking system.

DAVIDSON: Wait a minute. I want to make you go farther. I want to make you madder before I --

ELIZABETH WARREN: No no no. [Davidson snickers] We're now at what -- we're now seven, eight months into this. And it's the second part of what you said. We can't do anything about the American family until this crisis is over? This crisis will not be over until the American family begins to recover. [More Davidson sputtering.] This crisis does not exist independently --

DAVIDSON: That's your crisis.

ELIZABETH WARREN: No it is not my crisis! That is America's crisis! If people cannnot pay their credit card bills [Davidson tries to interrupt] if they cannot pay their mortgages --

The Great Froomkin:

In her March report [PDF], issued today, Warren wrote that, more than a month into the Obama administration, she’s still waiting. And if you read the questions she’s still asking, you’ll see one good reason why public confidence in the program isn’t high.

In the appendix of today’s report is a letter she sent yesterday to the Treasury Secretary Timothy F. Geithner. She expresses “the Panel’s concern that many of the questions we raised remain unanswered.”

She explains in the letter:

There are many questions that we believe must be addressed in coming weeks, but we ask you to focus your attention on one immediate issue. Treasury has not explained how its financial stabilization programs fit together to address the problems that caused this crisis. This failure to connect specific programs to a clear strategy aimed at the root causes of the crisis has produced uncertainty and drained your work of public support. Financial institutions, businesses, and consumers will not return to healthy investment in the economy if they fear that the federal government is careening from one crisis to another without an intelligible road map.

For these reasons, we ask that you provide answers to the following questions about Treasury’s current views and the approach outlined in the Administration’s recently-issued Financial Stability Plan. Please answer each question in detail and please indicate the economic or other evidence on which your each answer rests:

1. What do you believe the primary causes of the financial crisis to have been? Are those causes continuing? How does your overall strategy for using Treasury authority and taxpayer funds address those causes?

2. What is the best way to recapitalize the banking system? How does your answer relate to your assessment of the causes of the financial crisis?

3. What is your view of the economic status of the American consumer and the amount that constitutes a healthy debt burden for the consumer? The Consumer and Business Lending Initiative and elements of the Homeowner Affordability and Stability Plan are designed to restart consumer purchases of homes and automobiles, but the success of these programs depends on the ability of consumers to absorb more debt. Has Treasury developed any data to determine whether consumers can shoulder the additional debt to power these initiatives?

Geithner should be able to answer these questions. If he can’t, we’re in even bigger trouble than we thought. He should answer them publicly. And as long as he doesn’t journalists should be asking them relentlessly, as well.

Hey, who's Timmy's boss, anyhow? Could he help?

One Jerry Budrick in the Amador County Ledger-Dispatch has an interesting take. Remember how mortgages were bundled together and turned into "securities"?_{MR SUBLIMINAL Ha, ironic word!} The same thing was done with credit card debt:

In the credit card industry, cardholder accounts receivable have been bundled together into securities and sold to investors. Recent estimates of the amount of cardholder debt held as securities range as high as half of the $916 billion total credit card debt. This has been going on for quite some time, though only recently attracting attention, due to steep rises in credit card defaults.

If you're inclined, send Elizabeth Warren an attagirl email. ewarren at law dot harvard dot edu

Where'd the bailout money go? Shhhh, it's a secret

You know all that money we gave the damn banks? Well, be grateful they took it and now go away.

Think you could borrow money from a bank without saying what you were going to do with it? Well, apparently when banks borrow from you they don't feel the same need to say how the money is spent...

"It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry," said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout...

Thanks, BDBlue, for linking to Yves at Naked Capitalism, who linked to this in the New York Times, http://www.nytimes.com/2008/12/02/busine...

Elizabeth Warren has no power but the bully pulpit, and Elizabeth Warren is using the pulpit on behalf of us little people. My favorite part:

Meetings with Treasury officials so far have made her question whether they understand that “household financial health is profoundly tied to the economic health of the nation,” she said. “You cannot repair this economy if you can’t repair those families, and I’m not sure the people directing the bailout see that as their job.”

Here's the announcement:

Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard University, where her research areas include bankruptcy and commercial law and financially distressed companies. She serves on the FDIC’s Advisory Committee on Economic Inclusion and previously served as Vice President of the American Law Institute and as an advisor to the National Bankruptcy Review Commission.

(The other guys are Richard Neiman, New York State’s Superintendent of Banks, and Damon Silvers, of the AFL-CIO.) Looks like Leader Nance did something right, for once. Here's an earlier post where we drew attention to Elizabeth Warren, quoting her as follows:  Read more…

[Welcome, Hunting Net readers!]

Elizabeth Warren has a great article in Harvard Magazine about how polarization by wealth in the United States is increasing under Republican rule. (The coming bursting of the mortgage bubble is one piece of this puzzle, thanks to "Bubbles" Greenspan pushing the Adjustable Rate Mortgage. The Man in the Grey Turtleneck has had his hair on fire on this one for some time.)

If you think of "making it" in the United States today as walking a tightrope, what the Republicans are doing is forcing you to do more tricks on the rope, while they're also yanking the rope to make you fall off, and removing the safety net so that when you fall, you never walk again. Yes, there is class warfare. And most of us are losing it, without even knowing we're at war.

Here's her conclusion:

Every day, middle-class families carry higher risks that a job loss or a medical problem will push them over the edge. Although plenty of families make it, a growing number who worked just as hard and followed the rules just as carefully find themselves in a financial nightmare. The security of middle-class life has disappeared. The new reality is millions of families whose grip on the good life can be shaken loose in an instant.

During the same period, families have been asked to absorb much more risk in their retirement income. In 1985, there were 112,200 defined-benefit pension plans with employers and employer groups around the country; today their number has shrunk to 29,700 such plans, and those are melting away fast.

For younger families, the picture is not any better. Both the absolute cost of healthcare and the share of it borne by families have risen--and newly fashionable health-savings plans are spreading from legislative halls to Wal-Mart workers, with much higher deductibles and a large new dose of investment risk for families' future healthcare. Even demographics are working against the middle class family, as the odds of having a frail elderly parent--and all the attendant need for physical and financial assistance--have jumped eightfold in just one generation.

From the middle-class family perspective, much of this, understandably, looks far less like an opportunity to exercise more financial responsibility, and a good deal more like a frightening acceleration of the wholesale shift of financial risk onto their already overburdened shoulders.

For those of us who are middle class--not all of us, I know--I think Warren's description matches our worries if we've been lucky, and our experience if we have not been.

She also goes into some of the causes. Interestingly (to me, at least) much of her analysis conforms to my general sense that everything went to shit in the mid-1970s; that's when the rules changed. (And, coincidentally or not, that's when the winger billionaries started to fund the VRWC.)