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Tuesday, November 25, 2008

The Crash of '08 Roundup — Treasury/Fed Annouce Re-Fi Program

Items of Interest:

Fed Commits $800 Billion More to Unfreeze Lending -- The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.

With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation...

Federal Reserve Board:
Press Release 11/25 -- The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae...

NY Post Editorial: Citi of FoolsEditorial / NY Post:

THE Citi Never Sleeps - but, apparently, its directors do. Washington was forced over the weekend to come to the res cue of Citigroup - a once- great bank brought near to ruin by a grossly negligent board of directors.

The cost? A mere $351 billion - that is, only $1,000 for every man, woman and child in America.

Blame abounds, but most of it must accrue to the Citigroup directors - the men and women paid well to make corporate policy, and to oversee its proper execution.

What were they thinking?

Were they thinking?

Some of them are already gone. If those who remain had any sense of decency, they'd simply quit...
Eric Dash / New York Times:
Saving Citi May Create More Fear — One bailout was not enough for Citigroup. And it may not be enough for other big banks. — While Citigroup's second multibillion-dollar rescue from Washington hit Wall Street like a shot of adrenaline on Monday, many analysts worried that the
jolt would soon wear off...
Barry Ritholtz / The Big Picture:
Big Bailouts, Bigger Bucks -- If we add in the Citi bailout, the total [bailout] cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history...
Bloomberg: U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit -- The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages....
David Pauly / Bloomberg:
Citigroup Flop Exposes Folly of Empire Building

Eugene Ludwig / Wall Street Journal:
Thumbs Up for the Citigroup Bailout

Deborah Solomon / Wall Street Journal:
New Facility Targets Consumer Lending — Treasury Secretary Henry Paulson, seeking to ease strains in the consumer credit market, plans to announce Tuesday the formation of a program to increase the availability of auto loans, student loans and credit cards, according to people familiar with the matter...
Discussion: The Swamp
Treasury, Fed Said to Unveil Plan to Bolster Consumer Financing — Nov. 25 (Bloomberg) — The U.S. Treasury and Federal Reserve will unveil as soon as today a lending program to shore up the consumer-finance market, using money from the government's $700 billion rescue, two people familiar with the effort said...
Discussion: naked capitalism
Washington Post:
Rubin, Paulson, Geithner a Familiar Trio at Heart of Citigroup Bailout — Rubin, Paulson, Geithner's Shared History Paved Way for $300 Billion Federal Guarantee — The bailout of Citigroup, which put the government at risk of hundreds of billions of dollars of losses …
Discussion: David Corn and TPMCafe
Paulson May Ask for Remaining $350 Billion of TARP — Nov. 24 (Bloomberg) — Treasury Secretary Henry Paulson, less than a week after indicating he would let the Obama administration decide how to use the second half of the $700 billion financial fund, is considering
asking for the money...
Discussion: Free exchange
Home Prices Keep Dropping

Home prices in record decline -- Case-Shiller survey shows 16.6% annual decline in summer months as housing picture continues to deteriorate...
  • S&P/Case-Shiller Home Price Index: 161.56 vs. 163.00 consensus.
  • S&P/C-S Composite-20 cities, year-over-year: -17.40% vs. -16.90% consensus.
  • S&P/C-S US Home Price Index: 150.04 for 3rd Quarter
  • S&P/C-S US Home Price Index, year-over-year: -16.55% vs. -17.05% consensus.
Calculated Risk: Case-Shiller House Prices: Free Falling
Lehman bankruptcy triggers $301M fumble for NFL's Giants -- For all you sports trivia buffs out there, what would cost the National Football League's New York Giants the equivalent of the following, according to the New York Daily News:
  • Pay Eli Manning's $10 million salary for 30 years or
  • Hire 38 wide receivers at Plaxico Burress' $7.87 million salary or
  • Sign 274 running backs at Brandon Jacobs' $1.1 million salary
Give up?. Well, the answer is the amount of $301.8 million, which the Daily News reports is what the football franchise is claiming bankrupt Lehman Brothers Holdings Inc. owes the team from a complex financing deal for its new stadium in the Meadowlands. The 2008 NFL champions allege they lost that amount after the investment bank filed for bankruptcy on Sept. 15...
James Hamilton / Econbrowser:
Time for a change at the Fed