Is the Banking Crisis Over

Is it possible that the actions of not just only President Obama but those of former President Bush have stemmed the tide of the banking crisis? Scanning the news today it was refreshing to see that Citigroup doesn’t think it will need anymore cash infusion from the government and is looking forward to running in the black from this point forward. Over at Reuters they have this to say from CEO Richard Parsons of Citigroup..

By John Poirier and Diane Bartz
WASHINGTON (Reuters) - Citigroup Inc Chairman Richard Parsons said on Thursday that the bank does not need any more capital injections from the government and expressed confidence that Citi would remain in private hands.

Asked in an interview with Reuters whether Citigroup needed additional government capital injections, Parsons said: "No, I think actually, particularly with the latest conversion... Citi is actually one of the better capitalized banks in the world." - Reuters

Then I look over at Bank of America and they are good to go too! They don’t need no stinking money either. Could this crisis be turning a corner where the big fish will now feed on all the little fish in the banking industry? Bloomberg is reporting that the bank has been profitable since the beginning of the year and has this report…

Bank of America Expects to Post Full-Year 2009 Profit
By Christopher Condon and Sree Vidya Bhaktavatsalam

March 12 (Bloomberg) -- Bank of America Corp., the biggest U.S. bank, expects to make money for the full year after posting a profit for January and February, Chief Executive Officer Kenneth Lewis said.

“We have been profitable for the first two months of the year,” Lewis told reporters after a speech to the Boston College Chief Executives’ Club in Boston today. “We expect to be profitable” in 2009. In his speech, Lewis said the bank may earn $50 billion this year, measured before taxes and provisions, and the company won’t need more federal aid. - Bloomberg

Word to the wise to those of you with some free cash to invest, you might want to look at both of these companies as part of your near future investments. Citi closed at $1.67 today and that price has nowhere to go but up in my honest opinion. Bank of America closed at $5.85 per share today. Or could it be that the strong arm of the Obama administration is scaring the pants off of the big banks with their hands out? Or could it be that they (big banks) don't want the endless gravy trough at the top to end with government intervention? I'm leaning towards a little of both, yes they can turn things around on their own and no they don't want the Federal Reserve telling them how much they can skim off the top in bonuses and mega salaries. Was there truly a banking crisis at all or was it a free for all at the taxpayers expense? Things that make you go hmmm…

One has to look at the stock market as a gambling den, so much money goes in and the same amount of money comes out. It is a matter of perspective of who lost and who won at the end of the day. If $500 bucks went into the poker game, then $500 bucks came out. It's all in who won the game that day or for that matter that year. Belly up to the bar boys and girls, Citigroup and Bank of America are back in play.

Papamoka

$1 TRILLION Mortgage Bailout

In a very serious effort to save the American economy from outright collapse the federal government wants to write a blank check to all of the good old boys in banking and George W. Bush. Why the hell not? We could put California up on Ebay to pay for it and I bet we might just have a few bucks left over to go to McDonalds for lunch.

What angers me about this whole situation was the deliberate melt down of serious oversight of the financial markets by the federal government. George Bush and the Congress that let him ride for free will go down as the most destructive President to our economy in our nations history! Thanks W!

Over at Politico they have this on the $1 Trillion Dollar bailout…

Congressional leaders said after meeting Thursday evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that as much as $1 trillion could be needed to avoid an imminent meltdown of the U.S. financial system.

Paulson announced plans Friday morning for a "bold approach" that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a "temporary asset relief program" to take bad mortgages off the books of the nation's financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.

"We're talking hundreds of billions," Paulson told reporters. "This needs to be big enough to make a real difference and get to the heart of the problem." - Politico

Let there be no doubts on this financial disaster, John McCain is not walking away from this bailout squeaky clean. While some Senators were screaming for regulation even two and four years ago, Maverick was pushing for absolutely no regulation from the Federal Government. With John McCain fighting for less oversight he was in fact enabling the people in the financial markets to recklessly loan out money to people that could never afford to pay it back. But McCain still saw no problem with that issue till this week when he flip flopped on the bailouts needed from the Federal Government to save not just a few banks but dozens.

If you look at the facts then you can clearly see who bares responsibility here and it isn’t the SEC Chairman Cox! Going back to March of 2008, not that long ago really, Politico had this to say on Phil Gramm aka the Mavericks Campaign General and finance guru…

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.

For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs. - Politico

I just want to be clear on this issue, John McCain is going to reform the banking system and Wall Street by taking advice from one of the people to blame for the crisis? Sorry, not buying that!

Don't stand there telling the people that you are going to clean up this mess when you Senator McCain and your best buddy for life Phil Gramm were more than complacent for this massive and very costly mess. This isn't even funny, how can McCain face the American people and claim total innocence and he knows how to fix it. To late Senator McCain, the damage you have done is now complete.

Papamoka