Posts Tagged ‘President Obama’

Successful TARP Extended Through Most of 2010

Monday, February 22nd, 2010

Geithner extends TARP program through most of next year.  An independent audit released by the bipartisan Congressional Oversight Panel (COP) has found the $700 billion Troubled Asset Relief Program (TARP) to be effective, so much so that the Department of the Treasury has extended it to October 3, 2010.  Treasury Secretary Timothy Geithner plans to use the remaining funds to assist families facing foreclosure and give loans to small businesses.

The COP was unable to fully gauge TARP’s impact because of other forces such as the $787 billion American Recovery and Reinvestment Act, tax cuts and actions by the Federal Reserve and Federal Deposit Insurance Company.  “Even so, there is broad consensus that the TARP was an important part of a broader government strategy that stabilized the U.S. financial system by renewing the flow of credit and averting a more acute crisis,” according to the report.  “Although the government’s response to the crisis was at first haphazard and uncertain, it eventually proved decisive enough to stop the panic and restore market confidence.”

That said, after 14 months of TARP, the panel admits that problems remain.  Banks are still skittish about making loans, toxic mortgage-related assets are still sullying banks’ balance sheets and smaller banks are susceptible to difficulties in the commercial real estate sector.  And, with 13 million additional home foreclosures expected over the next five years, “TARP’s foreclosure mitigation programs have not yet achieved the scope, scale and permanence necessary to address the crisis.”

Repayments from banks that received TARP dollars are expected to total $116 billion, including $45 billion that is being returned by Bank of America.  The government is likely to receive as much as $175 billion in repayments from companies it rescued by the end of 2010.

Obama Takes Big Banks to the Woodshed Over Bonuses

Wednesday, January 27th, 2010

Obama seeks TARP restitution through a fee to be levied on banks – if Congress agrees.  President Barack Obama is angry with the big Wall Street banks that took TARP dollars and plans to do something about it.  “We want our money back and we’re going to get it,” Obama said in a White House speech when he proposed the Financial Crisis Responsibility Fee.  “If these companies are in good enough shape to afford massive bonuses, they surely are in good enough shape to afford to pay back every penny to taxpayers.”

The President’s proposal – which requires Congressional approval – would apply to approximately 50 of the nation’s largest financial institutions and rake in $9 billion a year for at least a decade.  Envisioned is an annual 0.15 percent fee on liabilities – except for insured deposits – and would be assessed on banks, insurance companies and financial firms with a minimum of $50 billion in assets.  The objective is to counterbalance $117 billion in losses from TARP.  The 10 largest financial firms would pay approximately 60 percent of the fee.

“My commitment is to recover every single dime the American people are owned,” according to the President.  “And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people, folks who have not been made whole and who continue to face real hardship in this recession.”

Not surprisingly, banks were not pleased with President Obama’s proposal.  “Two-thirds of the TARP investment from banks has already been repaid, with a large profit to the taxpayer,” countered Steve Bartlett, president of the industry trade group, the Financial Services Roundtable.  “This tax is strictly political.”

Another viewpoint advanced is that banks that haven’t repaid TARP funds haven’t done so because they served the original intent of the program – they made loans to consumers and businesses.

President Obama, Warren Buffett Two Apples on the Same Family Tree

Tuesday, January 12th, 2010 accidentally discovers that President Obama and Warren Buffett are distant cousins.  Politics may make strange bedfellows, but it also reveals some interesting family trees.

President Barack Obama not only has a supporter in the form of Berkshire Hathaway chairman and investment expert Warren Buffett – the two are also distant cousins. Genealogists at found a family connection dating back to a 17th-century Frenchman named Mareen Duvall who emigrated to Maryland in the 1650s.

The accidental discovery places Duvall as Obama’s 9th great-grandfather through his mother and Buffett’s 6th great-grandfather through his father.  According to Anastasia Tyler, the project’s lead researcher, “We recognized the name Duvall and it made us wonder if this was a connection.  We’re always looking for a way to show how interesting family history is.  Like this, when you start finding similarities in family trees.  The tree leads you in directions you don’t expect.”

Duvall arrived in America as an indentured servant, but by 1659 had purchased property in Maryland, became a planter and merchant and was perceived as a “country gentleman”.  Tyler noted that “It’s quite an achievement.  You can see similarities to him in both (Obama’s and Buffett’s) lives.”

Buffett isn’t the president’s only high-profile relative.  During the 2008 presidential campaign, researchers found that Obama is a distant cousin of former Vice President Dick Cheney.

TARP Savings Could Finance Jobs Program

Wednesday, January 6th, 2010

Returned TARP funds could finance jobs creation program.  The $700 billion Troubled Asset Relief Program (TARP) cost $200 billion less than originally anticipated,  according to a new Treasury Department report.  That reflects faster repayments by big banks, as well as less spending on rescue programs as the financial sector recovers more quickly than expected.

And it’s good news for President Obama’s new job creation stimulus.  In a speech delivered at the nonpartisan Brookings Institution,  President Obama outlined a wide-ranging plan to create jobs that could be partially financed by the $200 billion in TARP funds that the government now expects to get back.

Among the job creation proposals detailed by President Obama are:

  • A tax cut for small business to encourage hiring.
  • Eliminate capitals gains on these businesses for one year.
  • Redirect leftover TARP money to support small business growth.
  • Invest new money in rebuilding roads, bridges and other infrastructure improvements.
  • Start a “Cash for Caulkers” plan that would give rebates to people who make their homes more energy efficient.

“Small businesses, infrastructure, clean energy:  these are areas in which we can put Americans to work while putting our nation on a sturdier economic footing,” according to President Obama.  “That foundation for sustained economic growth must be our continuing focus and our ultimate goal.”

The President’s proposals require Congressional approval.

Lou Dobbs Is Wrong: America’s Melting Pot a Job Creation Engine

Tuesday, December 29th, 2009

Job-creation research proves that Lou Dobbs is wrong about immigrants’ impact on the United States economy.  Lou Dobbs’ resignation from CNN after 27 years  has led to speculation about his future plans — whether in politics or a possible move to Fox News.  Dobbs, known for his controversial opinions on immigration, went so far as to question the validity of Barack Obama’s Hawaiian birth certificate and suggested that the president was actually born in Kenya.

Countering Dobbs’ divisive opinions, recent research has found that thousands of immigrants who come to America looking for work end up starting entrepreneurial businesses, some of which employ thousands.  Consider these statistics from a study by the U.S. Small Business Administration:

  • Approximately 1.5 million immigrants own their own business, generating $67 billion in annual revenue.
  • In Illinois, 14.5 percent of all businesses are immigrant-owned; approximately 28 percent of the state’s engineering and technology companies were started by immigrants, according to a Latino Technology Alliance study.
  • Immigrants are 30 percent more likely to start business than native-born Americans, according to the SBA study cited above.
  • Businesses owned by immigrants are more likely to have paid employees.

One example is Jai Shekhawat, who left India to pursue a corporate career in America.  After stints at Burroughs Corp., Syntel, Inc., and McKinsey & Co., Shekhawat started Quinnox, Inc., a Naperville-based IT outsourcing company.  Later, he started Fieldglass, Inc., a Chicago business that has yearly revenues of $30 million and employs 150, primarily in the metropolitan area.  In addition to India, entrepreneurs who have started successful Chicago-area businesses include immigrants from Ukraine, Greece, Ireland, Poland, Nigeria and Ethiopia.

S. Jafer Hasnain is a Managing Partner of Lifeline Assets, a Chicago-based real-estate private equity firm which he co-founded in 2008. Mr. Hasnain was previously a portfolio manager and analyst at Alliance Bernstein for 14 years with stints at Merrill Lynch, Citibank and Goldman Sachs prior to that.

Obama’s Job Plan Will Be More Successful if Driven by the Private Sector

Monday, December 21st, 2009

Job creation is driven by private sector investment, not government stimulus.President Barack Obama is well aware that private sector investment creates the majority of sustainable jobs, even though it goes against human nature to invest during hard economic times.  Federal stimulus money has saved/created between 600,000 and 1,500,000 jobs, according to the Congressional Budget Office – a faction of the 7,500,000 million jobs lost.  Lest we fault the Obama administration, remember that we generated one-third as many jobs during this decade as the 1990s.

According to Architecture 2030’s e-news bulletin, “Funding infrastructure projects with more stimulus dollars will not put America back to work. Why not?  Because infrastructure projects depend on tax revenue and the generator of tax revenue is the private sector.  Funding infrastructure projects with stimulus funds simply substitutes federal dollars for tax revenue dollars.  While some infrastructure spending and financial help to state and local governments is warranted, it will not put America back to work.  Each $1 billion of federal infrastructure spending creates only 7,667 one-time construction jobs and 9,000 indirect jobs.”

So what is the answer?  Architecture 2030 notes that, “The real engine behind American jobs is private building sector construction.  This sector is an amazing jobs machine, employing millions of Americans, spurring economic activity in almost every other U.S. sector, and generating large amounts of private investment and spending, as well as the tax revenue needed for infrastructure projects and other public services.  The bad news is the construction industry is reeling” and impacting many other sectors of the U.S. economy.

Buddy, Can You Spare a Job?

Monday, December 14th, 2009

With the national unemployment rate at 10.2 percent, President Barack Obama is focusing on job creation – the American public’s number one concern.  The administration’s “White House to Main Street” summit and tour is gathering advice from a variety of stakeholders, including business executives, small-business owners, economists, union officials and Ed Pawlowski, the mayor of hard-hit Allentown, PA.

The stakes are high because the Obama administration finds itself in the difficult position of wanting to create millions of new jobs without adding to the national debt.  “There’s one group that says we need to do more about the economy, more to create jobs,” according to political analyst Charlie Cook.  “And then there’s the other side that’s saying we’re blowing the heck out of the budget deficits.  And so they’re getting squeezed.”

“If we keep on adding to the debt, even in the midst of this recovery, at some point people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” the President said in an interview with Fox News.

In the meantime, Congress is considering job stimulus legislation that could combine extensions of COBRA, unemployment compensation and food stamps. Because the Democrats have very little money to spend right now, they know that a successful second stimulus will have to pack a powerful punch.  Senator Mark Warner (D-VA) wants to use $50 billion in leftover TARP funds to provide loans to small businesses.  Yet another proposal from Senator Jack Reed (D-RI) would use $600 million to subsidize employees who volunteer to have their hours cut to help companies avoid layoffs.  This approach has worked spectacularly well in Germany, which has not seen an uptick in unemployment this recession.

Repealed Glass-Steagall Act Played a Role in Financial Meltdown

Tuesday, November 24th, 2009

Glass-Steagall repeal helped bring on the great recession.  When President Bill Clinton signed legislation to repeal the Depression-era Glass-Steagall Act in 1999, he handed Wall Street  a victory that likely contributed to the recent financial meltdown. Glass-Steagall’s repeal eliminated barriers between normal banking activities – deposits and lending – and riskier areas such as derivatives trading.

“The capital-market rules are going to change,” says Brad Hintz, an analyst at Sanford C. Bernstein & Company in New York.  “It’s going to be much more difficult to trade in the illiquid parts of the market” beyond corporate and government bonds, as well as to finance investments.

President Barack Obama is working with his advisors and Congress to fill the regulatory void that Glass-Steagall’s repeal left.  Former Federal Reserve Chairman Paul Volcker, now a financial advisor in the Obama administration, prefers a “two-tier” financial system that limits risk taking.  Current Fed Chairman Ben Bernanke has increased surveillance of the systemically important firms and believes that these companies require “especially close oversight.”

To quote then-candidate Obama in a spring of 2008 speech, “A regulatory structure set up for banks in the 1930s needed to change.  But by the time the Glass-Steagall Act was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

The result?  Commercial banks seeking to compete with investment banks took on significant trading risks and created off-balance-sheet financing methods to reduce the capital they required to avoid loan losses.  At the same time, investment banks started lending more aggressively to companies and increased their own borrowing to purchase securities or real estate.

All that has occurred clearly demonstrates the need for effective new regulation.

Mr. Obama’s Neighborhood

Wednesday, November 11th, 2009

You can be President Barack Obama’s Chicago next-door neighbor for just $1.85 million. That’s the listing price for the 17-room 1906-vintage brick house at 5040 South Greenwood Avenue owned by Bill and Jacky Grimshaw since 1973.front2-thumb-580xauto-19524

The house had been on the market for an unspecified sum since September, but a price had to be set since it is being placed on the local multiple listing service.  The house is a relative bargain for upscale Kenwood because it requires substantial renovation.  Large Kenwood houses in good condition can cost between $2.3 million and $2.4 million, according to Matt Garrison, the Grimshaws’ real estate agent.

Garrison says that the premium for buying a house located next to the home of a sitting president is a few hundred thousand dollars.  “It’s probably going to sell to a traditional Chicago buyer,” Garrison said.  “Right now buyers aren’t doing anything fast and the seller wants to sell the property.”

Potential buyers of the Grimshaw house will require security clearances by the Secret Service.

President Barack Obama, Nobel Laureate

Monday, October 19th, 2009

apg_obama_nobel_091009_mnThe announcement that President Barack Obama, after just nine months in the Oval Office, had won the 2009 Nobel Peace Prize stunned the world — including the humbled recipient.

“I do not feel that I deserve to be in the company of so many transformative figures that have been honored by this prize,” Obama said in remarks to the press in the White House Rose Garden.  “I will accept the award as a call to action, a call to all nations to confront the challenges of the 21st century.”

The Norwegian Nobel Committee said they chose to award Obama the prize “for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples.”  Thorbjoern Jagland, the Nobel committee chairman, said “only rarely has a person such as Obama captured the world’s attention and given his people hope for a better future.  His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitude that are shared by the majority of the world’s population.”

Obama becomes only the third sitting American president to win the Nobel Peace Prize.  He joins Teddy Roosevelt, who won the 1906 award for his efforts in ending the Russo-Japanese War.  The other is Woodrow Wilson, who won the 1919 prize  for negotiating the Treaty of Versailles to end World War I and his efforts in creating the League of Nations.

Obama intends to donate the $1.4 million cash prize to charity.

In congratulating him, we should also remember the extraordinary heroes who were nominated this year, including Morgan Tsvangirai – the Prime Minister of Zimbabwe – and Denis Mukwege – a gynecologist who specializes in the treatment of women who have been gang raped by Congolese militia.