Posts Tagged ‘Treasury’

Geithner: The Patient is Out of Intensive Care

Friday, May 15th, 2009

It’s been a long, strange ride, but the nation’s financial system is finally starting what is certain to be an extended healing process. Treasury Secretary Timothy Geithner believes that “the financial system is starting to heal” as he promised to move returned bail-out funds to community banks that need help.bandaid-on-broken-and-cracked-piggy-bank

Improved lending circumstances are tempering concerns about systemic risk and reduced leverage at banks, according to Geithner, who noted that “a substantial part of the adjustment process” for the financial sector is now coming to an end.

Several of the larger banks – Goldman Sachs, JP Morgan and Capital One Financial – want to repay the funds they received under the Troubled Asset Relief Program.  The Treasury will increase the money community banks can access to five percent of risk-weighted assets from three percent.  The government has already invested in preferred stock in 300 smaller banks.

“As in any financial crisis, the damage has been unfair and indiscriminate,” Geithner said.  “Ordinary Americans, small business owners and community banks who did the right thing and played by the rules are suffering from the actions of those who took on too much risk.”

Why the optimism?  Geithner points to declines in corporate bond spreads, lower risk premiums in inter-bank markets and cheaper default insurance on big banks as evidence that the financial system is healing.  “These are welcome signs, but the process of financial recovery and repair is going to take time,” he cautions.

How Will President Obama Impact Commercial Real Estate? Part 1

Thursday, December 18th, 2008

With change expected to begin in Washington, D.C., on January 20, 2009, the commercial real estate industry is bracing itself for the incoming Obama administration and the 111th Congress.  CoStar Advisor recently polled commercial real estate professionals on the top issues of the first 100 days.  The resulting list includes such policy issues as saying “no” to capital-gains increases and other investment taxes; moving forcefully to stabilize the Treasury and capital markets; suspending market rules regulating perceived asset value; making the biggest investment in the public infrastructure since the 1950s; and reforming Fannie Mae and Freddie Mac.

The overall attitude within the industry, according to a poll by National Real Estate Investor, is negative because of Obama’s plan to hike taxes on dividend income, capital gains and high-earning individuals.  The poll notes that 54 percent of responders are registered Republicans.

So, should our industry be wary of the new team?

http://www.marketwatch.com/news/story/Commercial-real-estate-stocks-rally/story.aspx?guid=%7BF3669FE9-C7E9-4D5C-9A85-AE7FECF0E5DF%7D

$700 Billion Financial Bailout Plan Still Evolving

Friday, November 21st, 2008

Treasury Secretary Henry Paulson is sitting on $350 billion dollars of the taxpayers’ money, and can’t quite settle on the best way to spend it.  When approved by Congress in October, the $700 billion Troubled Assets Relief Program (TARP) bill’s purpose was to purchase bad mortgage assets that had frozen the credit markets. The Treasury Department has already used approximately half of the money to capitalize banks and prevent insurer American International Group (AIG) from going into financial default.  The problem with the TARP bill is that conditions keep changing and Treasury is altering its focus to one of helping banks that are sound to stay healthy – with the ultimate goal of thawing credit.  Meanwhile, Treasury is coordinating with the Federal Reserve to restore consumer confidence so people start buying cars, taking out student loans, or even using their credit cards again.  The question is:  which version of TARP eventually will unfreeze the debt markets.  Given the complexity of the situation, there is no simple answer.  Because both Wall Street and Main Street are equally impacted, TARP is likely to end up providing some amount of relief to both groups.

So, the question is, which TARP is it?  We invite your comments.

http://www.reuters.com/article/ousiv/idUSTRE4AB7P820081112

http://www.chicagotribune.com/business/chi-thu-crisis-bailout-shift-nov13,0,2664351.story