Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
the injection of free TARP funds enabled the recipient banks to enter a charred landscape that was, nevertheless, bristling with easy profits. For example, $10 billion of TARP funds enabled Goldman Sachs to make leveraged trades during the bear market rally of the last four months. Though this is the same activity that caused its downfall, Goldman now assumes a government guarantee on its risk-taking. With no limits on their appetite for risk, record profits are theirs for the taking. (but guess who gets shafted if these deals go south)
Second, some of the shadow banks, such as Goldman Sachs and Morgan Stanley, were allowed to become bank holding companies. This change allowed them access to the Fed Window to borrow at zero percent interest. This greatly increased the profit margins of the banks day-to-day lending operations.
Third, the reduction of Fed rates to below 1% has steepened the yield curve, enabling banks to take 6% to 8%-plus spreads in lending to boost earnings.
Fourth, for the first time, the Fed is paying interest on bank reserves. This means that all banks can borrow at zero and lend back to the Fed at an interest rate spread of some 3%, thus boosting earnings further. The downside is that banks are discouraged from lending to risky companies and individuals while they can lend at no risk to the Fed. Therefore, despite political pressure for banks to lend, credit remains tight.
tight for risky companies.
You forgot to mention that Lehman and Bear Stearns went out of business, so GS, JP Morgan and the others were able to scoop up their clients and make more money than they would have otherwise.
You forgot to mention that Lehman and Bear Stearns went out of business, so GS, JP Morgan and the others were able to scoop up their clients and make more money than they would have otherwise.
You forgot to mention that Lehman and Bear Stearns went out of business, so GS, JP Morgan and the others were able to scoop up their clients and make more money than they would have otherwise.
Let the gov kill your competition, then take the gov money and pay your billions in bonuses - its a win-win!
LOL...don't you find it the least bit odd that Lehman Brothers were allowed to fail but others weren't???
Especially considering who was in charge at the time?
No, Lehman was caught in a perfect storm, that was underpinned by the fact that management had been in chronic disarray. Its competitors didnt need to do anything. Lehman's failure is a good example of how strong a role faith plays in trading and business -- another reason the Fed shouldnt be opened up to public scrutiny.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
