Zero Hedge: Meet the 35 Foreign Banks That Were Bailed Out by the Fed

[boobiemiles]

You just hate whitey.

---------- Post added December-2nd-2010 at 02:32 PM ----------

I know I love making money. So i am going back to my job. My phones are ringing. People are buying new cars, homes, and everything else. Just because FLA is so messed up, doesn't mean we all have to suffer. I'll leave you to debate who I love or don't. Have fun playing with yourself. You hear that, hold on.....cha ching?

[SkinsHokieFan]

Yeesh this thread got unnecessarily nasty.

For TARP defenders, can you honestly believe the program did exactly what it was supposed to based on how it was sold to us?

Not counting the fact that somehow Cam Newton got hold of TARP funds

[Thirtyfive2seven]

You just hate whitey.

---------- Post added December-2nd-2010 at 02:32 PM ----------

I know I love making money. So i am going back to my job. My phones are ringing. People are buying new cars, homes, and everything else. Just because FLA is so messed up, doesn't mean we all have to suffer. I'll leave you to debate who I love or don't. Have fun playing with yourself. You hear that, hold on.....cha ching?

http://money.cnn.com/2010/12/02/real_estate/home_buying_angst/index.htm?hpt=Sbin

[Predicto]

I understand that you think you know what I understand. That's ok too.

I can only go by your posts. I'm not accusing you of being a racist, but I am suggesting that black people have a legitimate concern that Obama has not been given a fair shake, and they also have a historical basis to suggest that the likely reasons for unfairness are not good ones.

There is legitimate opposition to Obama. There is also open racial opposition to Obama in some quarters, as well as subconscious race-tinged opposition by people who are sure that they are not racists (we saw some of that at the Tea Parties).

I'm not asking you to agree that Obama is a good president. I'm asking you to understand why black people honestly might think he is getting a raw deal.

[boobiemiles]

I understand that you think you know what I understand. That's ok too.

Crying racism when none is present devalues it when something actually is wrong. Just sayin

Are you guys really trying to say percecption has nothing top do with this? Really? Ok I am done. You guys have fun debating who we gave what, for what purpose. I have work to do.

[Thirtyfive2seven]

I'm not asking you to agree that Obama is a good president. I'm asking you to understand why black people honestly might think he is getting a raw deal.

Ok that I can somewhat agree with. But there are some crazy people on both sides of the fence. They don't represent the vast majority. Do you agree with everything Farakhan has to say?

Btw, good points Predicto

[Predicto]

Yeesh this thread got unnecessarily nasty.

For TARP defenders, can you honestly believe the program did exactly what it was supposed to based on how it was sold to us?

Of course not. Any emergency solution worked out in a short time frame is bound to be flawed.

You don't judge it against the perfect hindsight solution (assuming people can agree on one, which we can't). You judge it by how big the risk was and whether or not it accomplished its main objectives.

Assuming you are trying to be fair.

[Kilmer17]

Local banks get closed by the FDIC on a Friday, they are taken over, and their branches reopen their doors for business the next Monday with the same tellers behind the counters. When credit freezes and Citibank or Credit Suisse closes, Ford can't make payroll, Toyota can't lease container ships AND guess what - Horizon Bank also disappears.

"People look at this and get angry" because people are stupid, or because people have an agenda, or both.

And with completely different lending standards.

Horizon Bank was taken over by the FDIC on a Friday, who then GAVE bank of the Ozarks 10 mill in cash and agreed to let them write off 38 mill in non performing loans.

So Bank of Ozarks, with FDIC backing and encouragement, called notes on dozens of local businesses who were then forced to not make payroll, or shut down. And now the lending requirements at Bank of Ozarks is so stringent, they havent made a local loan over 10k since they took over in Sept.

You think the local businessman here in SW FL gives a flying **** whether or not Toyota can lease a new container ship right now?

---------- Post added December-2nd-2010 at 03:01 PM ----------

But it probably wasn't loans to local businesses that caused Horizon Bank to fail. It was likely their relationships with larger multi-national banks. That's why the TARP money was directed there.

Besides, you can't really claim that Horizon Bank received no assistance from the government. The FDIC brokered its sale to the Bank of the Ozarks.

http://bankozarks.com/HBCustomers/default.asp

Anyone who had an account at Horizon Bank now has one under a different bank's name. What is there to complain about?

The Govt didnt broker a sale, they took over Horizon and THEN sold it to BOO.

---------- Post added December-2nd-2010 at 03:01 PM ----------

You just hate whitey.

---------- Post added December-2nd-2010 at 02:32 PM ----------

I know I love making money. So i am going back to my job. My phones are ringing. People are buying new cars, homes, and everything else. Just because FLA is so messed up, doesn't mean we all have to suffer. I'll leave you to debate who I love or don't. Have fun playing with yourself. You hear that, hold on.....cha ching?

Sigh, if that were only true........

[Predicto]

Ok that I can somewhat agree with. But there are some crazy people on both sides of the fence. They don't represent the vast majority. Do you agree with everything Farakhan has to say?

Huh? I don't agree with ANYTHING Farrakhan has to say.

I'm not talking only about crazy people. I'm talking about Joe Sixpack as well. Obama appears to have been given a shorter leash by Joe Sixpack than any President I can remember. You think it's because Obama is a horrible president. Fine. Understand that black people are not likely to view it that way, and for good historical reasons. So cut them a little slack when they say so. :whoknows:

[SkinsHokieFan]

TO be honest, most of us aren't even blaming Obama in this thread

This thread started off as a good old bash Paulson, Geithner and Bernake.

I am not sure how the President got involved in all of this when this wasn't his policy

In fact, Boobiemiles was the first to bring up Obama in this thread, saying everything about Obama and TARP is negative

The fact that I think 95 percent of America forgets is that TARP was NOT Obama's policy. It was Paulson and Bernake, selling it to Bush who got Pelosi on board

[Predicto]

And with completely different lending standards.

Horizon Bank was taken over by the FDIC on a Friday, who then GAVE bank of the Ozarks 10 mill in cash and agreed to let them write off 38 mill in non performing loans.

So Bank of Ozarks, with FDIC backing and encouragement, called notes on dozens of local businesses who were then forced to not make payroll, or shut down. And now the lending requirements at Bank of Ozarks is so stringent, they havent made a local loan over 10k since they took over in Sept.

You think the local businessman here in SW FL gives a flying **** whether or not Toyota can lease a new container ship right now?

The Govt didnt broker a sale, they took over Horizon and THEN sold it to BOO.

Horizon Bank deserved to fail, and it did.

Citibank deserved to fail, but we couldn't afford to let that happen because it would have risked causing pretty much every other business in the world to fail - including Horizon Bank.

If local businessmen in SW Florida can't understand that (or don't want to), then screw them.

[DjTj]

Yeesh this thread got unnecessarily nasty.

For TARP defenders, can you honestly believe the program did exactly what it was supposed to based on how it was sold to us?

Actually, I'm not even sure how it was sold to us. It was basically: "Do this or the world economy will collapse." And I'm sure that a number of people really believed it at the time. We did it. The world economy didn't collapse. So I guess it did what it was supposed to do? :whoknows:

There wasn't really enough time for anyone to digest all the details. It was like WMD's or the Patriot Act. Sometimes the world moves a little too fast for proper democracy.

[Predicto]

TO be honest, most of us aren't even blaming Obama in this thread

This thread started off as a good old bash Paulson, Geithner and Bernake.

I am not sure how the President got involved in all of this when this wasn't his policy

In fact, Boobiemiles was the first to bring up Obama in this thread, saying everything about Obama and TARP is negative

Oh I know that. My first post in response to Boobie was to suggest that he was putting an excessive racial spin on it. I just wanted Thirtyfive2seven to understand why Boobie might feel that way.

I'm done with the derail if everyone else is.

[bird_1972]

So are you people really trying to tell me that race, religions, or where he was born has nothing to do with the negative sentiment expressed towarsd Obama on this forum from day 1? What else is it? We gave Bush 8 years to mess things up. 8! We gave Obama 2 yeras to try and fix it. And now he is associated with the worst figures in that annals of human history. And on this precious forum not one positive thread has piopped up. just a lot of whinning, and people sitting on their thumbs. The economy is getting better, but you guys are still crying about who got what?

You are right. People do cloak their racism in the guise of legitimate criticism. Not everyone who is critical, obviously, but many.

And they are being hypocritical for making these calls 2 years into his presidency while attempting to fix problems largely caused by the last sitting president. It won't stop until the culture divide between middle/southern america and the rest of the country is breached.

[Thirtyfive2seven]

Oh I know that. My first post in response to Boobie was to suggest that he was putting an excessive racial spin on it. I just wanted Thirtyfive2seven to understand why Boobie might feel that way.

I'm done with the derail if everyone else is.

Absolutely, cheers

[bird_1972]

Citibank deserved to fail, but we couldn't afford to let that happen because it would have risked causing pretty much every other business in the world to fail - including Horizon Bank.

This is an argument for reinstalling the Glass-Steagall act (the one that was repealed by the GOP to allow the formation of banks as large as Citigroup to begin with.

[Thirtyfive2seven]

Actually, I'm not even sure how it was sold to us. It was basically: "Do this or the world economy will collapse." And I'm sure that a number of people really believed it at the time. We did it. The world economy didn't collapse. So I guess it did what it was supposed to do? :whoknows:

.

The thing is how do we know there would have been some major catastrophic global economic meltdown if we allowed it to fail?

[Hubbs]

That is probably the most biased report on the bailout i have seen. They make it look like the Fed had to bail out these banks in fear of them failing, which for at least two of banks listed on there is not true at all. The Bank of Montreal and the Royal Bank of Canada did not need to be bailed out, in fact they had a limited exposure. I have no idea why the Fed loaned money to the Bank of Montreal or the Royal Bank of Canada, but it was not to keep them solvent. Canadian banking laws prohibit debt ratios as large as those in the US, so there was no possible way for the Canadian banks to fail, they did see a reduction is assets, but no where near to the point of being insolvent. I would also be suspicious of some of the other banks on that list, if they got less than a billion dollars, I doubt that money was to bail them out, as they would need much more than a billion dollars to do so. The top 3, I would question, for all others this just looks like one bank (the Fed-even thought they are not really a bank) loaning money to other banks.

Loans are a two-way street. Those banks wanted the loans for a reason. I wouldn't be so sure that they didn't need them.

Maybe you decide that AFTER the crisis passes, rather than burning down your entire house because the plumbing needs an upgrade.

If your house is on fire, step one is to put out the fire. Everything else can come later.

Our house was on fire in 2008. The Fed response may not have been perfect, but it was necessary. It put out the fire.

This is asinine. A bank is not a house. Bankruptcy is not a fire. These analogies have to stop.

uh... Bernanke was NOT the guy with the shotgun.

I know that. Well, I know that to a certain extent. I know that the main "guy with the shotgun" were banks who told the most powerful government in the world that if they weren't bailed out, the entire global economy would shut down. But I also know that in certain cases, Hank Paulson called the leaders of certain banks and said, "You're going to take the bailout. End of discussion."

I actually am not sure what you are saying here? Iceland and Ireland are weathering the crisis better than the US?

No, Iceland has weathered it better than Ireland.

great.. the solution is zero financial sector. If your ideas is so good, OBVIOUSLY you should've built up a level of cash sufficient to impliment it before you get started.

No, the solution is a different financial sector.

Are you comparing the world economy to that of Iceland and/or Ireland?

No. I'm comparing two "test labs," so to speak. We can't truly know what's best for the world economy unless we have multiple world economies to run through different scenarios, and we don't, so the best we can accomplish is running multiple test labs.

I'm not even an armchair historian, but I think credit has been driving the world's economies since the middle ages.

Not all debt is bad. If I didn't allow myself to have any debt, I could not have gone to school or bought the house I live in. Sometimes, investing via credit and debt is very intelligent. So, I think debt is a central part to any growing economy.

I didn't say all debt is bad. I said basing an entire economy on debt - which we do, and I can explain why if I don't have to spend my time explaining why bankruptcy isn't a house fire - is stupid.

Iceland has the luxury of being able to devalue its own currency, and its banks were primarily in debt to foreign banks. Defaulting passed their problems on to the rest of the world, and it basically allowed Iceland to take advantage of all bailouts in other countries.

Ireland would not be permitted to do the same thing as a member of the EU. Its currency is controlled from Brussels, and the debt of its banks is held by banks in many other EU nations.

In any case, even Krugman's Op-Ed shows that everything isn't exactly all roses in Iceland.

http://krugman.blogs.nytimes.com/2010/11/24/lands-of-ice-and-ire/

GDP is still down more than 14% since its peak, and although the unemployment situation is better than in Ireland, I think it's still early to be declaring victory in Iceland.

Yes, I'm aware of all of this. I'm also aware of the fact that Ireland could give a big middle finger to the euro tomorrow if it chose to do so. And I know, I know: "That's crazy talk!" "Ireland has a lot invested in the euro!" "It can't just back out now!"

Well, no. It can back out whenever it damn well pleases, and backing out is just one of a variety of painful-yet-necessary decisions the Irish have to make. The alternatives all hurt, too. The bailout hurts. No bailout but sticking with the euro hurts. Ditching the euro and telling German and British banks to suck it hurts. Everything hurts. The Irish have put themselves in a very, very bad spot. So please, do tell me a way out that doesn't hurt.

[Kilmer17]

Horizon Bank deserved to fail, and it did.

Citibank deserved to fail, but we couldn't afford to let that happen because it would have risked causing pretty much every other business in the world to fail - including Horizon Bank.

If local businessmen in SW Florida can't understand that (or don't want to), then screw them.

Im not sure why you keep comparing Citi to Horizon, Im comparing Horizon to banks in other countries as presented in the OP.

Screw the small guy huh? That's pretty low man.

[bird_1972]

For the record, I largely agree with what Paulson, Bernanke, and Geithner have done - these were extreme conditions and also largely unprecedented.

What I don't agree with is how toothless subsequent efforts to re-regulate the financial services industry have been. That blame lies squarely at the feet of Congress (both Ds and Rs) who are in the pocket of the Investment Banks' lobbyists.

---------- Post added December-2nd-2010 at 03:16 PM ----------

The thing is how do we know there would have been some major catastrophic global economic meltdown if we allowed it to fail?

Would you really want to find out?

[DjTj]

And with completely different lending standards.

Horizon Bank was taken over by the FDIC on a Friday, who then GAVE bank of the Ozarks 10 mill in cash and agreed to let them write off 38 mill in non performing loans.

So Bank of Ozarks, with FDIC backing and encouragement, called notes on dozens of local businesses who were then forced to not make payroll, or shut down.

Without government intervention, it wouldn't have just been dozens of local businessmen, but everyone with an account at Horizon losing their money.

And now the lending requirements at Bank of Ozarks is so stringent, they havent made a local loan over 10k since they took over in Sept.

You don't think this is true everywhere in the country? Lending requirements are more stringent at every bank, as they should be.

The Govt didnt broker a sale, they took over Horizon and THEN sold it to BOO.

Horizon was going to fail. The government assumed part of the losses and was able to sell it to a healthy bank. Without that, those branches might have just closed.

[Kilmer17]

Without government intervention, it wouldn't have just been dozens of local businessmen, but everyone with an account at Horizon losing their money.

You don't think this is true everywhere in the country? Lending requirements are more stringent at every bank, as they should be.

Horizon was going to fail. The government assumed part of the losses and was able to sell it to a healthy bank. Without that, those branches might have just closed.

No it wasnt. It was no where close to failing. The Govt is systematically shutting down small banks in favor of monsters.

So if lending is so stringent that local guys cant get loans for their businesses, why are we giving money to banks overseas? Why not give that money to local banks HERE and let the American entrepreneur prosper?

[Hubbs]

Horizon was going to fail. The government assumed part of the losses and was able to sell it to a healthy bank. Without that, those branches might have just closed.

Lovely. So I pay because Horizon couldn't stay in business, even though I never interacted with Horizon in any way whatsoever.

[Predicto]

The thing is how do we know there would have been some major catastrophic global economic meltdown if we allowed it to fail?

Because all the people who are supposed to know these things were telling us that. My wife works for the FDIC. She read the internal reports. We were walking on the edge of knife in 2008.

---------- Post added December-2nd-2010 at 02:25 PM ----------

Lovely. So I pay because Horizon couldn't stay in business, even though I never interacted with Horizon in any way whatsoever.

Do you even understand what the FDIC is for?

---------- Post added December-2nd-2010 at 02:28 PM ----------

No it wasnt. It was no where close to failing. The Govt is systematically shutting down small banks in favor of monsters.

You have no idea what you are talking about. Seriously. The FDIC is not closing down any banks that they don't have to. They want them to stay open if at all possible.

So if lending is so stringent that local guys cant get loans for their businesses, why are we giving money to banks overseas? Why not give that money to local banks HERE and let the American entrepreneur prosper?

We didn't "give" money to anyone. We made liquidity loans. And you want the government to tell the banks what loans to make and who is creditworthy? That's not very free market of you.

[Hubbs]

Do you even understand what the FDIC is for?

No. I've been obsessed with economics for years, but I don't understand something as simple as the FDIC. I don't have an opinion on when the FDIC should be relevant and when it shouldn't, instead, I've just never looked into the institution that backstops the entire global financial system. (And yes, by backstopping the American financial system it backstops the world's financial system. Or at least that's what I'm randomly writing, because, like I said, I don't understand the FDIC. Hell, I don't even know what it stands for.)