Bailout

Party strategists hope to harness voter anger at unemployment with anti-spending rhetoric.

While judges must recuse themselves from cases where financial interests are at stake, members of Congress regularly invest in the very companies they regulate.

Federal Reserve Chairman Ben Bernanke is testifying this morning before the House Oversight and Government Reform Committee about his role in catalyzing Bank of America’s controversial December buyout of Merrill Lynch.
The saga made headlines this spring when former BoA CEO Ken Lewis told New York’s attorney general that he was reluctant to go through with [...]

As the Senate this week debates legislation placing the tobacco industry under the oversight of the Food and Drug Administration, Sen. Lamar Alexander (R-Tenn.) is proposing an amendment that would give every taxpayer an equal share in the 60 percent of General Motors just acquired by the federal government.
“It’s a pretty simple proposal,” Alexander told [...]

As the Wall Street bailout nears its first anniversary, a risky aspect of the financial rescue has flown largely under the radar.

The real risk to the future of General Motors (other than the unpopular vehicles) is that a bankruptcy and reorganization process would not be quick, in what’s called a 363 sale, but would go through a standard Chapter 11 reorganization, which could take several years. A long and drawn out reorganization would probably have an [...]

Specifically, Chapter 11. General Motors’ creditors have rejected the latest offer extended to them to facilitate an out-of-court restructuring — a swap of some $27 billion in GM debt for a 10 percent equity stake in the new, reorganized company. Creditors are complaining that union stakeholders were offered a much better deal than they were [...]

Here’s a fun accounting term to remember: accretable yield. That’s the difference between a loan’s value on a bank’s balance sheet and the expected cash flow from the loan. Bloomberg reports:
JPMorgan Chase & Co. stands to reap a $29 billion windfall thanks to an accounting rule that lets the second-biggest U.S. bank transform bad loans [...]

Treasury Secretary Tim Geithner appeared before the Senate Banking Committee today to discuss the Wall Street bailout, but Sen. Sherrod Brown (D-Ohio) wanted to talk about the auto industry instead. There was good reason for Brown’s concern. Not only are Detroit’s automakers hemorrhaging cash, ditching dealerships and laying off employees, but recent reports indicate that [...]

Since the Obama administration doesn’t seem all that concerned about potential conflicts of interest of having private fund managers advising the government on its $1.25 trillion mortgage-backed securities purchase program while also investing in similar assets on behalf of private clients, the Project on Government Oversight sent a letter to Congress today asking for a [...]