The appointment of unqualified Dems to powerful regulatory roles is one more aspect of the Dem grift. This particular appointment is absurd and dangerous. You cannot give unqualified persons the car keys and expect to avoid a car crash.
A Federal Reserve Governor -- essentially a part time job -- is paid $203,500 as a Level II Executive.
There is no question that Powell has made discreet decisions to further the political fortunes of the Dems/Joe Biden and to thwart Donald Trump -- particularly around the time of elections.
The big Fed mistake of the 21st century has and always will be ZIRP. Bernanke was wrong. Cutting rates to zero in 2020 at the same time Congress issues trillions of dollars of stimulus greatly compounded Bernanke's error and Powell owns that.
Greenspan, Bernanke and then Powell have used the Fed to create a Zombie economy and the consequence is trillions of dollars of overpriced assets.
Well said. Spending $2.5 Billion renovating a building that was last renovated in the early 2000s and then lying about the renovations (private dining room, anyone) would be enough "cause" for me to fire him.
For $2.5 Billlion, you could get 5 million months of membership at the Metropolitan Club of Washington DC. Nice place with plenty of private dining available.
Back on letting banks fail, it turned out that many banks did (sort of) fail, because of regulatory issues rather than a lack of cash to pay bills. Mark to Market Accounting (FASB 157) was a disaster because of the illiquid and hard to value assets held by banks, and criminal penalties for violating the law. So companies like Merrill Lynch and Washington Mutual failed, rather than execs facing time in prison.
So a bank holds some ridiculous portfolio of convenience stores in Ohio purchased for $1Billion. The market spazzes out, and a more up to date sales price values the stores portfolio at $100 Million. Even if the stores are profitable and hold $150 Million inventory, banks were force to use the most current market price, and take a 90% hit. Then they don't meet the reserve requirements.
Most banks that failed had a healthy cash flow. A relative at WaMu told me that they made enough cash flow on ATM Fees to cover expenses indefinitely. Might be a stretch, but there sure were a lot of WaMu ATM's in the Loop.
Pretty much simultaneously with the suspension of FASB 157, banks recovered. Found it amusing (and I was very involved in trying to get this suspended) that Michelle Bachman, the Minnesota Conservative, and Barney Frank, the Massachusetts Liberal, led the charge in the House to get this done. Bachman was a tax accountant, and Frank had a lot of close friends in banking, so they both understood the ridiculous peril of a really bad law.
Point of story...all it took was a slight shift on a terrible bit of regulation to fix the banks problems. Of course, we overshot and did stupid things like opening the Fed window to Goldman Sachs. Hard to put that toothpaste back in the tube.
Not sure they had the correct cash flows. They had taken A LOT of risk. The interbank market froze. Frank was the point man in Congress to let them build the house of cards on Fannie and Freddie. When Bear Stearns went down, it was over. Goldman converted to become a bank-so they could get free money. The government picked winners and losers and Morgan, JP, Goldman, BOA, were the winners. Hey, didn't ole Warren own a big chunk of BOA and Goldman? You betcha.
The 2008-2009 crisis has many causes, notably the ridiculous push during the Clinton years to ensure that "everyone" can own a home. Result was next to no underwriting of mortgages, coupled with the explosion of "synthetic" financial instruments which similarly hurt large insurance cos.
And yes, the Fed and its fellow travelers in "regulation" are at the heart of many (if not all) of recent financial panics/crises. Another example is the unquantifiable metric of "reputation risk" used to punish disfavored industries via regulatory pressure on banks. That is the culprit in the "debanking of conservatives" scandal.
All that said, I'm of two minds on the bailout. By the time of late 2008 gov't had so botched its response that the alternative of "letting it all fail" would have led, imho, to a catastrophic result with more years of recovery than the 3+ years it took for housing and some other markets to recover.
IF they had acted more wisely in spring 2008 and allowed failures then (Bear Stearns in March 2008), perhaps the market could have digested the results. By fall it was too darn late, again, my opinion.
Well they didn't match up on timing of short term vs. long term, but they weren't under any stress to sell some of the long-term complex real-estate traunches they amassed. Just notational issues with market value being a single data point, barely related to what an investment would be worth if held to maturity.
The banks magically recovered, not after the Fed bailouts, but after the FASB 157 was suspended (which magically happened while Obama was out puttering around in Denmark in his failed bid to bring the Olympics to Chicago).
This is not even close to the truth. I worked at the WaMu corporate headquarters in Seattle and was there at the end. I was not one of the top executives, but was on the periphery and had unique access to what was really happening. We went from reporting cash balances to the FDIC on a monthly basis, to weekly, then daily, then hourly in the final days. The wire had also run dry in the last week. People like Killinger and Rotella were publicly saying there was no run on the branches, but the numbers told a different story.
"We went from reporting cash balances to the FDIC on a monthly basis, to weekly, then daily, then hourly in the final days. The wire had also run dry . . ."
Can you elaborate on why you had to report cash balances so often? And what does "The wire had also run dry" mean? Thanks
I'll take your word but I wouldn't bet on there ever being a cash shortage there. I've heard it from multiple sources, it was a reserve requirements that were killing WaMu not cash flow.
I have probably have as many crazy stories about the final days of WaMu as I do from working on the floor of the CBOT. My favorite memory was the final shareholder meeting prior to the downfall. This was at Benaroya Hall in Seattle. Imagine a huge theater packed with hundreds of angry employees and two executives sitting on an empty stage in leather chairs. When they came out the entire theater booed them. It was fantastic. The guy sitting in front of me went down to the microphone during Q&A and blasted Killinger, calling him a liar. People were clapping and cheering. When he came back we were all high fiving the guy. The execs said after that they were caught off guard and didn’t expect that sort of reaction. Goes to show how badly they were in denial. They had no clue what was happening or how to get out of it. A more competent group of people may have been able to save WaMu if they had time.
Cook checked another box that you didn't mention...mental disordered liberal. They suffer from the delusion that you can pick up a turd from the clean end.
How certain is it that a Fed rate cut would really cause a drop in the longer-term rates that are what matter for mortgages, et? Isn't it equally likely that bond investors would have increased concerns about long-term inflation trends and demand higher rates for 10, 20, and 30-year treasuries?
Looking at the list of Cook's papers' titles is mind boggling. WTH is "spatial racism"?
How about asking the brilliant Thomas Sowell for a recommendation of a capable black woman economist for a good position at the Fed? Or maybe the equally smart, Carol Swain (poly sci is her field) would have a name?
Unfortunately, government bureaucrats, including Fed Governors, rarely if ever understand escalation and exponential rates of change, both of which are imperative to understand if one is to oversee highly leveraged industries.
The damage from the previous Presidential Administration may well take decades to clean up and we are extremely fortunate, blessed or lucky, or some combination of the three, that this nation did not go the way of the British Empire and become just one of, instead of number one, due to an incompetent, senile and corrupt dirtbag supposedly running things, but not even knowing himself who was really in charge, while hangers on were manipulating anything they could get their hands on to grab more available taxpayer cash. The disgusting and vile exposure of USAID and the NGO corruption that we know about is just the tip of the iceberg, because we've barely gotten two or three layers deep on that.
It is sad to see so many DEI appointments that have screwed up so much.
The appointment of unqualified Dems to powerful regulatory roles is one more aspect of the Dem grift. This particular appointment is absurd and dangerous. You cannot give unqualified persons the car keys and expect to avoid a car crash.
A Federal Reserve Governor -- essentially a part time job -- is paid $203,500 as a Level II Executive.
There is no question that Powell has made discreet decisions to further the political fortunes of the Dems/Joe Biden and to thwart Donald Trump -- particularly around the time of elections.
JLM
https://jeffreylminch.substack.com/
Maybe if she's fired, the CEO of Cracker Barrel will scoop her up!
Yep!
The big Fed mistake of the 21st century has and always will be ZIRP. Bernanke was wrong. Cutting rates to zero in 2020 at the same time Congress issues trillions of dollars of stimulus greatly compounded Bernanke's error and Powell owns that.
Greenspan, Bernanke and then Powell have used the Fed to create a Zombie economy and the consequence is trillions of dollars of overpriced assets.
Well said. Spending $2.5 Billion renovating a building that was last renovated in the early 2000s and then lying about the renovations (private dining room, anyone) would be enough "cause" for me to fire him.
For $2.5 Billlion, you could get 5 million months of membership at the Metropolitan Club of Washington DC. Nice place with plenty of private dining available.
Cook is a joke as an academic, let alone as a Fed governor. That CV would be pathetic even without the plagiarism.
Back on letting banks fail, it turned out that many banks did (sort of) fail, because of regulatory issues rather than a lack of cash to pay bills. Mark to Market Accounting (FASB 157) was a disaster because of the illiquid and hard to value assets held by banks, and criminal penalties for violating the law. So companies like Merrill Lynch and Washington Mutual failed, rather than execs facing time in prison.
So a bank holds some ridiculous portfolio of convenience stores in Ohio purchased for $1Billion. The market spazzes out, and a more up to date sales price values the stores portfolio at $100 Million. Even if the stores are profitable and hold $150 Million inventory, banks were force to use the most current market price, and take a 90% hit. Then they don't meet the reserve requirements.
Most banks that failed had a healthy cash flow. A relative at WaMu told me that they made enough cash flow on ATM Fees to cover expenses indefinitely. Might be a stretch, but there sure were a lot of WaMu ATM's in the Loop.
Pretty much simultaneously with the suspension of FASB 157, banks recovered. Found it amusing (and I was very involved in trying to get this suspended) that Michelle Bachman, the Minnesota Conservative, and Barney Frank, the Massachusetts Liberal, led the charge in the House to get this done. Bachman was a tax accountant, and Frank had a lot of close friends in banking, so they both understood the ridiculous peril of a really bad law.
Point of story...all it took was a slight shift on a terrible bit of regulation to fix the banks problems. Of course, we overshot and did stupid things like opening the Fed window to Goldman Sachs. Hard to put that toothpaste back in the tube.
Not sure they had the correct cash flows. They had taken A LOT of risk. The interbank market froze. Frank was the point man in Congress to let them build the house of cards on Fannie and Freddie. When Bear Stearns went down, it was over. Goldman converted to become a bank-so they could get free money. The government picked winners and losers and Morgan, JP, Goldman, BOA, were the winners. Hey, didn't ole Warren own a big chunk of BOA and Goldman? You betcha.
The 2008-2009 crisis has many causes, notably the ridiculous push during the Clinton years to ensure that "everyone" can own a home. Result was next to no underwriting of mortgages, coupled with the explosion of "synthetic" financial instruments which similarly hurt large insurance cos.
And yes, the Fed and its fellow travelers in "regulation" are at the heart of many (if not all) of recent financial panics/crises. Another example is the unquantifiable metric of "reputation risk" used to punish disfavored industries via regulatory pressure on banks. That is the culprit in the "debanking of conservatives" scandal.
All that said, I'm of two minds on the bailout. By the time of late 2008 gov't had so botched its response that the alternative of "letting it all fail" would have led, imho, to a catastrophic result with more years of recovery than the 3+ years it took for housing and some other markets to recover.
IF they had acted more wisely in spring 2008 and allowed failures then (Bear Stearns in March 2008), perhaps the market could have digested the results. By fall it was too darn late, again, my opinion.
Well they didn't match up on timing of short term vs. long term, but they weren't under any stress to sell some of the long-term complex real-estate traunches they amassed. Just notational issues with market value being a single data point, barely related to what an investment would be worth if held to maturity.
The banks magically recovered, not after the Fed bailouts, but after the FASB 157 was suspended (which magically happened while Obama was out puttering around in Denmark in his failed bid to bring the Olympics to Chicago).
This is not even close to the truth. I worked at the WaMu corporate headquarters in Seattle and was there at the end. I was not one of the top executives, but was on the periphery and had unique access to what was really happening. We went from reporting cash balances to the FDIC on a monthly basis, to weekly, then daily, then hourly in the final days. The wire had also run dry in the last week. People like Killinger and Rotella were publicly saying there was no run on the branches, but the numbers told a different story.
"We went from reporting cash balances to the FDIC on a monthly basis, to weekly, then daily, then hourly in the final days. The wire had also run dry . . ."
Can you elaborate on why you had to report cash balances so often? And what does "The wire had also run dry" mean? Thanks
I'll take your word but I wouldn't bet on there ever being a cash shortage there. I've heard it from multiple sources, it was a reserve requirements that were killing WaMu not cash flow.
I have probably have as many crazy stories about the final days of WaMu as I do from working on the floor of the CBOT. My favorite memory was the final shareholder meeting prior to the downfall. This was at Benaroya Hall in Seattle. Imagine a huge theater packed with hundreds of angry employees and two executives sitting on an empty stage in leather chairs. When they came out the entire theater booed them. It was fantastic. The guy sitting in front of me went down to the microphone during Q&A and blasted Killinger, calling him a liar. People were clapping and cheering. When he came back we were all high fiving the guy. The execs said after that they were caught off guard and didn’t expect that sort of reaction. Goes to show how badly they were in denial. They had no clue what was happening or how to get out of it. A more competent group of people may have been able to save WaMu if they had time.
Cook checked another box that you didn't mention...mental disordered liberal. They suffer from the delusion that you can pick up a turd from the clean end.
How certain is it that a Fed rate cut would really cause a drop in the longer-term rates that are what matter for mortgages, et? Isn't it equally likely that bond investors would have increased concerns about long-term inflation trends and demand higher rates for 10, 20, and 30-year treasuries?
You’d think that. But like after the Great Recession started, apparently you’d be wrong.
DEI or die tryin’!
Looking at the list of Cook's papers' titles is mind boggling. WTH is "spatial racism"?
How about asking the brilliant Thomas Sowell for a recommendation of a capable black woman economist for a good position at the Fed? Or maybe the equally smart, Carol Swain (poly sci is her field) would have a name?
As a Fed alum this all makes me ill.
Unfortunately, government bureaucrats, including Fed Governors, rarely if ever understand escalation and exponential rates of change, both of which are imperative to understand if one is to oversee highly leveraged industries.
The damage from the previous Presidential Administration may well take decades to clean up and we are extremely fortunate, blessed or lucky, or some combination of the three, that this nation did not go the way of the British Empire and become just one of, instead of number one, due to an incompetent, senile and corrupt dirtbag supposedly running things, but not even knowing himself who was really in charge, while hangers on were manipulating anything they could get their hands on to grab more available taxpayer cash. The disgusting and vile exposure of USAID and the NGO corruption that we know about is just the tip of the iceberg, because we've barely gotten two or three layers deep on that.
It is sad to see so many DEI appointments that have screwed up so much.