Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

In Rearview Mirror, Crisis Looks Even Worse


Banks are trying to move forward but they can't shake the past.

Just when bank executives appear near the peak of this mountain of populist rage, another landslide sends them tumbling back down again. This week has produced several setbacks, and it's still only Tuesday.

First, banking analyst Meredith Whitney put on her bear costume again on Monday when she told Maria Bartiromo that the banks were still undercapitalized and that next year will see the second dip of a double-dip recession. The news sent financial shares immediately lower.

Second, Bank of America (BAC) executives are heading to Capitol Hill today to testify about exactly what they shared with shareholders, or didn't share as the case may be, about Merrill Lynch losses late last year as the deal was closing to merge the banks.

Third, Bloomberg reports that a California public utility has sued JP Morgan (JPM), Bank of America, and UBS (UBS), alleging that they "conspired to pre-select winners of municipal derivative auctions, coordinated their pricing, and accepted kickbacks disguised as fees from co-conspirators."

But wait! There's more!

Turns out the New York Federal Reserve may have unnecessarily bailed out AIG's (AIG) biggest trading partners, including Goldman Sachs (GS), late last year when it scrambled to save the insurance giant with billions in taxpayer money.

The Federal Reserve Bank of New York -- headed at the time by Treasury Secretary Timothy Geithner -- paid AIG's business partners full face value for securities so they would cancel insurance contracts AIG had written in order to ease the firm's liquidity crunch. But at least one of those partner banks, UBS, offered to cancel the contracts for less, according to a report Monday from Neil Barofsky, the special inspector general for the $700 billion financial bailout Congress approved last October.

AIG was too big to fail in the eyes of the government. As it teetered last fall, officials decided to save the company with billions of taxpayer dollars and government guarantees to prevent deepening the spreading financial crisis.

After several bailouts, AIG now holds government commitments worth up to $180 billion -- more than any other company. The Treasury Department owns nearly 80% of the company.
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos