The U.S. economy has already "blown past" the worst case scenario envisioned when the Treasury Department conducted stress tests on the viability of financial institutions, the Chairwoman of the TARP oversight panel said Tuesday.
Harvard Professor Elizabeth Warren, who chairs the panel that oversees the administration of the Troubled Asset Relief Program (TARP), said that it would mean banks may have to go through another round of recalculated stress tests.
"We've already blown past the worst case scenario on unemployment," Warren said during an interview on CNBC. "That means it's time to rerun those numbers and find out if the stress test is strong enough to give us a good prediction and tell us these financial institutions are solid even if unemployment is higher than the model predicted."
The Treasury Department announced Tuesday that 10 banks would be allowed to repay $68 billion in bailout funds.
"I don't care whether you're Republican or Democrat," Warren said. "You need good information about where the financial institutions are today and good projections on where they're likely to be in the next couple of years."
"Then let the politicians fight it," she added. "I'll go back home."
Rep. Jeb Hensarling (R-Texas), a leading conservative House Republican, wants to put an end to the government's $700 billion financial rescue program.
"It is increasingly being used instead to promote the economic, social and political agendas of the administration," he said on Monday. Hensarling is the only sitting member on the five-person Congressional Oversight Panel set up to oversee the rescue package.
Hensarling introduced a bill on Monday that would end the Troubled Asset Relief Program (TARP) by December 31.
The Obama administration encouraged the Supreme Court to leave in place its deal to finance a sale of Chrysler LLC to Italian automaker Fiat in a filing Monday.
Solicitor General Elena Kagen said that an application to the Supreme Court by Indiana investors to halt a final deal on Chrysler should be denied.
"Applicants make no meaningful effort to show that either of those findings is wrong, much less to demonstrate that review of those findings is an appropriate use of this Court's resources," Kagen wrote in a 26-page memo submitted to the Court on Monday. "The application for a stay should therefore be denied."
Justice Ruth Bader Ginsburg, who oversees appeals from the New York area, will decide whether or not to refer the investors' appeal of two lower courts' decisions upholding the Chrysler deal, to the rest of the Court. Should she refer it to the rest of the Court, four of the nine members would have to support scheduling oral arguments on the matter.
In its filing, the Obama administration agrees with the investors' argument that the Chrysler deal was an issue of national economic importance -- but said that's exactly why the court should deny a hearing.
"Applicants are left with the contention that this Court should grant review because the Chrysler bankruptcy is of national importance," Kagen wrote. "As an economic matter, that is true, and blocking the transaction would undoubtedly have grave consequences."
Rep. Barney Frank's (D-Mass.) maneuver last week to keep open a General Motors facility in his district was "highly offensive," Sen. Bob Corker (R-Tenn.) said Monday.
Corker, who has been a leading Republican engaged in the debate over assisting the beleaguered auto industry, said he expressed his displeasure to President Obama's auto czar in a phone call last week.
"The fact is, nothing happens in Washington without political elements being involved," Corker said in an appearance on CNBC. "Let's face it, you all were going to keep politics out of it, and that's clearly not the case."
Corker said that GM's bankruptcy and restructuring plan announced last week could have been essentially achieved in the Senate last fall had the United Auto Workers union been willing to agree to steep concessions they've now largely accepted.
"We probably would have had 80 folks behind an arrangement that would have been far more limited," Corker said about the December negotiations over bailing out the automakers, in which he took the lead. "The companies themselves, hopefully, would have been directing this, not the government. And it's a shame -- it was a tremendous missed opportunity."
Since then, the Obama administration's auto task force has basically been "playing God" with the companies, Corker asserted.
The SEC is charging former Countrywide Financial CEO Angelo Mozilo with fraud and insider trading, according to reports.
Civil charges have also been filed against, Paul Kranhold, the company's former chief operating officer, and David Sambol, the former chief financial officer.
The S.E.C. and federal prosecutors have undertaken wide-ranging investigations of companies across the financial services industry, touching on mortgage lenders, the Wall Street investment banks that bundled home mortgages into securities sold to investors, and other market players.
The S.E.C.'s scrutiny of Mr. Mozilo's stock sales began in the fall of 2007 with an informal inquiry.
The filing of the agency's civil lawsuit in federal court in Los Angeles is a striking turn for Mr. Mozilo, the man who 40 years ago co-founded what grew into the nation's largest mortgage lender. He moved the company in 1969 from New York to suburban Los Angeles, guiding Countrywide through numerous boom-and-bust housing cycles.
Of course, this couldn't be good news for Chris Dodd, who has been fending off charges that he received a favorable loan under Countrywide's "Friends of Angelo" program.
Dodd has responded that he did not receive any financial advantage under the program and that it does not affect his ability to regulate the industry as chairman of the Senate Banking Committee.
Rep Barney Frank (D-Mass.) won a stay of execution on Thursday for a General Motors plant in his district that the automaker had announced it would close.
No other lawmaker has managed to halt the GM ax. As chairman of the House Financial Services Committee Frank oversees the government's bailout program, known as TARP. Frank's staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass. plant open for at least 14 months.
GM announced Monday in its bankruptcy and restructuring plans it would close of nine of its plants and idle three others. The automaker said it would also shutter three service and parts operations by the end of the year -- one of which is in Frank's district.
"I greatly appreciate General Motors' willingness to take into consideration the wider needs of the company and especially the community," Frank said in a statement. "Keeping the facility open for this extra time gives workers a chance to look at other opportunities, while at the same time continuing to provide for their families."
Frank said that an improving economy could improve the prospects for GM and its employees, hinting that an uptick in auto sales could keep the Norton plant open longer.
The government might not want to rush too much to divest of its investments in financial institutions, Sen. Mark Warner (D-Va.) suggested Thursday.
While Warner urged the government to recover money from its Troubled Asset Relief Program (TARP) bailouts as quickly as reasonably possible, he encouraged a "good business decision" that could have taxpayers see a return on their investments.
"I think that we ought to make a good business decision. I want to make sure that the government gets out of these institutions as reasonably possible," Warner told Bloomberg News today. "But I also want to make sure that we who have taken the risk through these challenging times -- we, the taxpayers -- get some potential."
Warner said that Treasury Secretary Tim Geithner should make sure the banks don't pay back their loans too quickly.
"I think it's fully appropriate for the Treasury to evaluate before the banks are able to repay to make sure the banks they're not repaying too quickly if they're not fully out of the woods," he said.
Senate Republicans plan to unveil a proposed bill on Thursday that would redistribute the federal government's share of stock in General Motors and Chrysler from the U.S. Treasury to individual taxpayers -- as well as restrict additional taxpayer-funded bailouts for the auto industry.
The bill will be proposed by Minority Whip Jon Kyl (R-Ariz.), Senate Republican Conference Chairman Lamar Alexander (Tenn.) and GOP Sen. Bob Bennett of Utah.
Alexander previewed the ideas in a floor speech this week, saying it is the best way to avoid government ownership of GM persisting for years. The bill would break up the 60 percent share of GM that belongs to the federal government into stock certificates mailed to all 154 million Americans who filed tax returns this year. Alexander said without such a bill, distributing GM stock could take several years.
"I want the Treasury also to have the option of getting the ownership of these companies out of the hands of Washington and back into the hands of the marketplace in months rather than years," Alexander said. "Distributing new GM shares to individual taxpayers is a way to do that."
Alexander said the bill will also prevent awkward situations for the federal government, such as during congressional debates over fuel efficiency standards, as well as politically sensitive situations such as decisions to build plants in certain states during campaign seasons.
A group of Republican senators thinks Congress should be able to effectively veto bailouts for General Motors and other firms, and talked up legislation Wednesday to achieve that.
Sen. Mike Johanns (R-Neb.) said that Congress should have a chance to vote on the bailouts for those companies, introducing an amendment that would allow lawmakers to scuttle administration plans to assist different industries.
The Johanns amendment, which he hopes to add to a piece of tobacco legislation, would only apply to instances in which the government gains a majority of the equity in a company.
"It basically says this: If the government is going to own portions, in this case, a majority of shares in a company, then Congress has the responsibility to review that matter," Johanns said at a press conference on Monday. "What I am proposing is that the Senate and the House would have the right to vote on that to determine if, in fact, that's the best course of action."
Johanns was joined at the press conference by Sen. John Ensign (R-Nev.), Jim DeMint (R-S.C.), and Jeff Sessions (R-Ala.).
Johanns lobbied even those who supported the bailout for GM to support his amendment, reasoning the law would still enable Congress to approve such a thing. Johanns's bill would apply retroactively, however, to allow senators to disapprove the GM bailout.
The federal government should distribute GM shares to taxholders and relinquish direct control over the bankrupt company, Mitt Romney said today.
"The government should get out right now," Romney said on the NBC's Matt Lauer. Instead of holding a direct stake in the company, the federal government should "distribute the shares to the taxpayers of America, let them buy and sell amongst themselves as we do in a normal public market."
Though the White House has claimed it will not be involved in the day to day operations of the auto giant, Romney worried that the administration would determine where plants would be and what kind of cars are built.
"I don't want the Sierra Club telling General Motors what kind of cars they have to build," Massachusetts quipped. "Let's let the taxpayers--the shareholders--decide how GM is going to be run."
Also in the interview, Romney criticized Obama for his perceived "apologies" on his last overseas tripped, and said he hoped the President would put on a repeat performance during his current trip to the Middle East.
"The prior visits the president has had for instance to Europe has resulted in the kind of apology I think is inappropriate," Romney said, adding that the sacrifices America has made "overshadows all the mistakes."
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