Word: bankes
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Dates: during 2000-2009
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...result, it's unlikely that any of the $1 trillion Obama wants for his "bad bank" will be turned into credit that helps revive business and consumer spending. The main reason is that the North-American economy might be stuck in a classic liquidity trap, first witnessed during the Dirty Thirties when banks began hoarding newly created liquidity as insurance against a further downturn. "The fact is that since the failure of Lehman Brothers every bank in the world has been concerned with beefing up capital to survive the next few years," says Lawrence Booth, a finance specialist...
...Canadian experience with EFF reinforces the U.S. experience with TARP: government loses control of stimulus money once it falls into the hands of recipients. Obama needs to be realistic about what the "bad bank" can accomplish - namely relieving banks of some junk assets at considerable cost to the taxpayer. It won't jump-start consumer lending - at least not in the foreseeable future if the lesson of Prime Minister Stephen Harper's experience is anything...
...early February, Treasury Secretary Timothy Geithner, as part of his bank fix, said he will "stress-test" the nation's largest financial firms to find out which ones are fit and which ones are flatlining, and then apply the appropriate therapy - which we assume means anything from injecting capital to pulling the plug. By using a medical term, Geithner gave the impression that he had some fiscal electrocardiograph that could be strapped to banks to chart the strength of their accounts. But when it comes to a bank checkup, the actual test is far less scientific. (Read "Geithner's Challenge...
...theory, a financial stress test looks at a firm's loans, assesses which will go bad and then concludes whether the bank will have money left when those accounts go unpaid. Pretty clear...
...exception is Citigroup. Since the bank struck a deal with the government to shield $301 billion in losses, we had to account for some investment missteps to value the arrangement. Bank of America has a similar deal, but since the details aren't public, we didn't factor it in. (See pictures of the top 10 scared traders...