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New York (HedgeCo.Net) – Obama used his time in front of Congress last night to present a “blueprint for our future,” with a specialized focus on health care, education and energy. But there was plenty of time for talk on the financial crisis, saying we have come to a “reckoning” after years of poor decision making and lax regulation.
"A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future," the President said. “People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day."
Obama added, “I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you, I get it."
Obama said while he is in favor of lending a hand to large banks when needed, those institutions will be held accountable for how that money is spent. He also said he plans on launching new lending programs that will provide funding for college, small business and car loans.
Touching on the anger regarding CEO payouts and bonuses, Obama put to rest any further issues saying, “CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over."
Obama also tried to restore confidence in the U.S. banking system by assuring the public that their money is safe in our financial institutions. To those same banks he said, “if we do not re-start lending in this country, our recovery will be choked off before it even begins."
Prior to his speech today, Gallup reported that Obama’s approval rating had dipped below 60 percent for the first time since the company started tracking it on January 21st. Gallup stated that his average approval rating was 64 percent, with most of the current decline coming from the Republicans.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Financial institutions that have received generous assistance from Congress may be forced to restrict executive compensation and their dividends, if Barack Obama and his new Treasury have their way.
“Those receiving exceptional assistance will be subject to tough but sensible conditions that limit executive compensation until taxpayer money is paid back,” said Larry Summers, who Obama chose to head the White House National Economic Council. He also said they would ban dividend payments beyond the minimum amounts while putting limits on stock buybacks.
Obama has expressed his disappointment with the current administration and the lax oversight in doling out the first $350 billion of the bailout, along with failing to focus on areas like housing and consumer credit. Summers tackled the subject in a letter to Congress yesterday that outlined the issues Obama supports in distributing the other half of the $700 billion Troubled Asset Relief Program.
Summers told Congress that the President-elect believes there has been “too little transparency and accountability,” among the financial institutions. In addition, Obama believes the executives acted irresponsibly and did not provide enough support for small-businesses owners. Small businesses and community banks are where more of the money needs to be directed, Obama says.
In addition, he wants to provide help to struggling homeowners in order to avoid foreclosure, along with providing enhanced oversight of the relief program which includes public accounting to see how the money is being spent.
The House of Representatives will vote on a proposal this week that include some of the restrictions outlined by Summers.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Tacoma News Tribune – It was a year of disillusionment, betrayal and excruciating pain for investors.
Wall Street got investing so wrong that the financial system needed an emergency $700 billion transfusion of taxpayer money to avoid collapse, and investors lost trillions of dollars of their life’s savings.
For the regular person with a 401(k), it didn’t help much if they obeyed the lessons of sound investing. Although investors are told that diverse mutual fund choices will help them get through a stock market downturn, the practice didn’t save them from a miserable 2008.
As the stock market plunged more than 50 percent from its October 2007 high, everything but U.S. Treasury bonds suffered drastic losses – real estate, commodities, U.S. stocks, international stocks and even hedge funds, municipal bonds and corporate bonds. As investors panicked and headed for the exits, strong and weak investments were sold. Virtually nothing was immune.
“All 10 sectors within the Standard & Poor’s 500 fell, from a 22 percent slump for consumer staples to a 74 percent thrashing for the financials,” said Standard & Poor’s chief investment strategist Sam Stovall.
