13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (52 page)

31.
Jowei Chen and Connor Raso, “Do TARP Bank Bailouts Favor Politically Connected Firms?” (working paper, October 15, 2009).

32.
Dan Fitzpatrick, Damian Paletta, and Susanne Craig, “Bank of America to Get Billions in U.S. Aid: Sides Finalizing Terms for Fresh Bailout Cash; Lender Told Treasury That Without Funds, It Couldn’t Close Deal for Ailing Merrill,”
The Wall Street Journal,
January 15, 2009, available at
http://online.wsj.com/article/SB123197132814683053.html
.

33.
See James Kwak, “More on Bank of America,”
The Baseline Scenario,
September 28, 2009, available at
http://baselinescenario.com/2009/09/28/more-on-bank-of-america/
.

34.
Mary Williams Walsh, “A.I.G. Lists Banks It Paid with U.S. Bailout Funds,”
The New York Times,
March 15, 2009, available at
http://www.nytimes.com/2009/03/16/business/16rescue.html
.

35.
See Gretchen Morgenson, “Revisiting a Fed Waltz with A.I.G.,”
The New York Times,
November 21, 2009, available at
http://www.nytimes.com/2009/11/22/business/22gret.html
. For Goldman Sachs’s rebuttal, see “Goldman’s Response to Questions About A.I.G.,” DealBook Blog,
The New York Times,
November 23, 2009, available at
http://dealbook.blogs.nytimes.com/2009/11/23/goldmans-response-to-questions-about-aig/
.

36.
Richard Teitelbaum and Hugh Son, “New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers,” Bloomberg, October 27, 2009, available at
http://bloomberg.com/apps/news?pid=20601109&sid=a7T5HaOgYHpE
.

37.
Mary Williams Walsh, “Audit Faults New York Fed in A.I.G. Bailout,”
The New York Times,
November 16, 2009, available at
http://www.nytimes.com/2009/11/17/business/17aig.html
. UBS offered to take 98 cents on the dollar, but the New York Fed insisted on treating all banks equally, so the offer was refused.

38.
In the first PPIP transaction, private investors paid about 70 cents on the dollar for a portfolio of loans, while they would only have been willing to pay 50 cents without the government financing. Edmund Andrews, “F.D.I.C. Sells Failed Bank’s Troubled Mortgages to Private Investor,”
The New York Times,
September 16, 2009, available at
http://www.nytimes.com/2009/09/17/business/17loans.html
. See also Mike Konczal, “PPIP Gets Its Debut,”
Rortybomb,
September 18, 2009, available at
http://rortybomb.wordpress.com/2009/09/18/ppip-debut/
.

39.
David Enrich, Dan Fitzpatrick, and Marshall Eckblad, “Banks Won Concessions on Tests: Fed Cut Billions off Some Initial Capital-Shortfall Estimates; Tempers Flare at Wells,”
The Wall Street Journal,
May 9, 2009, available at
http://online.wsj.com/article/SB124182311010302297.html
.

40.
Saturday Night Live
(NBC television broadcast May 11, 2009), available at
http://www.nbc.com/Saturday_Night_Live/video/clips/geithner-cold-open/1099562/
.

41.
Tim Geithner, “Written Testimony: Congressional Oversight Panel,” April 21, 2009, available at
http://www.treas.gov/press/releases/tg94.htm
.

42.
Board of Governors of the Federal Reserve System,
The Supervisory Capital Assessment Program: Overview of Results,
May 7, 2009, available at
http://www.federalreserve.gov/newsevents/bcreg20090507a1.pdf
. Profits are “Resources Other than Capital to Absorb Losses in the More Adverse Scenario.” Estimates are from the “More Adverse” scenario; however, detailed estimates were only provided for that scenario.

43.
Federal Reserve,
Senior Loan Officer Opinion Survey on Bank Lending Prac- tices,
October 2009, available at
http://www.federalreserve.gov/boarddocs/snloansurvey/200911/
. Data after Q3 2009 were not available at time of writing. Loan types include commercial and industrial loans (for large and small companies), commercial real estate loans, residential mortgage loans, and consumer loans.

44.
Chrystia Freeland, “Lunch with the FT: Larry Summers,”
Financial Times,
July 10, 2009, available at
http://www.ft.com/cms/s/2/6ac06592-6ce0-11de-af56-00144feabdc0.html
.

45.
Office of the Special Inspector General for the Troubled Asset Relief Program,
Quarterly Report to Congress,
July 21, 2009, available at
http://www.sigtarp.gov/reports/congress
/2009/July2009_Quarterly_Report_to_Congress.pdf
.

46.
Paul Krugman, “Zombie Financial Ideas,” The Conscience of a Liberal Blog,
The New York Times,
March 3, 2009, available at
http://krugman.blogs.nytimes.com/2009/03/03/zombie-financial-ideas/
.

47.
Paul Krugman, “All the President’s Zombies,” The Conscience of a Liberal Blog,
The New York Times,
February 25, 2009, available at
http://krugman.blogs.nytimes.com/2009/02/25/all-the-presidents-zombies/
.

48.
Richard W. Fisher, “Paradise Lost: Addressing ‘Too Big to Fail’ (With Reference to John Milton and Irving Kristol)” (lecture, Cato Institute’s 27th Annual Monetary Conference, Washington, D.C., November 19, 2009).

49.
“Nationalized Banks Are ‘Only Answer,’ Economist Stiglitz Says,”
Deutsche Welle,
February 6, 2009, available at
http://www.dw-world.de/dw/article/0,,4005355,00.html
.

50.
Nouriel Roubini, “Nationalize Insolvent Banks,”
Forbes,
February 12, 2009, available at
http://www.forbes.com/2009/02/11/geithner-banks-nationalization-opinions-columnists_0212_nouriel_roubini.html
; Matthew Richardson and Nouriel Roubini, “Nationalize the Banks! We’re All Swedes Now,”
The Washington Post,
February 15, 2009, available at
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/12/AR2009021201602.html
; Dean Baker, “The Banks Have Stolen Enough; It’s Time to Take Them Over,”
The Huffington Post,
January 25, 2009, available at
http://www.huffingtonpost.com/dean-baker/the-banks-have-stolen-eno_b_160677.html
.

51.
Christine Harper and Jeff Kearns, “Citigroup Falls Below $1 as Investor Faith Erodes,” Bloomberg, March 5, 2009, available at
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKLJO8S5nFaU
.

52.
Larry Summers, “International Financial Crises: Causes, Prevention, and Cures,”
The American Economic Review Papers and Proceedings
90 (2000): 1–16.

53.
Simon Johnson with James Kwak, “The Quiet Coup,”
The Atlantic,
May 2009 (published online on March 26, 2009), available at
http://www.theatlantic.com/doc/200905/imf-advice
.

54.
“Hear: Geithner’s Stress Test” (podcast),
Planet Money,
February 25, 2009, audio available at
http://www.npr.org/blogs/money/2009/02/hear_geithners_stress_test.html
.

55.
Department of the Treasury,
TARP Standards for Compensation and Corporate Governance,
June 10, 2009, available at
http://www.treas.gov/press/releases/reports/ec%20ifr%20fr%20web%206.9.09tg164.pdf
.

56.
Stephen Labaton and Edmund L. Andrews, “Geithner Said to Have Prevailed on the Bailout,”
The New York Times,
February 9, 2009, available at
http://www.nytimes.com/2009/02/10/business/economy/10bailout.html
.

57.
Department of the Treasury,
TARP Standards for Compensation and Corporate Governance, supra
note 55.

58.
Stephen Labaton, “Treasury to Set Executives’ Pay at 7 Ailing Firms,”
The New York Times,
June 10, 2009, available at
http://www.nytimes.com/2009/06/11/business/11pay.html
.

59.
Stephen Labaton, “Ailing, Banks Still Field Strong Lobby at Capitol,”
The New York Times,
June 4, 2009, available at
http://www.nytimes.com/2009/06/05/business/economy/05bankrupt.html
.

60.
Ibid.

61.
Company annual and quarterly reports.

62.
David Cho, “Banks ‘Too Big to Fail’ Have Grown Even Bigger: Behemoths Born of the Bailout Reduce Consumer Choice, Tempt Corporate Moral Hazard,”
The Washington Post,
August 28, 2009, available at
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/27/AR2009082704193.html
.

63.
Office of the Comptroller of the Currency,
Quarterly Report on Bank Trading and Derivatives Activities, Second Quarter 2009,
Table 2, available at
http://www.occ.treas.gov/deriv/deriv.htm
. Market share is the top five bank holding companies’ share of all derivatives contracts held by all U.S. bank holding companies, by notional value.

64.
From Federal Deposit Insurance Corporation data, cited in Dean Baker and Travis McArthur, “The Value of the ‘Too Big to Fail’ Big Bank Subsidy,” Center for Economic and Policy Research Issue Brief, September 2009, available at
http://www.cepr.net/documents/publications/too-big-to-fail-2009–09.pdf
.

65.
Cho, “Banks ‘Too Big to Fail’ Have Grown Even Bigger,”
supra
note 62.

66.
Tyler Durden, “Exclusive: AIG Was Responsible for the Banks’ January & February Profitability,”
Zero Hedge,
March 29, 2009, available at
http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html
.

67.
Press Release, Goldman Sachs, “Goldman Sachs Reports Second Quarter Earnings per Common Share of $4.93,” July 14, 2009, available at
http://www2.goldmansachs.com/our-firm/press/press-releases/current/pdfs/2009-q2-earnings.pdf
.

68.
Quoted in Henny Sender, “Wall Street Profits from Trades with Fed,”
Financial Times,
August 2, 2009, available at
http://www.ft.com/cms/s/0/e84383dc-7f8c-11de-85dc-00144feabdc0
.html
.

69.
Elizabeth Hester and Elisa Martinuzzi, “JPMorgan Tightens Grip on Equity Sales by Selling Own Shares,” Bloomberg, June 28, 2009, available at
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYlWNEyLQzPk
.

70.
Quoted in Jenny Anderson, “Despite Bailouts, Business as Usual at Goldman,”
The New York Times,
August 5, 2009, available at
http://www.nytimes.com/2009/08/06/business/06goldman.html
.

71.
Felix Salmon, “Chart of the Day: Goldman VaR,” Reuters, July 15, 2009, available at
http://blogs.reuters.com/felix-salmon/2009/07/15/chart-of-the-day-goldman-var/
. See also Andrew Ross Sorkin, “Taking a Chance on Risk, Again,” DealBook Blog,
The New York Times,
September 17, 2009, available at
http://dealbook.blogs.nytimes.com/2009/09/17/taking-a-chance-on-risk-again/
. While VaR—value-at-risk—is a poor way of estimating potential losses under extreme market conditions, it does measure the change in the riskiness of a portfolio relative to historical data.

72.
Quoted in Simon Clark and Caroline Binham, “Profit ‘Is Not Satanic,’ Barclays CEO Varley Says,” Bloomberg, November 3, 2009, available at
http://www.bloomberg.com/apps/news?pid ewsarchive&sid=aGR1F_bjSIZw
.