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Wednesday, July 22, 2009

Afternoon Tidbits

*guess who will be paying for the CRE bailout bill?
Bernanke Says Commercial Property May Pose Risk for Economy
July 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy, without committing to additional steps to aid the market.

Bernanke, testifying before the Senate Banking Committee today, urged lenders to modify “problem” mortgages to avert defaults. Christopher Dodd, the Connecticut Democrat who chairs the panel, told Bernanke that “some have suggested” the commercial market “may even dwarf the residential mortgage problems” in the U.S.

The state of commercial real estate was one of the most- asked-about subjects in questioning by lawmakers so far in Bernanke’s two days of testimony on the economy. Bernanke said today in the Senate and yesterday at the House Financial Services Committee that it’s too early to tell how effective the Fed’s main initiative in the area will be.

The Term Asset-Backed Securities Loan Facility, a Fed emergency program that lends to investors to purchase securities backed by consumer and business loans, began accepting commercial mortgage-backed securities as collateral last month. Fed policy makers will extend the TALF, currently scheduled to expire Dec. 31, should they judge financial markets are still “some distance from normal operation,” Bernanke said today.
*what if the collateral collapses? What is the Fed's backup plan then? Hat in hand to Donkey Dodd that's what.


*GS paid off the TARP warrants with my money. Does this ever end?
Goldman Sachs Pays $1.1 Billion for Treasury Warrants
By Christine Harper
July 22 (Bloomberg) -- Goldman Sachs Group Inc., which reported a record profit for the second quarter, paid the U.S. Treasury $1.1 billion to redeem warrants the government received in October when it invested $10 billion in the firm.

The value was established by the Treasury, the New York- based firm said today in a statement. The payment is in addition to $318 million in preferred dividends that the company paid on the investment since October. On an annualized basis, the return to taxpayers was 23 percent, Goldman said.

“This return is reflective of the government’s assistance, which benefited the financial system, our firm and our shareholders,” Chief Executive Officer Lloyd Blankfein, 54, said in today’s statement. “We are grateful for the government efforts.”
*they got a bailout from AIG, where's that return?

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