MAIDEN LANE - Congratulations Taxpayers, You No Longer Own Bankrupt Red Roof Inns

This show on the House floor from Alan Grayson was one of the most entertaining bailout clips of the past 4 years. All the details are at this link:

New York Fed Website - Maiden Lane Transaction History

Here were the facts at the time:

"A good portion of Red Roof's remaining $407 million in debt, held on lenders' balance sheets and intended for later securitization, landed with the Federal Reserve via Bear Stearns.  The Fed holds $444 million total in Red Roof Inn debt through its Maiden Lane I vehicle."

Grayson quotes:

• "Let's find out once and for all who owns the hotels, who owns the houses, and let's try and put this wild beast that creates money out of nothing and jams it in the pockets of special interests like Maiden Lane, like Bear Stearns, like JPMorgan, like all their friends.  Let's put them under some degree of restraint before it all comes crashing down, on us."

• “I want to congratulate the gentleman and, in fact, everyone in America, because you now own a hotel chain.  Congratulations!  It’s this one, right here [pointing to poster board].  You own the Red Roof Inn.

• Now, I know what you’re thinking.  You’re thinking, ‘that’s funny, I don’t remember buying the Red Roof Inn,’ but the Federal Reserve Bank, in it’s wisdom, has done it for you.  The Federal Reserve Bank has seen to it that you have the pleasure of ownership of this delightful chain of hotels that extends from sea to shining sea.  You, America, you are now the owners of the Red Roof Inn chain.  Congratulations!”

• "The Federal Reserve became the sucker of last resort.  And in doing so, the Federal Reserve made you -- you, America! -- the sucker of last resort."

• “You’ll have enough to put a hotel on Marvin Gardens, on Park Place, and probably on Boardwalk, too!  You’ll own all the hotels in America, and isn’t that something?”

Comments

[DailyBail]

Fed Back To Its Secretive Ways, Sells $7 Billion In Maiden Lane Assets Directly To Credit Suisse Without Public Auction

http://www.zerohedge.com/news/fed-back-its-secretive-ways-sells-7-billion-maiden-lane-assets-directly-credit-suisse-without-p

[DailyBail]

The Fed, aided and abetted by BlackRock, has long been publishing rosy valuations of the assets of the various Maiden Lane vehicles. Accuracy of valuation matters for a host of reasons. First, the public has a right to know how large the various government subsidies to the banking industry are, irrespective of Fed and Treasury efforts to camouflage them. Second, losses on the Fed’s accumulation of dreck may well rise to the level that it will require Treasury (meaning taxpayer) recapitalization of the Fed (the central bank can in theory “print” its way out of any shortfall, but as former central banker, now Citigroup chief economist Willem Buiter has pointed out, the Fed’s anti inflation mandate puts limits on how far it can go down that path). Third, this willingness to bend facts reveals troublingly cavalier attitude from a bank regulator. If the Fed thinks fudging its own marks is OK, it is likely to be unduly tolerant of truth-bending by the institutions it supervises.

http://www.nakedcapitalism.com/2010/05/the-fed-thumbs-its-nose-at-the-public.html#Bl0SLQ5LzOBxsk8v.99

[S. Gompers]

I can't wait to see all the bills come due that have been written "PAID" ont the backs of the American people.

[LiberatedCitizen]

Speaking of Tarp l& Bail Outs (This is new)

A Quick End to TARP Means a Smaller Payoff for Taxpayers

Quietly, the Treasury Department is engaged in another bailout of the banks. This time, it’s America’s small banks that are the lucky duckies.

The federal government still holds investments in hundreds of small banks around the country in the Troubled Asset Relief Program, otherwise known as the bailout. In an effort to wind down TARP, the government is trying to sell off its holdings of preferred stock of the remaining smaller banks.

The problem is that the Treasury Department isn’t getting great bids on some of the bank paper, even on the shares of banks with strong profits and strong capital. When the government sold its holdings in MetroCorp Bancshares of Houston this month, the bank itself bought back most of it — at 98 cents on the dollar. Wilshire Bancorp of Los Angeles bought back its paper at 94 cents on the dollar. The Treasury Department sold preferred shares of Ohio-based First Defiance at 96 cents, and Peoples Bancorp of North Carolina at 93 cents. All of these are regarded

Who makes up the difference? Taxpayers, of course.

Treasury officials say that is what the market is willing to bear. But the government doesn’t have to sell now, and it doesn’t have to settle for less than a full repayment.

Why should healthy banks or hedge fund investors get a gift so that the Obama administration can score some political points by raising the number of banks that have left the program? For all the generous breaks that the government gave the gargantuan banks in the bailout, they all at least paid TARP back at 100 cents on the dollar. Why shouldn’t the small ones pay 100 cents on the dollar like the big boys?

continue

http://dealbook.nytimes.com/2012/08/22/a-quick-end-to-tarp-means-a-smaller-payoff-for-taxpayers/