The circus continues on Capitol Hill, and I don’t mean the one in Seattle. The $50 billion bank-financed fund that would have paid to wind down a big institution in trouble is now gone from the compromise financial reform bill. Republicans objected, saying it would encourage a taxpayer bailout.
In its place, according to The New York Times, “the Federal Deposit Insurance Corporation would finance the liquidation of failed financial companies, using a new credit line with the Treasury Department backed by the failed company’s assets. The money would be recouped later through the sale of assets, with shareholders and creditors forced to take losses.”
Now, I’m not the brightest bulb in the knife drawer, but that sounds suspiciously like the bailout of late that cost taxpayers potentially trillions of dollars, little of it recouped as those toxic “assets” sit steaming on the Fed’s books. Meanwhile, the big banks dodged fees that would have financed their safety net. Of course, the bill doesn’t even contemplate breaking up these too-big-to-fail banks.
Meanwhile, the Financial Crisis Inquiry Commission is looking into how big banks allegedly cooked their books to conceal their true situation — including the bomb that was ticking inside Lehman Brothers. Alas, the revelations of this commission are totally disconnected from the “reform” moving through Congress.
The Back Story: In perhaps a hopeful sign on the employment front, employers announced 43 percent fewer jobs cuts in April vs. March, according to Challenger, Gray & Christmas, the outplacement consulting firm. The April number was 38,326, the lowest since July 2006.
Year-over-year, the number was down 71 percent from the 132,590 planned layoffs in April 2009. So far this year, employers have announced 219,509 job cuts, 69 percent lower than the same period in 2009. On Friday, the federal government will release April jobless numbers.
Today’s Econ Haiku:
NYSE floor brokers
Hand-held devices broke down
Can we blame 3-G?