Bailout Oversight Panel: Some Banks Still Vulnerable to Collapse
Nearly a year after the $700 billion bailout of the nation’s financial system began, banks—especially regional and smaller banks—are still threatened by the billions of dollars in bad loans on their balance sheets. More could fail if the economy worsens, according to a new report from the Congressional Oversight Panel (COP), which oversees the spending of the bailout funds.
“The Continued Risk of Troubled Assets,” released today, warns that if unemployment rises sharply or the commercial real estate market collapses, the banking system could again nosedive into a crisis.
In the report, the panel says:
The financial system [remains] vulnerable to the crisis conditions that [the bailout] was meant to fix.
Bailout Oversight Panel: Bank Stress Tests Don’t Go Far Enough
The federal government’s recent stress tests of the nation’s largest banks generally were well designed, but they did not go far enough or raise some serious concerns. The tests may need to be repeated often, according to a congressional panel overseeing the $700 billion financial bailout.
Testifying before the Joint Economic Committee (JEC) this morning, Congressional Oversight Panel (COP) Chairwoman Elizabeth Warren said the stress tests were based on assumptions about the economic downturn that may be too optimistic. The COP released a new report today that calls for more strenuous and transparent testing of the banks until the current economic crisis is over.
‘It’s Time to Regulate All Global Financial Markets’
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The global financial meltdown demonstrates the need to regulate all international financial markets, not only the important institutions, says Damon Silvers, vice chairman of the Congressional Oversight Panel (COP). The COP is examining how the Treasury Department is spending taxpayer money to help rescue the financial system.
Speaking yesterday at The Wall Street Journal’s Future of Finance Initiative, Silvers said the overhaul of the global regulatory system should be comprehensive.
All forms of money management in global markets ought to be under a regulatory scheme. Not just systematically significant ones, all of them. Otherwise, we ought to just basically admit that we don’t have regulated markets.
Functioning Banks, Fair Deal for Taxpayer Dollars Should Be Treasury Goal
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Yesterday, as the U.S. Senate was debating the American Recovery and Reinvestment Act—the Obama administration’s first major initiative to aid the economy—Treasury Secretary Timothy Geithner was outlining the White House’s battle plan to put the nation’s banks and financial institutions back on course.
While many of the details remain to be worked out, the financial rescue package aims at several major goals:
- Help banks cleanse their holdings of “toxic” assets to get private lending up and running again.
- Prop up banks’ capital position to generate a higher level of lending.
- Boost consumer and business lending to get credit flowing again.
- Stop preventable foreclosures and make housing more affordable by lowering interest rates.
- Monitor and make public financial institutions’ use of government-provided public funds and ensure that taxpayer money isn’t wasted.
