They both bet on (but coexist awkwardly with) evangelicals, take defensive approaches to their campaigns, and rely on a tough guy from New Jersey. Dan Gross points out the similarities between Romney and the Jets.
Republican presidential candidate Mitt Romney has repeatedly expressed his affinity for business owners. When asked if he was a NASCAR fan, he responded that he was friends with some NASCAR team owners. Romney similarly finds support among the elite class of professional sports franchises owners. New York Jets owner Woody Johnson, for example, is the chairman of Romney’s New York campaign, and a major fundraiser. So it comes as no surprise that the Jets, who just endured a humiliating 34-0 loss on Sunday to the San Francisco 49ers, bear certain resemblances to the Romney campaign. Let’s count the ways.
Both are occasionally overshadowed by franchises based in Wisconsin—the Packers for the Jets, vice presidential nominee Paul Ryan for Romney.
Both have relied on a blustery, plus-size, New Jersey-based, media-hogging, tough-talking guy with an over-inflated sense of his own competence as a frontman and spokesperson: head coach Rex Ryan for the Jets, and New Jersey Governor Chris Christie for the Romney campaign.
Both have placed bets on evangelicals but coexist awkwardly with them and hold back from letting them hold center stage. Romney’s brief history as a moderate, and lifelong history as a Mormon, have contributed to an uneasy relationship with fundamentalist Christians. At the Republican convention in Tampa, few were given primetime speaking spots. The same might be said of the Jets, who brought in Tim Tebow, the Bible-thumping, knee-taking quarterback from Denver in the off-season. Tebow has been a fish out of water in the Jets’ offense. Even in Sunday’s debacle, as incumbent quarterback Mark Sanchez struggled, going 13 of 29, for 103 yards, with one interception, Tebow remained anchored on the bench. He threw one piece (complete) and carried the ball twice.
Both have taken a defensive approach to the campaign, and find it difficult to go on the offensive. In both the primaries and the general elections, Romney has generally waged a careful campaign that frequently finds itself pinned near its own end zone thanks to gaffes and fumbles. He has struggled to seize the initiative and narrative of the campaign. And he’s constantly calling audibles that result in incomplete passes—most recently, he’s taken to touting the Massachusetts health-care mandate as a sign of empathy. Just so, the Jets are a team that has historically been based on playing tough defense first, and that has struggled for years to develop a razzle-dazzle, high-scoring offense. On Sunday, the Jets’ offense was incompetent.
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Bettors give both entities long odds at success this fall. The “Nowcast” in Nate Silver’s election model on Monday gave Romney a 1.9 percent chance of winning the election. The same day, Vegas Insider had the Jets at a 30:1 longshot to win the Super Bowl.
Earlier in the season, both the Romney campaign and the Jets found themselves subject to Monday-morning quarterbacking and a dreaded quarterback controversy. In a recent Politico story, outsiders, anonymous insiders, and pundits questioned the play-calling and the game plan of the Romney campaign, and suggested that campaign QB Stuart Stevens be benched. These guys have been at it for four years, and they don’t seem to have a clue as to what to do with the ball. Which precisely echoes the criticism levied at the New York Jets offensive minds and quarterback Mark Sanchez. See this New York Post blogpost for an example: “He was flat out awful. This is now three straight weeks where he has completed less than 50 percent of his passes. If it’s not Tebow time yet, it’s getting close. The fumble at the end of the first half was an unbelievable mistake for a fourth-year player … Plain and simple, he’s not getting better.”
A rare competent regulator describes policy battles with the Obama administration in her new book. Watch exclusive video.
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, is a member of a very small club: competent crisis-era financial regulators. Bair was one of the policymakers in Washington in the 2007–2009 period who was ahead of the curve. From her perch at the FDIC, where she was charged with safeguarding the nation’s bank deposits, Bair had a front-row seat to the housing/credit boom and the spectacular bust.
The officials in charge at the Federal Reserve and the Treasury Department—Ben Bernanke, Henry Paulson, Tim Geithner—have been placed at the center of the many crisis narratives. But Bair and the FDIC deserve better billing. While the crisis originated in banks that were not part of its system—so-called shadow banks like Lehman Brothers, Countrywide Financial, and AIG—the FDIC played an important role in stemming the panic in 2008 and 2009. In the middle of the crisis, for example, the FDIC expanded the levels of deposit available for insurance and set up a program through which it guaranteed more than $300 billion of debt issued by financial companies.
In her comprehensive new book, Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself, Bair recounts her experiences at the FDIC, her frequent run-ins with banking executives, and with officials such as Treasury Secretary Tim Geithner.
Sheila Bair, a senior adviser to the Pew Charitable Trusts and former chairman of the Federal Deposit Insurance Corp. (FDIC), speaks during a Bloomberg Television interview in New York, on Wednesday, Sept. 26, 2012. (Peter Foley / Bloomberg via Getty Images)
In our extended interview, Bair discusses the historic bailout and the still-current issues surrounding banking reform, the size and influence of Wall Street, and the still-incomprehensible failure of the Obama administration to deal decisively with the housing and foreclosure crisis.
It’s worth noting that Bair was one of the only figures in Washington to emerge from the crisis with her reputation intact, and indeed, burnished. Hundreds of failing and faltering banks failed and were closed, with little disruption to customer service. No depositor lost a single penny in insured deposits, despite the worst banking crisis since the early 1930s. The debt insurance program collected several billion dollars in fees without having to make any payments. And the insurance fund run by the FDIC is replenishing itself without having to dun taxpayers. For better or worse, the banking system is now in relatively good health.
NFL owners thought they could get away with treating officials the way corporate America treats its employees.
“Whoever wants to know the heart and mind of America had better learn baseball,” wrote the cultural critic Jacques Barzun in the middle of last century. But if you want to understand what’s going on in the U.S economy, you’d be better advised to get to know football. The recently resolved labor dispute between the National Football League and its referees illuminates several larger trends in the economy.
Jose Luis Pelaez Inc / Blend-Getty Images; Otto Greule Jr / Getty Images
First, when rich and powerful guys defund the rulemakers and regulators, bad things happen—but only the public and the little guys seem to suffer. The NFL officials aren’t just workers. We learned they are vital to the quality of the experience in the marketplace—the pace of the game, making sure it is called reasonably, protecting participants from injury, and providing a safety net. They police activity, smack down out-of-bounds behavior, punish wrongdoers, and generally tamp down volatility. Which is very similar to the function that regulators like the Securities and Exchange Commission and the Office of the Comptroller of the Currency were supposed to do. When those entities were underfunded, understaffed, and marginalized, it encouraged an anything-goes environment. And then things went south, it wasn’t the owners of the institution that got hurt. Wall Street CEOs still got their businesses and saw their companies bailed out. It was small investors, borrowers, little firms that got hurt. Just so, during the strike, which severely hampered the quality of the experience, the owners didn’t suffer any financial harm. The payments from television deals and ticket sales still flowed in. But it was the workers and spectators that got hurt: the player who may have been injured when a cheap shot was missed, the coaches and fans who suffered when the results were miscalled, and small-time betters who found the spreads suddenly meaningless and unpredictable.
Second, American management views low wages and dominance over labor as an entitlement. It’s no secret that organized labor has declined as a force in American culture. In 2011, according to the Bureau of Labor Statistics, only 11.8 percent of salaried workers belong to a union, and only 7.6 percent of private-sector workers were represented by unions—down from 9.8 percent in 2000. The overwhelming majority of companies in the U.S. today simply do not have to deal with workers who band together to negotiate salaries and benefits. In the 1950s, big corporation and big labor forged an entente, in which they generally agreed to share an expanding pie. These days it’s much more like a zero-sum game. Capital takes what it wants and essentially tells workers to take what is offered without offering much of a peep. As David Lynch of Bloomberg notes, “quarterly corporate profits of $1.9 trillion have almost doubled since the end of 2008, while workers’ inflation-adjusted average hourly earnings have declined.” The concept of sharing the wealth is simply alien to the titans of industry who own NFL teams. So the willingness of a group of employees to hold fast to their demands came as a shock, and the owners’ natural inclination was to tell the refs to stuff it.
Third, there’s an epidemic of wealthy entities choosing not to fund retirement promises made to longtime workers—when they could easily afford to do so. One of the central points of contention was the owners’ desire to convert the officials’ old-school, defined-benefit pension into a 401(K). Commissioner Roger Goodell told the Huffington Post that “Yours truly doesn’t have that. It’s something that doesn’t really exist anymore and that I think is going away steadily.” (Of course, people who earn multi-million dollar salaries, as Goodell does, can easily fund their own retirements out of wages and savings.) The NFL owners would have saved a few million dollars by altering the pension scheme—a tiny sliver of their overall revenues, and a sum that wouldn’t put a crimp in their day. Just so, corporate America at large, which is flush with cash, is choosing not to fund adequately the pensions it has promised to employees—even as they pay out dividends and large bonuses and stay current on other obligations. For years, states, cities, and the federal government have chosen not to collect—or deploy—adequate resources to fund pensions plans and other benefit programs. There is a pension-funding crisis in the U.S. But it is largely a matter of choice.
Fourth, while the public isn’t exactly high on unions, it won’t always stand for it when organized labor is pushed around by powerful bullies. In the case of the NFL officials, public sentiment was overwhelmingly on the side of the referees. Players, fans, and even the sportscasters on networks that have vital, massive contracts with the NFL excoriated the owners for their shortsightedness and mean spiritedness. Just so, attempts by state governors to curtail the rights of esteemed public employees like teachers, cops and firefighters has frequently provoked a backlash. Wisconsin, where labor sought to recall Gov. Scott Walker, is Exhibit A. Ohio, where organized labor successfully overturned an anti-public-union measure, is Exhibit B.
Treasury’s $18 billion sale of AIG stocks highlights unlikeliest success of the bailout programs. Daniel Gross crunches the numbers.
Nearly 30 months ago, in March 2010, we used this space to suggest that the stricken insurer AIG might return all its taxpayer aid. With the announcement of a huge, $18 billion sale of AIG stock owned by Treasury, that might be happening.
AIG’s management will chalk up the achievement to its management. But really the success can be attributed to three huge forces: the decades-long growth in AIG’s core insurance business; rapid economic growth in Asia; and the successful reflation of the credit markets.
Of all of the efforts, the AIG rescue was the most inexplicable, the most stunning, the most infuriating, and the most damaging—not just for what it said about the company but for what it said about the financial system. How could a gigantic institution effectively escape banking regulation, and sell insurance on hundreds of billions of dollars’ worth of mortgage products and other securities—without ever setting aside money to cover claims should they arise? And how could the government shovel out a seemingly limitless amount of cash to make sure AIG’s counterparties, giant banks, like Goldman, Sachs, were paid at one hundred cents on the dollar? How could top employees and management, shortly after receiving a bailout that would rise to $182 billion, even consider paying out huge bonuses? And, lastly, how would the taxpayers ever get their money back?
When the Federal Reserve and the Treasury Department stepped into AIG, it was obvious they were wading into a swamp. AIG was subject to a panic. Many of the assets it held and insured were plummeting in value, and there were no ready buyers for many of them. The decline of the mortgage market and the seizing up of the credit markets swamped the real value inherent in its real, functioning businesses—life and property insurance units in the U.S., Europe, and Asia. But the government wound up buying an option on the bounce-back of the financial system and continuing growth in Asia. And those were pretty smart bets to make in the fall of 2008 and the spring of 2009.
In this Aug. 3, 2012, file photo, Specialist Donald Himpele, foreground second left, resumes trading in AIG stock on the floor of the New York Stock Exchange. (Richard Drew / AP Photo)
It would take a dissertation to detail all the help the government gave AIG. The Federal Reserve created two vehicles, Maiden Lane II and Maiden Lane III, and lent more than $50 billion to them, so they could purchase toxic assets and mortgage-backed securities from the company—for pennies on the dollar. It further made tens of billions of dollars of credit available to AIG, for which the company turned over interests in two of its crown jewels: Asian insurer AIA and U.S. life insurance subsidiary ALICO. The Treasury Department committed nearly $70 billion to AIG, and in turn took common shares that gave the government a 92 percent stake in the (barely) surviving company. It was a moral hazard salad.
But a funny thing happened. AIG sold ALICO, a very solid business in a large market, to MetLife for $15.5 billion. It staged an initial public offering of AIA, a very solid business in a rapidly growing market, which raised about $20 billion. It used those funds to pay down the loans it took from the Fed. Then, as the credit markets recovered in 2009 and 2010, the bonds and other securities held by Maiden Lane II and Maiden Lane III rose in value and threw off interest. Over time, the two Maiden Lane entities used the cash raised from interest payments and asset sales to pay down the debt. In February and June 2012, respectively, Maiden Lane II and Maiden Lane III retired their debt to the Federal Reserve—with interest and several billion dollars left over in profits.
Extricating the Treasury Department from its massive, dominant stake was going to be the hardest portion of the exit. The market would have to absorb a huge flow of AIG shares, and the stock would have to stay above $29 for the taxpayers to break even. But over the past two years, like other companies with access to cash at a low cost, AIG has performed quite well. It has rebuilt its balance sheet through earnings, and through continued sale of assets—an insurer in Taiwan, shares it owned in MetLife and in AIA. And so starting in 2011, it began to return cash to Treasury by buying back shares. Meanwhile, a rising stock market has enabled Treasury to sell off big chunks. In May 2011, Treasury sold 200 million shares for $5.8 billion; in March 2012, 207 million shares for $6 billion; in May another 188.5 million shares worth $5.75 billion; and another $5.75 billion raised in August. That still left Treasury with a 53 percent stake—some 871 million shares—and about $24.2 billion that had yet to be returned.
A major unemployment report is dropping tomorrow morning, just hours after the president's big speech—and he already knows the new stats. Daniel Gross on whether he’ll drop any hints.
On Friday, pollsters will be crunching numbers coming out of the convention. But the most consequential number will be released at 8:30 a.m.: the August payroll jobs report. The strength (or weakness) of that report will be enormously consequential for this fall’s election. It will color the rhetoric and trajectory of the remainder of the campaign. It may even color the rhetoric that the president delivers tonight.
Job seekers wait in line at a construction job fair in New York, New York in August 2012. (Seth Wenig / AP Photo)
Here’s the thing. While reporters, analysts, and investors wait on pins and needles for the clock to hit 8:30 a.m., a few people in the White House already know the figure. Generally, the chairman of the Council of Economic Advisers finds out the figure on Thursday—the day before the report is released. (Here’s a great Bloomberg report on how the data is received and disseminated within the White House.) In other words, when the president steps up to the podium in Charlotte tonight, he’ll know the jobs number.
Will he drop a hint as to what the figure is? In a speech as sweeping and comprehensive as tonight’s is likely to be, it’s hard to believe he would devote much time talking about a specific number. And he surely won’t break the embargo by declaring the good news if a large number of jobs have been created. But it may be possible to read between the lines.
I’ll be looking specifically at the way Obama speaks about jobs and employment. Regardless of what the number is, Obama will have to talk about jobs in a difficult way. He’ll talk about the massive losses taking place in the economy as he came into office, and the steady comeback in private sector jobs that started in early 2010. But if he sounds more defensive, and seems to make more excuses as to why the job market isn’t recovering rapidly today—whether it’s because of the slowdown in Europe, or political uncertainty at home, or the weather—that could be an indication that tomorrow’s jobs number will be disappointing.
On the other hand, if he talks about jobs in more upbeat terms—noting the losses, but highlighting the gains, noting that America is finally getting back to work, and predicting that millions of new jobs will be created in the coming years—that could be a sign that tomorrow’s jobs number will be positive, and better than expected.
We’ll have to wait and see in the morning.
The president addressed the economy at the DNC.
With 1.285 million cars sold, August was a solid month. American manufacturers continued their comeback while Japanese automakers bounced back from the aftereffects of the tsunami.
August was another very good month for car dealers. About 1.285 million cars and light trucks were sold, as Reuters reports. At an annualized rate of 14.52 million, those sales were better than expected. Through the first eight months of 2012, sales are running at a pace nearly 12 percent higher than 2011’s selling rate.
The rising sales are a sign of rising confidence—of both consumers and lenders. Cars are big-ticket purchases—$20,000, $25,000, $30,000. Most must be financed, either with car loans or leases. Without the twin engines of available credit and consumers’ willingness to assume financial obligations, two components that disappeared four years ago this month and stayed missing for more than two years, there could be no recovery in auto sales.
Chrysler continues its impressive comeback. As we’ve written, the infusion of Italian management and marketing flair brought by the merger with Fiat seems to be working. Sales of 148,472 units were up a solid 14 percent from August 2011. But for a company on the verge of liquidation, this is good news. The core pickups and sedans did well. But the (still small) sales of Fiat models grew sharply, up 34 percent from August 2011. And the new Dodge Dart, the clunky classic reimagined as a high-mileage coupe, sold 3,045 units.
The bailout of General Motors has been less successful than the Chrysler rescue. GM still owes a lot of money to taxpayers, and its stock has been suffering. The only way for GM to return the entire "investment" is sustained, profitable sales growth, at home and abroad. In August, the U.S. division upheld its end of the bargain. GM’s overall sales rose 10 percent in August from last year, to 240,520. Sales of smaller passenger cars were particularly strong, up 25 percent. The Chevrolet Volt, the much-maligned electric-gasoline car, set a monthly record with 2,831 units. Meanwhile, Ford, whose unassisted turnaround was one of the most impressive feats of modern-day corporate engineering, turned in another solid month. Sales came in at about 197,000, up 13 percent from August 2011.
Ford’s growth enabled it to hang on to its second-place position in the U.S. market. In 2011, Honda and Toyota were laid low by the tsunami, which made it impossible for them to produce new vehicles or to export completed cars. But swift reconstruction of the supply chain and greater investment in U.S. production capacity have allowed the Japanese car companies to catch up. Toyota’s sales rose rose 40 percent. It sold 188,520 cars. Across the board it was a big month from the high end (Lexus) to the low (sales of Scion more than doubled from August 2011). Toyota sold 28,960 hybrids more than double the number of hybrids it sold in August 2011. Hybrids came to more than 15 percent of the company’s sales. Not bad for a niche technology. Honda’s sales, at more than 131,000, were up nearly 60 percent from August 2011.
Ford salesman Greg Bowles, left, helps customers at the Star Ford dealership in Glendale, California. (Kevork Djansezian / Getty Images)
The other foreign car companies had big gains as well: Volkswagen, up 62.5 percent; Kia, up 21 percent. And so on. Increasingly it is meaningless to talk of a division between the Big Three domestic automakers and foreign automakers—and not just because Chrysler is owned by Fiat. Every major foreign automaker has established significant production capacity in the U.S.—mostly in Southern states. And so the rising sales of foreign nameplates increasingly leads to more production and jobs in the U.S.
All in all, August was a very solid month for car sales.
The Case-Shiller report on housing values for the second quarter of 2012 is another piece of evidence suggesting that housing is back. Daniel Gross reports.
We’ve been noting that the data flow surrounding housing has been generally positive. Last week, for example, McMansion builder Toll Brothers reported impressive earnings. “We are enjoying the most sustained demand we’ve experienced in over five years,” said CEO Douglas Yearley. And the National Association of Realtors reported that existing-home sales rose 10.4 percent in July from July 2011 year, while the price of a typical home climbed 9.4 percent. And through the first seven months of this year, housing starts are up sharply from 2011.
Kevork Djansezian / Getty Images
On Tuesday, we received further confirmation of this trend, with S&P’s publication of the Case-Shiller Index of home values rose for the second quarter of 2012.
S&P/Case-Shiller produce three home index—a 10-city composite index, a 20-city composite index, and a national index. All of them are now flashing green. “All three headline composites ended the second quarter of 2012 with positive annual growth rates for the first time since the summer of 2010.” Nationwide, home prices were up 1.2 percent in the second quarter of 2012 compared with the second quarter of 2011. The positive momentum is clear. In the second quarter, the national composite index rose 6.9 percent from the first quarter. And on a monthly basis, prices in every one of the large cities in the 20-city index were up in June compared with May.
It’s important not to make too much of this number. It has been something of a lost decade for homeowners. “As of the second quarter of 2012, average home prices across the United states are back at their early 2003 levels,” as S&P notes. But before prices start to rise, they have to stop falling. The data suggests that the housing recovery may finally be leaving the stabilization stage and returning to growth.
Builders sold 25 percent more new homes in July 2012 than they did in July 2011. Daniel Gross on housing’s comeback.
Here comes housing—again. On Wednesday the National Association of Realtors reported that existing-home sales rose in July—up 2.3 percent from June and up 10.4 percent from July 2011. On Thursday the Census Bureau reported that new-homes sales were up by a much more significant margin.
Sales came in at an annual rate of 372,000. That’s up 3.6 percent from June’s total of a 359,000 annual rate (which itself was revised upward from the initial report of a 350,000 rate). More important, the July 2012 figure was up a whopping 25.3 percent from the July 2011 figure. In fact, through the first seven months of this year, new-homes sales are up 21 percent from the first seven months of 2011.
While new-home sales are still far below their bubble-era peak—back in the golden years of 2005 and 2006, new home sales topped 1 million—something is clearly happening. The pace of activity is rising. Inventory is falling. At the end of July there were only 142,000 completed new homes for sale. That’s down from 165,000 in July 2011, a 14 percent decline. For each of the past 12 months, the inventory of available homes for sale has declined, while the pace of sales has been rising. At the current rate of sales there are only 4.6 months’ worth of new supply on the market; a year ago, there were 6.7 months’ worth.
A new home is under construction in Palo Alto, Calif. Sales of new homes in the United States rose 3.6 percent in July to match a two-year high reached in May, the latest sign of a steady recovery in the housing market. (Paul Sakuma / AP Photo)
Clearly low mortgage rates are helping. So too are low prices. Builders have pulled in their horns. They’re building more modest homes, and in many cases they are building on lots they picked up for peanuts after the bust. Which means they can keep prices down while still turning a profit. The typical new home sold in July cost $224,200. That’s actually down from a year ago.
Month after month, even as skeptics point out that foreclosures continue and home values remain far below their peak, a steady accumulation of data is moving charts in the right direction. This year will likely go down as the first year since 2006 in which sales of new and existing homes rose and in which values bumped up.
Both are second-generation franchises with a Southern clientele. Both oppose same-sex marriage. But the list goes on. Let Daniel Gross explain.
In the modern era, presidential campaigns are very much like large corporations. And in some instances, they take on the characteristics of well-known companies. The 2008 Obama campaign, for example, was very much made in the vein of Facebook circa 2008—networked, young, tech-savvy, idealistic.
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At first blush, the highly upscale Ivy League-pedigreed Mormon candidate may not seem to have much in common with the downscale southern-fried fundamentalist restaurant chain. But consider the following similarities.
Chick-fil-A is a well-known American brand that was founded by a charismatic, rustic entrepreneur with a hardscrabble upbringing who didn’t graduate from college. See Truett Cathy’s inspiring life-story here. While the founding figure looms large, the franchise is firmly in the hands of second-generation leadership. Dan Cathy, Truett’s son, is president of the company. Just so, the Romney name is a well-known American political brand that was founded by a charismatic, rustic entrepreneur with a hardscrabble upbringing who didn’t graduate from college. George Romney rose from a humble birth to become an auto executive, governor of Michigan, and Housing secretary in the Nixon administration. The Romney political brand is now firmly in the hands of the second generation leadership.
Jake Heller asks New Yorkers about Chik-Fil-A's political statements.
Chick-fil-A is huge in the South but doesn’t have any presence to speak of in New England, save a vestigial presence in Massachusetts and a token outpost in New Hampshire. Check out the store locator: its biggest states are Texas (264 outlets), Georgia (197), Florida (155), and North Carolina (143). Chick-fil-A has no outlets in Maine, Vermont, Rhode Island, or Connecticut, just two in Massachusetts, and a single lonely store in New Hampshire. The Romney campaign is similarly huge in the South. Polls generally show that he is generally crushing it in the former Confederacy and is making a strong play for Florida. Romney, like Chick-fil-A, doesn’t seem interested in competing seriously in the large market east of the Hudson River. Of course, he does have a vestigial presence in Massachusetts (where the campaign is nominally headquartered) and a token presence in New Hampshire, where he owns a large lakefront house.
Chick-fil-A’s expansion plans seem to rest largely on appealing to its existing base in rural areas and ignoring the vast new customer base that lies in more diverse areas. As this list of upcoming openings shows, it’s not particularly interested in densely populated urban areas or college towns. Of the upcoming 19 openings slated for later this year, two are in Idaho, three in Texas, and two are in North Carolina (although there are a bunch slated to open in California). Just so, the Romney campaign is largely focused on appealing to the Republican party’s existing base–the wealthy, the old, the white–and doesn’t seem particularly interested in the vast new customer base that lies in more diverse areas. The latest NBC/Wall Street Journal poll shows Romney getting precisely 0 percent of the African-American vote, and a smaller share of the Hispanic vote than John McCain did in 2008.
TARP programs continue to wind down, at a profit to taxpayers. Daniel Gross reports on the latest $1.5 billion in payments
Good news! This year’s federal deficit just shrunk by about $1.5 billion. (Not so good news! That’s about one-tenth of one percent of the annual deficit.) And it had nothing to do with cutting spending or raising taxes. Rather, that’s the amount of money that TARP recipients returned to the Treasury Department last week.
Four years after the Lehman Brothers crisis, housing finance remains a mess. But the Trouble Asset Relief Program (TARP), the crisis-era measures aimed at saving the banks, stabilizing credit markets, and preventing the auto companies and the insurer AIG from plunging into liquidation, have largely succeeded. And at a very low cost to the taxpayer. By and large, the recipients of cheap government capital have returned the cash they took—and with interest. The central component of TARP was the Capital Purchase Program, in which Treasury bought interest-yielding preferred shares in banks and received warrants in return. Here is the latest daily TARP update. Between the CPP and extra aid given to Citigroup and Bank of America, Treasury put $245.1 billion into banks. So far, those recipients have returned $231.11 billion of that capital. Add in dividends ($15.2 billion), proceeds from the sale of warrants ($9.19 billion), and cash raised from selling Citigroup and Bank of America stock ($9.36 billion), and the taxpayers have received a total of $264.86 billion back. That’s a profit of nearly $20 billion.
Returns continue to stream in. Most of the CPP-receiving banks that have yet to return capital are smaller ones, which are sitting on $5 million and $10 million bits of taxpayer capital. Until this month, M&T Bank, was one of the largest recipients of CPP funds still to exit the program. But last Friday, Treasury sold its preferred shares of M&T for $381.5 million. Treasury still holds warrants in the company.
American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts. (Mark Lennihan / AP Photo)
One of the more obscure components of TARP was the Public Private Investment Program (PPIP), in which Treasury invested in—and lent money to—vehicles formed by asset-management companies. These entities in turn bought toxic securities from banks. Treasury committed about $22 billion to seven funds that participated in the PPIP. Over time, as the investment funds collect interest payments or realize gains from selling securities, they make distributions or return capital to Treasury. On August 14, several of these funds returned capital to Treasury, as follows:
Alliance Bernstein Legacy Security Funds, $633.75 million
Blackrock PPIP Fund, $95.8 million
AG GEEC PPIF Master Fund, $205.2 million
With an Ohio Walmart hosting a holiday food drive for its own workers, The Daily Beast's Michael Tomasky criticizes the notoriously stingy company for not paying them more.
Hailed as a perfect answer to the evils of fiat money, the virtual currency has come crashing down because the invisible hand is paralyzed without government.