Quote:

---

Why are Docs From the Bailout Being Redacted?



The U.S. Treasury Department has decided against publicly releasing key details of the contract it awarded Bank of New York Mellon to keep the books for the government’s purchase of toxic securities.

In a publicly released copy of the contract, the Treasury blacked out how much it will pay the bank for its role in the government's $700 billion taxpayer-funded bailout.
www.treas.gov/press/releases/reports/custodiancontract.pdf

The Washington Post first briefly noticed the redactions. Meanwhile, Bailoutsleuth, a site created by Mavericks owner Mark Cuban, has been tracking the redactions and flagging more examples.
www.bailoutsleuth.com/2008/10/more-bailout-contracts-contain-blacked-o
ut-portions/

The government’s justification for blacking out the monthly fees set in the publicly bid contract aren’t clear.

“It looks like a reflexive, ‘we don’t want to tell you,’” said Steven Aftergood, director of the Project on Government Secrecy at the Federation of American Scientists. “I just don’t see the rationale.”

Aftergood explained that the Freedom of Information Act allows the government to redact information for reasons including privacy and proprietary concerns, neither of which apparently applies in this case, he said.

A privacy exemption would allow the government to black out the names and salaries of specific Bank of New York Mellon employees, but not the bank’s fee. And a proprietary exemption applies while the contract is being competitively bid, a process that ended last week with the selection of the bank, the world's largest custodian of assets.

“If it were challenged, I believe they would eventually be compelled to reveal the information,” Aftergood said.

A Treasury spokesperson did not return our phone calls. But Treasury officials have previously told the Post that they will reveal the terms once other contracts related to the bailout have been negotiated.

The government released the redacted contract one day after a Treasury Department official touted the bailout plan’s transparency.

“Consistent with Congress' intent, we are committed to transparency and oversight in all aspects of the program,” said Neel Kashkari, the Treasury’s Interim Assistant Secretary for Financial Stability.

That same day, the Treasury compelled Bank of New York Mellon to take a $2 billion infusion of cash in exchange for preferred stock.

Government officials have called Bank of New York Mellon the “prime contractor” of the Treasury’s purchase program. Specifically, the bank will run the auctions used by the government to purchase distressed assets, then hold, track and value those securities. It also will keep track of executive compensation limits.

The bank beat out other big banks JPMorgan Chase and Northern Trust for the contract. In total, 70 firms vied for the deal.

www.propublica.org/article/why-are-docs-from-the-bailout-being-redacte
d-1022/

---

Quote:

---

Golden Sacks ready to hand out £7bn salary and bonus package... after its £6bn bail-out

Goldman Sachs is on course to pay its top City bankers multimillion-pound bonuses - despite asking the U.S. government for an emergency bail-out.

The struggling Wall Street bank has set aside £7billion for salaries and 2008 year-end bonuses, it emerged yesterday.

Each of the firm's 443 partners is on course to pocket an average Christmas bonus of more than £3million.

The size of the pay pool comfortably dwarfs the £6.1billion lifeline which the U.S. government is throwing to Goldman as part of its £430billion bail-out.

As Washington pours money into the bank, the cash will immediately be channelled to Goldman's already well-heeled employees.

News of the firm's largesse will revive the anger over the 'rewards for failure' culture endemic in the world of high finance.

The same bankers who have brought the global economy to its knees seem to pocketing the same kind of rewards they got during the boom years.
Gordon Brown has vowed to crack down on the culture of greed in the City as part of his £500billion bail-out of the UK banking industry.
But that won't affect the estimated 100 London partners working at Goldman Sachs's London headquarters.

The firm - known as Golden Sacks for the bumper bonuses it pay its top bankers - is expected to cut the payouts by a third this year. However, profits are

falling much faster. Earnings have plunged 47 per cent so far this year amid the worst financial crisis since the Great Depression.

This has wiped more than 50 per cent off the company's market value.


www.dailymail.co.uk/news/worldnews/article-1081624/Goldman-Sachs-ready
-hand-7BILLION-salary-bonus-package--6bn-bail-out.html

---

Quote:

---

JP Morgan CEO: Of Course We Won't Use Bailout Money To Make Loans

Remember that $250 billion that the government is injecting into wobbly banks so they can start lending to American companies and consumers again? Yes? Well, of course the banks have no intention of lending out a dime of it.

Merrill's John Thain admitted as much two days after the bailout. Then JP Morgan's Jamie Dimon dropped hints to that effect by saying he "hoped" the bailout would work--implying that he didn't think it would. And now another JP Morgan executive has been kind enough to tell Joe Nocera of the New York Times (via a recorded internal conference call) that JP Morgan has no intention of lending the $25 billion of taxpayer money the government just gave it to help restore the US economy:

“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began.

[What's it going to help those struggling folks do? Plug the gaping holes in their balance sheets. But given that the value of their assets is still plunging, they'd be nuts to lend any of it out. Instead, they'll hoard it like starving people given boxes full of food. Meanwhile, what will JP Morgan do?...]

“What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

As Joe observes, not a word about lending money. To reiterate, what will banks do with the $250 billion we just gave them?

1. hoard it
2. buy other banks with it

And, of course, the insurance companies and car companies that now want some of that money also aren't going to lend it, either (or use it to write new policies or make cars). It's just a sop to their shareholders and debtholders.

What SHOULD the government do? Send its bank regulators into JP Morgan and every other bank it wants to save, audit the asset values, and force the bank to write down the asset values to nuclear winter levels. THEN inject the taxpayer money (getting a far bigger piece of the equity in return). This is what has worked historically, and it would eventually work here.

And don't allow the banks to acquire other banks with cash. Make them do it with stock, instead. Then, only then, will the banks begin to lend that cash. Because they'll have no other choice but to put it to work.

www.clusterstock.com/2008/10/jp-morgan-of-course-we-won-t-use-bailout-
money-to-make-loans

---