equinaire's tarp overview

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A look at the "first" Economic stilumulus package and a look back on how it all happened.

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  • 1.A Look atThe Federal Bailout(s) November 22, 2008 December 13, 2008

2. AKA:E mergencyE conomicS tabilizationA ct of 2008 AKA:TARP, orTroubled (Toxic) Asset Relief Program 3. AKA:E mergencyE conomicS tabilizationA ct of 2008 AKA:TARP, orTroubled (Toxic) Asset Relief Program And make room for: TALF, Term-Asset Backed Securities Loan Facility 4. Overview

  • International, Nationaland someLocalHistory and Fallout;
  • Implications;
  • Pending Cures:
    • USA
    • You and Me
  • Outlook.
  • Drastic Solutions call for Drastic Times!
  • Q&A Throughout.
  • From Wall Street to main Street: The Modification Option Equinaires new AmeRestart

5. The Current Economic Situation

  • Unemployment
  • Stock, Commodities, Bond Values
  • Housing Starts & stats
  • Foreclosure Activity
  • Market Confidence
  • A Bumpy Ride

6. The Current Economic Situation Unemployment Sept.Oct.Nov. Stock Market Friday Closes 1,523.57 741 6.32% +47.59 800.03 S&P 13,780.11 7,449 6.14% +494.13 8,046.42 Dow 52 wk Hi 52 wk Lo %B(W) B(W) close November 21, Florida Texas California National 6.4 5.1 7.7 6.1 6.6 5.6 8.2 6.5 7.0e 6.7 .70% 6.14 ?2 S&P .75% 64.59 ?1 Dow %B(W) B(W) close December 12 , 7. The Current Economic Situation Unemployment Sept.Oct.Nov. Stock Market Friday Closes 1,523.57 741 6.32% +47.59 800.03 S&P 13,780.11 7,449 6.14% +494.13 8,046.42 Dow 52 wk Hi 52 wk Lo %B(W) B(W) close November 21, Florida Texas California National 6.4 5.1 7.7 6.1 6.6 5.6 8.2 6.5 7.0e 6.7 .70% 6.14 879.73 S&P .75% 64.59 8,629.68 Dow %B(W) B(W) close December 12 , 8. Fun Stats

  • ?

? ? 9. Fun Stats Date Value ?6 1/14/00 Start of Clinton Bull Market ?5 8/12/82 Start of Reagan Bull Market ?4 12/6/74 Dow: All Time Low 14,164 ?3 Dow: All Time High 10. Fun Stats 11,723 1/14/00 Start of Clinton Bull Market 776 8/12/82 Start of Reagan Bull Market 577 12/6/74 Dow: All Time Low 14,164 10/9/07 Dow: All Time High 11. So What Happened?

  • An unswerving, if somewhat nationalisticbelief in the American Dream had us looking the other way:

12. Precipitated by a^ Sub Prime Meltdown Global Swiss, Saudi Arabia, Qatar, Israel . $2.5B write down with money raised from Qatar Sovereign Fund; Saudi Arabia; and Israels Koor Ind Credit Suisse 2/08 France E$7B write down of US subprimeSociete General 1/08 UK $45B bailout of a $2.5T Asset institution HSBC 11/07 Swiss $4B write down of Subprime mortgages USB 9/07 UK $42B rescue by Bank of England Northern Rock (Lender) 9/07 13. The Scope of the Challenge US Purchased by BofA for $50B 5,200 jobs lost Merrill Lynch 9/08 Germany E$6B in write downs on a $2.6T in assets Deutsche Bk 7/08 US, Japan Announces an issue Japan freezes Asian assets Eventually losing 13,900 jobs 10/08 Lehman Bros 6/08 Scotland L$12B right issue Royal Bank of Scotland 4/08 US After 85yrs, sold to JPMorgan/Chase for $2/sh eventually $10/sh; JP Morgan later bought WAMU for $1.9B Bear Sterns 3/08 14. The Scope of the Challenge US $32B takeover by FDIC at the time was second largest bank failure in US history; eventual cost of $4B - $8B IndyMac 7/08 15. The Scope of the Challenge Reinvents itself away from investment banker;Goldman Sachs 9/08 Japan Nomura purchases in exclusive talks Lehman, Asia 9/08 Japan Mitsubishi, UFG takes 10% -20% stake for $9B with at least one representative on their board Morgan Stanley 9/08 After BK filing, Barclays UK pays $1.75B Lehman, N. America 9/08 UK UKs largest mortgage lender taken over by Lloyds using L$11.5b in gov funding HBOS,PLC 9/08 16. The Scope of the Challenge ?? Dutch, Tawain Gives up $11B equity after spinning off Taiwan Life Ins grp ING 9/08 France, Belgium, Dutch, Luxemborg, French bank agrees to take over Fortis buying out Belgiums interest BPN, Paribas 9/08 Iceland Icelands 3 rdlargest bank nationalized; Glitner 9/08 US $12B bailout; sold initially to CitiWachovia 9/08 17. The Granddaddy of them all

  • ___________________
  • Representing assets of
  • __$__________________

? ? ? 18. US Seized and sold to JP Morgan after a $16.7B run on the bank; est $19B in bad debts; WAMU(At $307B in assets & $188B in Deps, biggest bank failure in US history) 9/08 19. Fun Stats

  • ?

? ? 20. Who Said It

  • The notion of a bubble bursting and the whole price level coming down seems to me as far as a national nationwide phenomenon, is really quite unlikely
  • Housing activity will remain healthy for some time to come
  • The idea that were going to see a collapse in he housing market seems to me improbable
  • Its impossible for prices to go down this year
  • At this juncture, the impact on the broader economy and financial markets of the problems in the sub prime market seems likely to be contained
  • We got a big problem

21. We Never Saw It Coming

  • The notion of a bubble bursting and the whole price level coming down seems to me as far as a national nationwide phenomenon, is really quite unlikely. Alan Greenspan Fed Reserve Chairman, 2003
  • Housing activity will remain healthy for some time to come David Lereah, NARs Chief Economist, 2005
  • The idea that were going to see a collapse in he housing market seems to me improbable John Snow, Treasury secretary, 2005
  • Its impossible for prices to go down this year Garry Watts, Orange County Assoc of Realtors, 2006
  • At this juncture, the impact on the broader economy and financial markets of the problems in the sub prime market seems likely to be containedBen Bernanke, Fed Reserve Chairman, 2007
  • We got a big problem????

22. Financial Market

  • Job Losses 130,000 jobs lost
    • JP Morgan 3,000
    • Deutsche 900
    • Citi 52,000 e
    • RBS 3,000
    • Morgan2,000
    • Amex 7,000 (10%)
    • Goldman 10%

23. Financial Market130,000 Jobs Loss 24. LenderImplode.com

  • Since late 2006, 304 major U.S. lending operations have "imploded

25. We got a big problem-George W. Bush, September, 2008 26. More Signs of the Times

  • 2 year bond falling due to high demand fearing long range deflation.
  • 30Yr dropped below 4%
  • More recently, the 3 month T Bill dropped to zero yield;
  • S&P - probably the most watched indicator in the world since its a broader measure than the Dow sank to 13 year low;
  • Dow below $8k since 2003
  • Citi (after taking its SIVs onto its balance sheet) still losing value by the buckets, rumored to layoff another 52,000 employees. Stock below $4.
  • GM at $3.06,Ford at $1.03
  • Feds seizes Downey and PFF
  • More recently BofA announced a layoff affecting 32,000 workers.

27. Signs of the Time

  • Sax 5 th3Q loss worse than expected;
  • Home Depot 3Q down 30% from expectations actually down 8% versus expected 5% decline;
  • Circuit city BK
  • I did look over the LA Times business section this morning Remember Theyre in BK protection 4 pages on a Friday.

28. Whos Doing Well? ? ? ? ?8.____________ 29. Whos Doing Well? Wal-Martdoing nicely realizing 50% of all retail gains; last yr only 10% of retail gains; Early economic indicator may be Starbucks 30. Drastic Solutions in Drastic Times 31. ?9. Can You Name This Man? 32. OK Just In Case You Were Sleeping

  • Theres a man lose
  • with a wooden Stake!
  • And a hammer!
  • .

Secretary of The Treasury, Henry M. Paulson, Jr. 33. BUT

  • hes from Goldman Sachs

34. The^ Solution

  • Emergency Economic
  • Stabilization
  • Act of 2008.

First 35. The^Solution

  • Term
  • Asset-Backed Securities
  • Loan Facility

Second 36. Emergency Economic Stabilization Act of 2008

  • Authorizes Treasury to spend $700B to
    • Purchase distressed assets
    • Make capital injections into banks
  • Originally 3 pages when it started in the House;
  • Became 110 pages by the Senate;
  • After another $150B in unrelated provisions it became 451 pages by the time it was signed;

37. EESA of 2008

  • Managed by the Office of Financial Stability within the Treasury Dept.
  • Consults with:
    • Bd of Govs of Federal Rsrv.
    • FDIC
    • Comptroller of the Currency
    • Director of Office of Thrift Supervision
    • Secretary of HUD

38. Actions thus Far

  • Allowed:
  • Immediate access to $250B
  • Additional access to $100B with Presidents Authorization
  • For the Final $350B, President must notify Congress. They have 15 days to stop it