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Who Will Lose the Most From the GM Bankruptcy
Tweet Share on Facebook May 19, 2009 Comment (35)Dealers will close. Jobs will disappear. Customers may flee. With General Motors in bankruptcy, millions of GM workers and other Americans will suffer the collateral damage.
So will the investors who own (make that owned) GM stock. GM's share price peaked in 2000 at over $90, then fell steadily over the following years as GM's market share dwindled and its earnings turned from positive to negative. In October 2007, GM stock was worth about $42. Now, those old shares are effectively worthless, and new shares will be issued to bondholders, the government, and an auto-workers' trust fund.
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How TARP Began: An Exclusive Inside View
Tweet Share on Facebook May 14, 2009 Comment (151)When it first came into existence last September, TARP—the troubled assets relief program—sounded like just another ungainly government acronym. But since then, it has become an integral—and controversial—part of America's recession economy.
TARP's chief architect was Henry "Hank" Paulson, President Bush's treasury secretary, who led the financial rescue along with Federal Reserve Chairman Ben Bernanke and New York Fed Chairman Tim Geithner, who's now Paulson's replacement at treasury. Their initial plan was to use the $700 billion in TARP funding approved by Congress last October to purge financial firms of their so-called toxic assets.
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12 Cars That Could Spoil a Chrysler-Fiat Deal
Tweet Share on Facebook May 14, 2009 Comment (29)As the Chrysler bankruptcy proceeds, the odds are improving that enough of the automaker will survive to consummate a merger with the Italian automaker Fiat. But how, exactly, will the reformulated Chrysler return to profitability?
The company claims that Fiat's innovative small-car technology will fill a gaping hole in Chrysler's product lineup and turn Detroit's No. 3 automaker into a winner. Chrysler desperately needs that kind of help, and Fiat does have some appealing vehicles, like the 500 and Panda, each of which has earned honors as European car of the year. If the Fiat deal flies, such models could be imported to the United States and even built here.
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The Chart That Launched the TARP
Tweet Share on Facebook May 14, 2009 Comment (1)Last fall, as the financial crisis was mushrooming, officials from the Treasury Dept. and the Federal Reserve had a hard time explaining to members of Congress why they needed a $700 billion emergency rescue plan.
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Why the Banks Still Aren’t Fixed
Tweet Share on Facebook May 11, 2009 Comment (39)The stress tests are done. The results are better than feared. Bank stocks are up. A few large lenders, such as Capital One, US Bancorp, and BB&T, are even preparing to repay billions in federal bailout money. Sounds like the bank crisis is solved!
Except for everything that could still go wrong. "Yes, everyone passed the stress test, but it was a questionable test to begin with," writes Charles Rotblut of Zacks Investment Research. "Foreclosures are still rising, credit card defaults will get worse, and, despite all of the analysis, nobody still knows how to value the toxic assets."
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How the Job Numbers Complicate Obama’s Agenda
Tweet Share on Facebook May 8, 2009 CommentWe’re all dying for some good news—any news—so fewer job losses in April seems like reason to celebrate. Instead of shedding more than 600,000 jobs, as in previous months, the economy only lost 539,000 jobs last month. Pop the champagne.
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6 Stress-Test Surprises
Tweet Share on Facebook May 8, 2009 CommentExpectations were low back in February when the Federal Reserve and Treasury Dept. first announced their plan to conduct “stress tests” on big banks, to gauge their ability to weather a nasty recession. The test criteria weren’t all that stringent, for one thing, and the initial plan was to keep the results confidential anyhow.
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5 Signs the Bailouts Are Getting Better
Tweet Share on Facebook May 7, 2009 Comment (1)Bailouts are now routine in America, and a lot of disgusted taxpayers have simply tuned out and stopped following the details. That’s too bad, because all that government aid might finally be helping.
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The Best and Worst Bailed-Out Banks
Tweet Share on Facebook May 5, 2009 Comment (13)The bank "stress tests" administered by the Obama administration were controversial even before they were conducted. Critics have complained that the government's worst-case testing is too lenient, the methodology whitewashes the worst problems, and the whole exercise amounts to a phony show of faith in banks that remain deeply troubled.
There are plenty of other stress tests, though—including the one administered in the stock markets every day. So to gauge which of the big bailout recipients seem to be in the best and worst shape, U.S. News ran a kind of poor man's stress test, based on easy-to-understand data that are publicly available.
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Banks Most Likely to Pay Back Bailout Funds
Tweet Share on Facebook May 5, 2009 Comment (1)Since last fall, when the financial bailouts began, the government has injected about $250 billion into hundreds of banks, whether they're faltering or not. The original Troubled Assets Relief Program flooded all banks of significant size with money to prevent bank runs, prop up lending, and convince consumers and investors that the entire banking sector is safe.
Since then, the TARP mission has changed. Regulators, politicians, and taxpayers all want to know which banks are healthy and able to pay back their taxpayer funds and which are sick and likely to need more. The Obama administration's "stress tests" of the 19 biggest banks are one effort to figure out which banks can stand on their own and which are likely to need more government aid.
