NEW YORK (CNNMoney.com) – President Obama on Wednesday will finally lift the curtain on his long-anticipated plan to reorder how banks and other firms are regulated in the hope of preventing another financial collapse.
The far-reaching effort will include a proposal to get rid of the embattled Office of Thrift Supervision and merge it with the Office of the Comptroller of the Currency, a senior administration official said Tuesday evening.
The OTS has been on the hot seat for months for its role as the overseer of American International Group and failed lenders IndyMac and Washington Mutual. The comptroller's office is a Treasury Department bureau that regulates national banks.
Obama will also call for the creation of a council of regulators to work alongside the Federal Reserve to monitor risk in the financial system, the official said. The Treasury secretary would chair the council.
In addition, Obama will propose the establishment of a new watchdog agency that would aim to protect consumers from deceptive or dangerous mortgages, credit cards and other financial products.
NEW YORK (CNNMoney.com) - Fannie Mae, the troubled mortgage finance company, reported a first-quarter loss of $23.2 billion on Friday.
The mortgage giant also reported that it submitted a request for $19 billion from the Treasury Department to cover its losses. That followed a request earlier this year for $15.2 billion to cover 2008 losses.
It also said Treasury has doubled its support level to the company to $200 billion, as President Obama had authorized.
In its quarterly release, Fannie Mae said its entire mortgage portfolio was experiencing increases in delinquency and default rates. It blamed the rise in unemployment, falling home prices and the revaluation of homes in the wake of the economic downturn.
(CNN) - One might think the government would automatically embrace requests from several of the nation's largest banks to return the bailout money they received last fall. Not so fast. JPMorgan Chase, Morgan Stanley and at least four other others have indicated they would like to return the almost $95 billion they jointly get in TARP (Troubled Assets Relief Program) funds.
The Treasury Department will have to give the OK to their requests. And before that happens the government will look at the financial health of the companies to make sure they can afford to give it back. Specifically, an administration official tells CNN regulators will want to make sure the bank is stable; returning the money would not cause any ripple effects which would deepen the recession; and to make sure the institutions have enough capital to keep loans going.
The TARP program has never been popular with the many of the banks or with the American public. Just last week Treasury reported participating banks have not increased their lending. However, experts believe it has helped stabilize the banking industry at a key time of uncertainty last year.
Now showcasing healthy profits for the first quarters the banks are stepping up their efforts to give back the loans. Jamie Dimon, the CEO and Chairman of JPMorgan Chase, last week called the program "a scarlet letter" and said on a conference call with investment analysts "We're...certainly not going to borrow from the federal government because we've learned our lesson about that."
Many of the banks believe keeping the bailout money will hurt business marking their banks as weak.
Also executives are eager to rid themselves of the restrictions attached, such as limits on executive compensation.
WASHINGTON (CNN) - President Barack Obama said Monday he will attempt to block bonuses to executives at ailing insurance giant AIG, payments hedescribed as an "outrage."
Watch: Obama on AIG bonuses
"This is a corporation that finds itself in financial distress due to recklessness and greed," Obama told politicians and reporters in the Roosevelt Room of the White House, where he and Treasury Secretary Tim Geithner were unveiling a package to aid the nation's small businesses.
The president expressed dismay and anger over the bonuses to executives at AIG, which has received $173 billion in U.S. government bailouts over the past six months.
"Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?"
Obama said he has asked Geithner to "pursue every legal avenue to block these bonuses and make the American taxpayers whole."
NEW YORK (CNNMoney.com) - Taxpayers hate the bank bailout. Lawmakers too. And now it looks like some of the bailed out banks themselves are starting to get fed up with it as well.
Just weeks after Congress removed a key hurdle that prevented banks from paying back funds from the Troubled Asset Relief Program, or TARP, some banks are already queuing up with checks in hand.
So far, three banks have formally declared their intentions to pay back the government. Last month, Louisiana-based IberiaBank Corp. (IBKC) said it would return $90.6 million while TCF Financial (TCB), a bank headquartered just outside of Minneapolis announced last week it was returning $361.2 million.
On Tuesday, New York City-based Signature Bank (SBNY) became the latest, announcing at a conference it had filed notice with the Treasury Department to pay back $120 million in TARP funds.
This list doesn't include the dozens of institutions that were approved for government aid, but subsequently decided to turn down the money. New Jersey-based lender Sussex Bancorp (SBBX) added itself to that group after it withdrew from the program last week.
But even more banks are poised to return TARP money, including some of the nation's largest.
NEW YORK (CNNMoney.com) - Insurance giant American International Group reported a stunning $62 billion quarterly loss on Monday, while government officials unveiled their latest efforts aimed at preventing the collapse of the firm.
Overwhelmed by ongoing deterioration in the credit markets and charges related to its restructuring, AIG's losses overwhelmed the firm during the fourth quarter. Its $61.7 billion loss amounted to $22.95 per share.
AIG's loss for the full year was even more dramatic - $99 billion. In 2007, the company reported a profit of $9.3 billion.
To keep the company from cratering and causing broader fallout across the financial system, the government said it would overhaul its bailout, which is aimed at helping the besieged firm unwind in an orderly way.
"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," Treasury said in its announcement.
One main goal of the revamped rescue plan - now totaling $162.5 billion - is to help boost AIG's financial position by, among other things, reducing the interest it pays the government on its loans.
Key components of the plan included the government's decision to commit another $30 billion to the firm in exchange for cumulative preferred stock. The payment, which will come from the second half of the $700 billion rescue package enacted last fall, will not be a one-time payment but AIG will able to draw down the funds as needed to help strengthen its capital base.
NEW YORK (CNNMoney.com) - The U.S. government waded deeper into the bailout of one of the nation's largest banks Friday when it announced a deal that will give it control over as much as 36% of Citigroup's common stock.
Citigroup shares tumbled 46% in premarket trading.
The deal will convert preferred shares that Treasury already holds in Citigroup for common shares, a shift that is designed to improve the embattled bank's capital base, which in turn will hopefully allow it to increase its lending.
The U.S. government has already given Citigroup $45 billion, for which it received preferred shares and warrants in the company.
The new deal Friday did not give the bank any additional taxpayer dollars. But the government is taking on a greater risk by assuming more volatile common shares. The market price is well below the $3.25 per-share conversion price the government is paying.
Taxpayers will also lose roughly $2 billion in dividends, because the preferred shares they are giving up paid 8% dividends. Citi suspended its common share dividend as part of the agreement.
NEW YORK (CNNMoney.com) - The "massive overhaul" of the banking bailout will be announced a day later than expected.
Treasury Secretary Timothy Geithner was originally scheduled to give full details about the changes to the rescue plan in a speech midday Monday. But the Treasury Department said Sunday that the plan will be announced Tuesday instead, in order for Geithner to focus on the stimulus bill that is being debated in the Senate.
(CNN) - The Obama administration pressed struggling Citigroup to reverse course after a Treasury Department official called the company Monday and "told them it was unacceptable" to accept delivery of a new $50 million corporate jet.
The move comes as new Treasury Secretary Timothy Geithner tries to quickly bring more accountability and oversight to the much-maligned TARP program he now oversees. Under that program, Citigroup has already received some $45 billion in government bailout funds, which is why a New York Post report about the new jet sparked outrage.
Related: Citi cancels jet plans
White House Press Secretary Robert Gibbs said Monday the President believes private jets aren’t “the best use of money at this point" with America facing a financial crisis.