Financial system may need over $1 trillion: dealmakers

[UpInArms]

Source: Reuters

NEW YORK (Reuters) - The U.S. government's $700 billion bailout fund is unlikely to be enough, with the financial system needing more than $1 trillion to get through the crisis, two of Wall Street's top dealmakers said on Wednesday.

The global crisis appears to have passed its most intense phase, seen around the time of the collapse of Lehman Brothers Holdings Inc (LEHMQ.PK: Quote, Profile, Research, Stock Buzz) in September, but financial institutions still face losses in the fourth quarter and early next year as the economy and credit quality deteriorate, said Gary Parr, deputy chairman of investment bank Lazard Ltd (LAZ.N: Quote, Profile, Research, Stock Buzz).

Parr was speaking on a panel along with H. Rodgin Cohen, chairman of law firm Sullivan & Cromwell, at The Deal's M&A Outlook 2009 conference in New York.

"You saw the problems of the financial services industry start to play over into the broader economy," Cohen said. "Now, we are going to see the reverse trend, with the broader problems in the broader economy moving back into the financial services industry."

Parr said the financial system had run out of a cushion to deal with further losses.

"The government's $700 (billion) is not enough. It's going to be over a trillion," he said. "It has to come from somewhere. And indeed in the last three months around the world, the primary source of capital for the financial services industry was the government."

Read more: http://www.reuters.com/article/ousiv/idUSTRE4AB9Q520081112?sp=true

[LonestarSB]

1. Really?

This seems to be getting out of hand.

Its all the damn vacations

[fascisthunter]

2. Take That Trillion from the Free Marketeers

they fucked this economy and I'm not buying their bullshit... they are literally extorting our government and in turn We the American tax payers.

[OhioChick]

3. Agreed.

K&R

[LonestarSB]

4. K&R....

What does this mean?

[OhioChick]

5. K&R means

"Kick and Recommend."

You can "kick" a thread up to the top of the page....and "recommend" means you can more or less "vote" on it....if you feel it's of importance. It takes 5 votes to make it onto the homepage.

You'll see this just below the article posted:

"Alert | Hide Thread | Recommend (4 votes)"

Click on "recommend" and it'll take the vote tally to 5 votes. I do believe you need more posts under your belt before you're allowed to start or recommend articles.

BTW...Welcome to DU! :hi:

[LonestarSB]

7. Thanks for being helpful

and for the warm welcome

[acmavm]

13. Before the government takes anything else from anybody, they should

take every last dime, liquidate every last asset, sell every furking home, every stock account, every everything of the son of a bitches who got us into this mess.

Then MAYBE CONSIDER giving anyone anything.

[olddad56]

25. it is more like several hundred trillion and you can't get blood out of a turnip.

The money is GONE.

[Hulk]

6. Just keep printing the "greenbacks"....until we run out of ink.

Maybe we should start printing them in "red"?

[brentspeak]

8. Oh, yeah? Well I'm sure your CEOs and execs' deep pockets can cover the cost

[wellst0nev0ter]

9. While Morgan Stanley Pays Themselves $11 Billion In Bonuses

do they want torches and pitchforks to be brought out?

[SpiralHawk]

10. "So we are closing up those costly food banks for the proles. Smirk." - Republicon fat cats

"Think of all the Trickle-Down Benefits from closing up the food banks and homeless shelters, and giving the money to republicon crony fat cats? Smirk."

- Republicon fatcat 'financiers'

[Neshanic]

11. Oh my, what a surprise. Look for that number to inch up a trillion by year end.

[mbperrin]

12. Not one damn dime. I've been against this corporate welfare scheme

with the limousine welfare kings from the start! Stop paying out now and sue to get back what we're already out. I mean, Goldman and American Express are becoming banks just so they can get their noses in!

Ridiculous! I've got this crazy scheme to help actual people who are being crushed by the corporations, but helping people is communistic and subversive, so I'll keep it to myself.

[defendandprotect]

14. Start with a Windfalls Profit Tax on oil industry and use it to bail out auto industry, BUT....

convert them to electric cars --

[burrowowl]

15. FUCK the Financial System!

Support the real Economy (production of good, workers, value added, not sale of resources like 3rd world nations, etc.)!
Wall Street is not the Economy, it is Finance and not based on anything but bogus PAPER!

[goforit]

16. I guess it literally grows on trees.

[struggle4progress]

17. gimme gimme gimme gimme gimme gimme gimme gimme gimme gimme gimme gimme

[sattahipdeep]

18. Fed officials appeared to be taken aback by Mr. Paulson

Paulson also made it clear he did not want to use bailout money to refinance the mortgages of homeowners who are in danger of losing their homes to foreclosure.


Treasury officials said the plan would allow them to leverage the government’s money by as much as 20 to 1, meaning that the Treasury would provide 5 percent of the money and investors would provide 95 percent. Using $50 billion in money from the government rescue program, they said, could thus underwrite $1 trillion worth of lending for consumer loans.

Such an arrangement would bear a similarity to exactly the highly leveraged, and eventually disastrous, special-investment vehicles that banks like Citigroup created in countless numbers to hold, among other things, securities backed by subprime mortgages.

Although the Treasury would contribute only a small share of the money for such a program, analysts said the plan would only overcome investor fears if the Treasury or the Federal Reserve provided some kind of backstop against losses. If that were to be the case, taxpayers would be indirectly liable for the entire volume of lending.

....
Fed officials appeared to be taken aback by Mr. Paulson’s public reference to the idea

U.S. Shifts Focus in Credit Bailout to the Consumer

http://www.nytimes.com/2008/11/13/business/economy/13bailout.html?_r=1&bl=&ei=5087&en=8493bad0556dcca4&ex=1226725200&oref=slogin&pagewanted=print

[customerserviceguy]

19. Yeah, take a Wall Streeter worth hundreds of millions

give him godlike powers to distribute hundreds of billions to his Repuke friends, without oversight.

Who knew something could go wrong with this idea? :-(

We really got suckered on this bailout.

[pokerfan]

20. Where are the DU bailout cheerleaders now?

[judasdisney]

21. $1.14 QUADRILLION

http://jutiagroup.com/2008/07/24/global-derivatives-market-now-valued-at-114-quadrillion /

http://baltimorechronicle.com/2008/101308Floyd.shtml

http://en.wikipedia.org/wiki/Derivative_(finance)

http://news.bbc.co.uk/1/hi/business/2817995.stm

[olddad56]

24. Can we all say Collateralized Debt Obligations (CDO)

Asset backed securities that these days are more realistically known as Worthless Paper Debt Non Obligations.

[w4rma]

22. con-artists. (nt)

[WhiteTara]

23. they've already gotten over

a trillion dollars. They now want another trillion? Is there no way to stop this madness?