...Troubled Assets Relief Program: Right or Wrong Michael J. Kneece Midlands Technical College ECO-210-B01 Instructor: Kenneth Craib Troubled Assets Relief Program: Right or Wrong In 2008, when the “Great Recession” happened, Congress passed the Troubled Assets Relief Program (TARP). The Troubled Assets Relief Program allocated over $700 billion to aid in “emergency” loans to “critical financial and other US firms”, that were considered “too big to fail.” While the Troubled Assets Relief Program was created with great intentions, it failed miserably in the sense that it stole from taxpayers dollars. Some of the major recipients of TARP funds included JP Morgan Chase, Goldman Sachs, Bank of America, Citibank and in addition to some nonfinancial firms included General Motors and Chrysler. The Trouble Assets Relief Program affected beneficiaries such as corporate, individual, congressional and individual taxpayers. “The sadly predictable consequences resulting from the government’s desperate treatment of Wall Street and Main Street have only become worse. As the banks amass even more size and power, Main Street continues to get pummeled.” (Barofsky, 2012) As it is sad to report all the money that was spent in this bail out, when looking through the list of banks and beneficiaries, I am glad to report that the bank that I bank with; which is First Citizens Bank of Columbia, South Carolina did not have to file for bankruptcy. Committed money was over a total of $549.4 billion...
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...Executive Pay Strategic Issues and Problems: As a result of the current economic crises, many companies are experiencing massive financial losses. These companies are reducing salaries and cutting peoples’ jobs while executives are maintaining high compensations. Using tax payer’s money, the US Government is assisting these financially struggling companies through the Troubled Asset Relief Program (TARP). TARP was created to assist these companies to ultimately allow them to survive and prevent massive job loss. Tax payers are concerned about executives receiving a high and unjust compensation in comparison to other non-executives whom are suffering from layoffs and compensation cuts. Executive compensation is controlled by the companies’ boards that in turn work under the Chief Executives. The US Government is intervening by proposing plans to regulate the compensation of executives in these financially stressed companies. Evaluation and Analysis: Compensation of executives is not regulated or monitored effectively. Executives have the ability to use deceptive and manipulative practices to achieve higher unjust compensations. Boards justify the high compensations as rewarding performance, which is contradicting considering the financial status of these companies. People are becoming outraged as many are losing their jobs and are receiving salary reductions while executives are still making millions. The US government is imposing executive compensation regulations to...
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...the ‘World’s local bank’ reflecting its strong corporate identity and global networks. As 2008 was the year where Global Financial Crisis (GFC) hit, it created havoc in the banking industry. HSBC was also one of the banks that was impacted by the crisis and ended up losing a lot of money as well as customers. In contrast to competition, they expanded in emerging markers of Asia, especially China. They did lose quite a lot of money during the GFC but they did not seel any bailouts in Europe and Asia but continued to be a visible brand in the global banking industry. Unlike the American banks, HSBC’s operations were somewhat spared but growth remained stagnant during this period. The bank closed its money- losing operations and sold a few assets to the US and this action weakened the bank’s well-established business model in the banking industry. Next, other reorganisations took place that aimed at mostly downsizing and trimming operations. These changes did impact the bank’s massive operations in the global markets. In 2009, HSBC conducted a campaign and contrasted themselves to other banks through an interesting ad campaign. As for Wells Fargo, they took over Wachiova on 3rd October 2008 and created a total loss of $60 billion. On October 28th 2008, Wells Fargo and company was the recipient of $25 billion of the Emergency Economic Stabilisation Act Federal bailout in the form of a preferred stock purchase. On May 11, 2009 Wells Fargo announced an additional stock offering...
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...Revolt on Goose Island: The Chicago Factory Takeover, `and What it Says About The Economic Crisis INTRODUCTION Kari Lydersen, a staff writer for the Washington Post, wrote the Revolt on Goose Island: The Chicago Factory Takeover, and What it Says About The Economic Crisis in 2009. This was during a time when the economy was in financial crisis and many lives were being disrupted. It is situated in Chicago, Illinois at the Republic Windows & Doors factory. This story tells how 250 members of the UE, a very progressive union took a stand for what they believed they were owed. The purpose of writing this book was to show that people in the labor force were tired of being taken advantage of and wanted their lives to matter. THE COMPANY The Republic Windows & Doors factory was located on what is known as Goose Island in the Chicago River. This was an area that used to be located in the heart of the industrial and commercial businesses. The area had lost most of its industrial businesses and was in a revitalizing mode to turn it back to the industrial roots that had first started that area. Republic Windows & Doors was a small family owned business that made low-cost storm windows and doors (Lydersen, 22). By moving to Goose Island, the city committed almost $10 million in 1996 to help Republic establish the new building and to grow (Lydersen, 25). The money was funded through TIF (tax increment financing) funds that are used to revitalize areas that have declined...
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...Graduate Programme Mercer: http://careers.uk.mercer.com/graduates/graduate-jobs/ Insurance Factset: http://www.factset.com/careers IT & Telecommunication Amazon: http://www.amazon.jobs/team-category/university-recruiting Retail, Marketing Accenture: https://www.accenture.com/gb-en/careers/graduates Consulting & strategy, IT & Telecommunication Jefferies: http://www.jefferies.com/Careers/Campus-Recruiting/2cr/826 banking Atos: http://uk.atos.net/en-uk/home/careers/graduates.html IT & Telecommunication Brand2life: http://brands2life.com/views/brands2life-15-week-paid-internship/?refresh=true Marketing & PR Baker&Mckenzie: http://uk-graduates.bakermckenzie.com/ Legal Mazars: http://www.mazars.co.uk/Home/Join-our-teams/Graduate-careers Accounting & finance GE: http://www.ge.com/uk/careers/university-students Aerospace, engineering, manufacturing CGI: http://www.cgi-group.co.uk/careers IT & Telecommunication Nomura: http://www.cgi-group.co.uk/careers Accounting & Finance Cyber-duck: https://www.cyber-duck.co.uk/insights/this-week-at-cyber-duck-22/ Information Tech Mott-macdonald : https://www.mottmac.com/careers/graduate/ Civil and structural engineering, construction and building service Prop Studios: http://www.propstudios.co.uk/#!newsletter-mailing-list/c1i3r architecture and Design Tk maxx: http://www.tkmaxx.com/content/ebiz/tkmaxx/resources/careers/graduate-scheme/index.htm retail Space property group: http://spacesproperty...
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...The Great Depression The Great Depression was the first bubble that Goldman Sachs made explode and got away with next to no penalty. They were just beginning as an immigrant owned business with the idea to gain money by loaning it out to people at interest. They blew up around the depression for their practice in “investment trust”. They offered stock and made the average guys feel like they were investing a lot but they knew little of the process. Once they invested, the company bought their own stocks to make it look good. Then they get another investment in their “new, better” stock than before, and repeated the process. Eventually somewhere in the chain it broke and Goldman owned everything under fake practices. When the depression hit these people found out these investments were worthless and suffered while Sachs excelled. I agree with the author in the way that the practices were morally wrong and should have been illegal. Goldman knew what was happening and pushed back investment on people. I disagree that it’s all their fault though. Goldman at the time was only being ethically wrong, since none of the practices were outlawed. In the end it is the person’s responsibility to know what is actually going on with your money. Tech Stocks 65 years later they picked up where they left off and began to scam again. This time Goldman attempted to pump up or down IPO on startups no matter how crap or great. With help from big players and the media Goldman would sell terrible...
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...Bailout Money Awarded to Major Bank Executives Their Impacts on Utilitarianism and Deontology Price TUI University Abstract This paper explores two published articles that report on banks receiving billions of taxpayers’ dollars awarded from the government known as the Trouble Asset Relief Program (TARP), who in turn paid their top executives billions of dollars for bonuses. TARP is a program to assist in the stability and strengthen its financial sector by paying for bad mortgages and other trouble assets. In order to prevent economic collapse, the Bush administration changed the programs goals. (Gold, 2008) Using the TARP funds to support and pay off executive’s bonuses poses a moral dilemma within society, which I will later discuss in the paper. The purpose of this paper is to answer the question, Should top executives of the major banks that received bail-out money be allowed to receive large bonuses? I will present my personal view on the matter using the bases of my values, beliefs and research that I have done on the topic. In addition, I will explain how bailout money awarded to major bank use for executives bonuses impacts on utilitarianism and deontology. Bailout Money Awarded to Major Bank Executives and their Impacts on Utilitarianism and Deontology The United States began experiencing the recession during the early years of 2000. On September, 11, 2001 a tragedy in New York City occurred when the World Trade Center Towers were struck with...
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...Answer: | causes inequities and discourages investment by increasing the uncertainty about future returns | | | | | * Question 2 2 out of 2 points | | | Budgetary deficits always have the effect of:Answer | | | | | Selected Answer: | creating governmental competition for private investment funds | Correct Answer: | creating governmental competition for private investment funds | | | | | * Question 3 2 out of 2 points | | | A primary focus of the Economic Stabilization Act of 2008, which became know as the ___________________________, was to allow the U.S. Treasury purchase up to $700 billion of troubled or toxic assets held by financial institutions.Answer | | | | | Selected Answer: | Troubled Asset Relief Program (TARP) | Correct Answer: | Troubled Asset Relief Program (TARP) | | | | | * Question 4 0 out of 2 points | | | The federal government pays for the services it provides primarily through:Answer | | | | | Selected Answer: | borrowing | Correct Answer: | taxation | | | | | * Question 5 2 out of 2 points | | | U.S. debt management...
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...1. Introduction/background: this section should include objectives and scope of your study as well as background information on global financial markets. You may highlight what happened in the global economy in recent past (say April- early August 2011) and that would set your platform for undertaking this study (business research report). Allow 1-1.5 pages for this section. Post GFC the global economy in my opinion is still reverberating with the ramifications of this tragic event. The tipping point of consumer and business credit has left the global economy “cooling down” by policies and recommendations of FDIC the federal deposit insurance corporation and TARP Troubled Asset Relief Program. The growth for the two largest economies is decelerating (R.Miller 2011) as finance ministers and central bankers arrive at the semi-annual meeting of the International Monetary Fund and World Bank. The increasing price of petrol has lowered consumer and business disposable income worldwide, and in the U.S budget cuts and a tighter monetary policy has limited the demand in China. The third largest economy Japan is recovering from the aftermath of the recent earthquake. While in Europe the possibility of a divided European Union becomes a probability for some members of the trading block as the debt crisis has claimed its third victim Portugal The objective of the study is to somehow interpret and create a better understanding of global and economic events and how these events affect...
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...analyzed here. Secondary data had been used here to formulate the thorough study from sources like Reuters, Sonntag, Barnett-Hart. Excessive issuance of CDOs by Citigroup to reallocate risk, regulate capital relief and earn greater profit was the substantial reason of its distress. Besides insufficient risk management resulting from risk managers’ cronyism and retransfer of huge amount of troubled assets back into its balance sheet to avoid the forego of its institutional clients due to shadow banking added to the situation. The crisis resulted in a numerical loss of $18.72 billion and around 100000 job cuts during 2008 period. Government aid like bail-out and internal restructure was implemented by this giant institution to overcome the distress. An analysis, backed by the study of the overall mishap suggests that, providing Citigroup with independent risk management, credit rating of its internal departments with stricter regulations, audits and checking rather than profit oriented private rating agencies and deeper focus on future strategies would act better as measures to prevent recurrence of such crisis and to eradicate the impact of the happened crisis in Citigroup. Until the subprime crisis in 2008, Citigroup used to be the largest bank in the world by total assets which motivated us to choose Citigroup to focus on this report (stempel & wilchins, 2007). The extent of damage to which Citigroup...
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...HISTORY: JP Morgan Chase & Co is one of the oldest, largest and best known financial institutions in the world. It is a result of a combination of several large US banking companies and over 1200 predecessors. It dates back to 1799. Chase bank is a subsidiary of JpMorgan Chase & Co that specializes in?. The Chase brand is used for credit card services in the United States and Canada, the bank's retail banking activities in the United States, and commercial banking. It is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The history of Chase Bank dates back to September 1st, 1799 when the Manhattan Company was founded by Aaron Burr as a water carrier company. Burr’s goal was to bring clean water to New York City and put a stop to the monopoly that the Bank of New York and the federal bank had on the state. Alexander Hamilton started Bank of New York in 1784. The Mannhattan Company received its charter in an unusual way, through Burrs’ political connections in New York. Being a former congress man and vice president as well as other prominent positions, he sponsored abill through the New York assembly that established the water company which in turn allowed the creation of a bank. A clause in the bill allowed the company to invest surplus capital in any lawful enterprise. The Bank of Mannhattan started paying dividends in June 1800. The water carrier/bank was off and running. In 1804 Burr was...
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...Govt Budgeting and Finance Professor: Vaida Maleckaite 2011 US.Budget A Summary 02/03/2014 “Budget Message of the President” – A Summary Introduction The President of the United States prior to a budget year gives a speech on the fiscal well being of the Nation. This budget is published by the by the Office of Management and Budget. This speech outlines the economic situation, the progress that the country has made during the year 2011and the issues facing as we look forward and. The budget also includes other important documents such “Rescuing the Economy,” “Reviving Job Creation and Laying a New Foundation for Economic Growth,” and “Restoring Responsibility.” This summary discusses some of the economic indicators that caused the recession. How we were declining in manufacturing, product demand being down, and the financial institutions on the verge of collapse. This was happening along with high unemployment. “The first order of business for the new Administration was to arrest the rapid decline in economic activity.” Economic Situation In the year, preceding the President Obama’s budget speech 2011 the banking industry had stopped lending money; credit was hard to come by. They were investing in high risk ventures with bad speculations that were not successful. There were no regulations to prohibit the banks in unsound investments. The country was going into a recession and perhaps a depression. The Gross Domestic Product was the lowest in 25 years. We were...
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...2008 to October 13, 2008. Dick Fuld, CEO of Lehman Brothers, is seeking external investment, but investors are wary as Lehman is seriously exposed to toxic housing assets and the Treasury is ideologically opposed to offering any sort of bailout as they did for Bear Stearns. Paulson directs Fuld to declare bankruptcy before the market opens after both Bank of America and Barclays, whose express interest in Lehman's "good" assets fails the deal. The crisis then has spread to Main Street after GE is unable to finance its daily operations. Paulson decides that the only way to get credit flowing again is direct capital injections. The banks agree with the terms of that they will be receiving mandatory capital injection and they must use this money to get credit moving again, but Paulson balks at putting additional restrictions on how the funds are to be used. Paulson's Treasury deputy for public affairs laments that the parties who caused the crisis are being allowed to dictate the terms. At the end, although markets did stabilize and the banks repaid their Troubled Asset Relief Program funds, credit standards continued to tighten resulting in rising unemployment and foreclosures. As bank mergers continued, these banks became even larger and at the time of the film, 10 financial institutions held 77% of all U.S. banking assets and have been declared too big to fail. The first stakeholder of this movie is the main character itself, Henry Paulson, U.S. Treasury Secretary. He is affected...
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...The 2008 Subprime Mortgage Crash and response by the Federal Government Philip J. Scanlon University of Redlands Conditions leading the Subprime Mortgage Crash Many factors contributed to the subprime mortgage crisis, a disruptive economic downturn that its severity can be compared to the Great Depression. Only federal intervention prevented a possible collapse of the world economic system. Ironically, it can be said that federal intervention in the mortgage industry led to the 2008 collapse. By backing risky mortgages, the government created a new systemic financial contagion that began in the housing market, moved through financial and investment markets, and created a loss of confidence in the financial system on which our economy is based. The following conditions created the crisis: 1. For the government, home ownership kept neighborhoods safe and clean because neighbors, in protecting their property, also protected neighborhoods. Government backed loans were offered to otherwise at risk lenders home ownership to strengthen communities, especially low income communities. 2. The government encouraged lenders to extend riskier loans to those more economically disadvantaged and therefore less likely to honor debt obligations. By guaranteeing the loans, the government allayed concerned bankers and other lenders. Fannie Mae and Freddie Mac, backed by the federal government, allowed financial institutes to sell mortgages as secure investments, creating a new financial...
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...UNITED STATES ECONOMIC SITUATION: The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $49,800. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income. Imported oil accounts for nearly 55% of US consumption. Crude oil prices doubled between...
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