Ngày tải lên :
16/02/2014, 06:20
... ($Bil)
41
Already,asanindicationofthisrisingperceptionofrisk,ownersofU.S.governmentsecurities and other
investorsareflockingtopurchaseinsuranceagainstapossiblefuturedefaultbytheU.S.Treasury,drivingthe
premiumsonU.S.Treasurycreditdefaultswapstonewhighs.
Thus,itrecentlycostinvestors98basispointstobuyprotectionagainstaTreasurydefault,up14‐foldfrom
just7basispointsinlate2007,orapremiumcostof$9,800per$1millionofU.S.debt,comparedtoonly$700
previously.Ifthispremiumcostbecomesprohibitive,lenderswilldemandhigheryieldsonU.S.Treasuriesor
maybegintoreducetheircurrentTreasurybondholdings,makingitincreasinglyexpensivefortheU.S.
Treasurytorefunditsmaturingdebts—letaloneraisenewfundstofinanceitsbulgingdeficits.
Thisisevidencethat,evenintheabsenceofadepression,thecreditoftheU.S.governmentisbeingdamaged
byitsassumptionoftrillionsofdollarsindirectorindirectliabilitiesforcompanieslikeFannieMae,Freddie
Mac,AIG,Citigroup, and manyothers.Inadepression,unlesstheU.S.governmentceasestoassume
responsibilityfortheseliabilities,thecredit and credibilityoftheU.S.governmentcanbedamagedfarmore.
Moreover,thereareotherpowerfulfactorsthatcanmakeitmoreexpensive and difficultfortheU.S.Treasury
tofinanceitsrescues and bailouts:
1.Thecapital and liquidityoflenders.
U.S.debtisfundedbyindividuals,domesticfinancialinstitutions and foreigngovernments.Inadepression,
eachofthesemaysufferadeclineincapital and liquidity,mayhavereducedfundsavailableforinvestment,or
mayhavetocashouttheirholdingsduetoother,morepressingdemands.
2.Theparticipationofgovernmentsecuritiesdealers.
TheU.S.governmentsellsitsdebtsecuritiesmuchlikeanautomanufacturersellsitscars.Ford,forexample,
rarelysellsdirectlytothepublic.Instead,itusesanationalnetworkofdealers.Thesedealersbuythecarsat
auction,payingawholesaleprice;holdthecarsontheirlots; and thenmarkupthepricetosellthemretail.
Similarly,theU.S.governmentsellsitssecuritiesatauctiontoanationwidenetworkofbonddealerswhobuy
themwholesale,putthemontheirshelves, and markthemupforsaletothepublic.
Withouttheactive,continuingparticipationofthisnetworkofprivategovernment‐securitydealers,theU.S.
Treasurywouldbeunabletoraisethefundsneededtofinanceitsoperations.
Thesedealers,inturn,requirerelativelystableprices and fluidfinancingtocontinuetoexercisethatfunction.
IfmarketsarefloodedwithanunusuallylargesupplyofTreasuries,ifthereisdamagetothecreditoftheU.S.
government,ifU.S. and foreignbondbuyerssufferaliquiditysqueeze,orifthoseinvestorsarefearfulofan
inflationrevival,themarketmechani
smitselfcouldsufferseriousdisruptions.
Specifically,theresultingsharppricedeclinesinthemarketvalueofbondinventoriesheldbydealerswould
threatentheircapital,forcingthemtowithdrawfromtheTreasuryauctions.Paralleldisruptionsinthe
interest‐ratefuturesmarkets,wheredealersseektohedgetheirrisk,wouldhaveasimilarimpact.
Inthisscenario,thedealerswouldceasetheirbiddinginTreasuryauctions and U.S.governmentwouldfind
thatdeficitfinancingisimpossibleat any price.
23
However,ifthisglobalstructureisshaky,neitherafuturefailureofAIGnorthe2008bankruptcyofLehman
Brotherscanbeproperlyconstruedastheunderlyingcause.Rather,theyaremerelypotentialtriggersofa
globalcollapse.
Theunderlyingcausesofglobalinstabilityaremanyyearsofoverborrowing and undersaving,plusthe
cumulativeweightoftheU.S.housingbust,mortgagemeltdown,widespreaddeleveraginginthefinancial
system, and thedeepesteconomicdownturnsincetheGreatDepression.
Meanwhile,thepotentialtriggersofaglobalcollapseareubiquitous—notlimitedtojustoneortwofirms
suchasAIGorLehmanBrothers.Aswedemonstrateinthispaper,inthebankingindustryalone,thereareat
leastfourmegabanks and thousandsofsmallerinstitutionsatrisk.Thus,althoughabundanttaxpayerfunds
maylockdownsomeofthepotentialtriggerssomeofthetime,itisunreasonabletoexpectthegovernment
tosilenceallthegunsallthetime.
18
JPMorganChaseBankNA(OH),or“JPM,”isthelargestU.S.commercialbankwith$1.8trillionintotalassets.
... Afailureisafailure.Ifmarketpricesmeanthatinstitutionshavebiglosses, and ifthebiglossesmeanall
capitalisgone,thentheinstitutionhasfailed.
8.Wewillpro‐activelyshutdowntheweakestinstitutionsnomatterhowlargetheymaybe;provide
opportunitiesforborderlineinstitutionstorehabilitatethemselvesunderaslimdietoflow‐risklending; and
givethesurviving,well‐capitalizedinstitutionsbetteropportunitiestogainmarketshare.
KansasCityFederalReservePresidentThomasHoenigrecommendsthat“publicauthoritieswouldbedirected
todeclare any financialinstitutioninsolventwheneveritscapitallevelfallstoolowtosupportitsongoing
operations and theclaimsagainstit,orwheneverthemarketlosesconfidenceinthefirm and refusesto
providefunding and capital.Thisdirectiveshouldbeclearlystated and consistentlyadheredtoforallfinancial
institutionsthatarepartoftheintermediationprocessorpaymentssystem.”Weagree.
9.Wewillbuildconfidenceinthebankingsystem,butinaverydifferentway:Rightnow,bankingauthorities
aretheirownworstenemy.Theypainttheentirebankingindustrywithasinglebroadbrush—“safe.”But
whenconsumersseebigbanksonthebrinkofbankruptcy,theirresponseistopainttheentireindustrywith
analternatebroadbrush—thattheentirebankingindustryis“unsafe.”Topreventthatoutcome,wewill
challengetheauthoritiestoreleasetheirconfidentialCAMELSratingsoneachbankinthecountry. And to
restoresomeriskfordepositors,wewillaskthemtoreversetheexpansionofFDICcoveragelimits,bringing
backthe$100,000capfo
rindividuals and businesses.
Althoughthesestepsmayhurtindividualbanksintheshortrun,itwillnotharmthebankingsysteminthe
longrun.Quitethecontrary,whenconsumershaveareasontodiscriminaterationallybetweensafe and
unsafeinstitutions, and whentheyhaveamotivetoshifttheirfundsfreelytostrongerhands,theywill
strengthenthebankingsystem.
IammakingtheserecommendationsbecauseIamoptimisticwecangetthroughthiscrisis.Oursocial and
physicalinfrastructure,ourknowledgebase, and ourDemocraticformofgovernmentarestrongenoughto
makeitpossible.Asanation,we’vebeenthroughworsebefore, and wesurvivedthen.Withallourwealth
and knowledge,wecancertainlydoitagaintoday.
Butmyoptimismcomeswithnoguarantees.Ultimately,we’regoingtohavetomakeachoice:Theright
choiceistomakesharedsacrifices,letdeflationdoitswo
rk, and startregeneratingtheeconomicforcesthat
havemadetheUnitedStatessuchagreatcountry.Thewrongchoiceistotaketheeasywayout,trytosave
32
WhenitbecameapparentthatMerrillLynchwouldpostnetlossesinthefourthquarterexceeding$15billion,
BankofAmericaseriouslyconsideredbackingoutofthedeal.However,withsomeforcefulpersuasionfrom
governmentofficials,themergerwascompletedonDec.31, and BankofAmericareceivedanadditional$10
billioninTARPmoneyonJanuary9,2009.
Justoneweeklater,onJanuary16,theTreasuryannounceditwould“provideprotectionagainstthe
possibilityofunusuallylargelossesonanassetpoolofapproximately$118billion” ... Afailureisafailure.Ifmarketpricesmeanthatinstitutionshavebiglosses, and ifthebiglossesmeanall
capitalisgone,thentheinstitutionhasfailed.
8.Wewillpro‐activelyshutdowntheweakestinstitutionsnomatterhowlargetheymaybe;provide
opportunitiesforborderlineinstitutionstorehabilitatethemselvesunderaslimdietoflow‐risklending; and
givethesurviving,well‐capitalizedinstitutionsbetteropportunitiestogainmarketshare.
KansasCityFederalReservePresidentThomasHoenigrecommendsthat“publicauthoritieswouldbedirected
todeclare any financialinstitutioninsolventwheneveritscapitallevelfallstoolowtosupportitsongoing
operations and theclaimsagainstit,orwheneverthemarketlosesconfidenceinthefirm and refusesto
providefunding and capital.Thisdirectiveshouldbeclearlystated and consistentlyadheredtoforallfinancial
institutionsthatarepartoftheintermediationprocessorpaymentssystem.”Weagree.
9.Wewillbuildconfidenceinthebankingsystem,butinaverydifferentway:Rightnow,bankingauthorities
aretheirownworstenemy.Theypainttheentirebankingindustrywithasinglebroadbrush—“safe.”But
whenconsumersseebigbanksonthebrinkofbankruptcy,theirresponseistopainttheentireindustrywith
analternatebroadbrush—thattheentirebankingindustryis“unsafe.”Topreventthatoutcome,wewill
challengetheauthoritiestoreleasetheirconfidentialCAMELSratingsoneachbankinthecountry. And to
restoresomeriskfordepositors,wewillaskthemtoreversetheexpansionofFDICcoveragelimits,bringing
backthe$100,000capfo
rindividuals and businesses.
Althoughthesestepsmayhurtindividualbanksintheshortrun,itwillnotharmthebankingsysteminthe
longrun.Quitethecontrary,whenconsumershaveareasontodiscriminaterationallybetweensafe and
unsafeinstitutions, and whentheyhaveamotivetoshifttheirfundsfreelytostrongerhands,theywill
strengthenthebankingsystem.
IammakingtheserecommendationsbecauseIamoptimisticwecangetthroughthiscrisis.Oursocial and
physicalinfrastructure,ourknowledgebase, and ourDemocraticformofgovernmentarestrongenoughto
makeitpossible.Asanation,we’vebeenthroughworsebefore, and wesurvivedthen.Withallourwealth
and knowledge,wecancertainlydoitagaintoday.
Butmyoptimismcomeswithnoguarantees.Ultimately,we’regoingtohavetomakeachoice:Theright
choiceistomakesharedsacrifices,letdeflationdoitswo
rk, and startregeneratingtheeconomicforcesthat
havemadetheUnitedStatessuchagreatcountry.Thewrongchoiceistotaketheeasywayout,trytosave
32
WhenitbecameapparentthatMerrillLynchwouldpostnetlossesinthefourthquarterexceeding$15billion,
BankofAmericaseriouslyconsideredbackingoutofthedeal.However,withsomeforcefulpersuasionfrom
governmentofficials,themergerwascompletedonDec.31, and BankofAmericareceivedanadditional$10
billioninTARPmoneyonJanuary9,2009.
Justoneweeklater,onJanuary16,theTreasuryannounceditwould“provideprotectionagainstthe
possibilityofunusuallylargelossesonanassetpoolofapproximately$118billion”...