Demoskratos

Despite President Obama and his administration along with Fed Chairman Ben Bernanke desperate efforts to re-inflate the economy through tens of trillions of taxpayers’ money, jobless rates continue to rise adding to the total number of unemployed Americans.

When will we see real results to all this massive spending?  Banks continue to hold back on lending while more people go unemployed and risk losing their homes and other assets.

U.S. Economy: Jobless Claims Climb to Highest Level Since 1982

By Shobhana Chandra

April 2 (Bloomberg) — The number of Americans seeking jobless benefits last week climbed to the highest level in 26 years, providing a reminder that unemployment will keep mounting long after the economy stabilizes.

Initial jobless claims swelled by 12,000 to 669,000 in the week ended March 28, the most since 1982, the Labor Department said today in Washington. A Commerce Department report showed orders to factories improved in February for the first time in seven months…[FULL STORY]

It’s scary that banks can change some numbers in their computers based on a FASB standard change and suddenly it has created profits.  Did this create jobs?  How will it help people stay in their homes and avoid foreclosures?  Do these profits allow dividends, i.e. cash paid out to shareholders?

The action by FASB, an independent accounting standards-setter, came after Congressional pressure to help banks that have been forced to record billions of dollars in lower values for distressed assets because of frozen markets.

Investor groups opposed the change, saying it would let big banks conceal the real value of their toxic assets.

KEY POINTS:

* FASB allows banks to apply new mark-to-market guidance in the first quarter of 2009.

* FASB says the objective of mark-to-market accounting is to set a price that would be received by a bank in an “orderly” transaction in the current, inactive market. It says an “orderly” transaction for accounting purposes does not include the forced liquidation or a distressed sale of an asset.

* FASB agrees to drop the presumption in mark-to-market accounting that all transactions in an inactive market are distressed unless proven otherwise.

* FASB clarifies when banks are required to take write downs on impaired assets, letting them record smaller losses on their income statements.

Even board members of FASB disagree when it came to a vote on the changes:

Two of the five FASB board members, Thomas Linsmeier and Marc Siegel, voted against the change in reporting of such impaired assets. They argued it was the sort of decision bank regulators should make, because it could affect banks’ capital positions, and that the FASB had been pressured by Congress to take it.

Many pundits have hesitations and have commented on the action:

“Now you’re going to leave pricing back in the hands of management teams that may not have done a great job over this cycle, and you’re going to have to trust them that they really are marking these things to a model and a price that is reasonable. It takes us back to the same thing: We’re probably going to give more leeway to the management teams that you trust … than those you don’t.”

After trillions of dollars issued to various failed financial institutions to bailout failed companies, to stabilize the financial system of the United States and to stimulate the economy, the banks failed to cooperate.  Bank lending continues to plummet.

So why are trillions of taxpayers’ bailout money going out the door?

Bank Loans Plummet as Obama Boosts Lending Efforts (Update1)
By Emre Peker

April 1 (Bloomberg) — Bank loans fell to a record low in the first quarter as the Obama administration steps up efforts to jump start debt markets and revive corporate lending.

Bank of America Corp. and JPMorgan Chase & Co. led banks in providing $79.6 billion of syndicated loans in the three months ended yesterday, a 61 percent drop from $203.2 billion a year earlier, according to data compiled by Bloomberg. The volume has dropped from $446.4 billion in the first quarter of 2007, before credit markets seized up amid the worst financial crisis since the Great Depression.

Banks are hoarding cash and driving up borrowing costs as Treasury Secretary Timothy Geithner seeks to spur them to resume lending by enticing private investors to buy troubled assets clogging their balance sheets. Companies including casino operator MGM Mirage and toymaker Mattel Inc. are agreeing to pay higher interest rates to maintain their credit lines.

“Banks are very much reducing their credit commitments overall, there’s no question about that,” Nicholas Bijur, assistant treasurer of PG&E Corp., said yesterday in a telephone interview. “In addition to the dollar amount, the pricing terms seem to have changed.”