YouSaid · the spoken record

Richard Field

lines on the record: 146
first: 2022-10-20
most recent: 2022-10-20
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Okay, Richard, so if we did this in the US, would there be good net interest margins if you shut down all of the insolvent banks? Because net interest margins spread between what you pay depositors pay, but you have to pay for deposits, and then what you earn on loans. It sounds like the loans are bad, right?”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“The way you've created $20 billion out of thin air is now you have good assets of 75. What they pay on their deposits, and you can look at the net interest margin, and you can see, oh, look at all that income that's pouring to the bottom line. That's a good bank. That's valuable, all that income.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Okay, okay, so you're saying that the FDIC plugs the hole, but the way that it plugs the hole without spending a gazillion dollars is by having the new bank be valuable and selling those assets. But I guess in the case of Iceland, how is it? Valuable. How did you just sort of create $20 billion out of thin air?”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“The FDIC puts it in initially to get the deposits and the assets. He asked us back to what it needs to be, and then it gets out by selling on its position.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“No, nobody takes the extra 20. It goes through an accounting statement of an entity that's out of business. 20 just gets written down.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so we get our money out, the FDIC, leaving the new shareholders in place. And they have a clean bank that has equity in it and the assets and liabilities match up. That makes sense.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“We start off with a bank that has $100 of assets, $95 of deposits, and $5 worth of equity. $100 worth of acids turns out to be worth $75. The deposits are still worth $80 We write it down, but now what's the book value of the equity worth? Minus 20 FDIC steps in, FDIC says, look at that. Losses have been taken. They all went through the accounting of the company that's insolvent. We take the seventy five of assets over to a new company. We take the 80 of deposits over to a new bank. So now they're both sitting in a new bank, we, the FDIC, put in $5 million to get it back to being balanced again. So there's 5 million cash goes in, 5 million of equity is now on the balance sheet, or whatever we need to do. At that point, we, the FDIC, can now sell equity in that bank.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“So, who takes the losses? Well, you're absolutely right. You know who's going to take the losses? You're going to look at a city. And they're likely to have hundreds of millions, if not several billion dollars worth of losses. So city ends up being broken up. All those losses flow through the old city.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“No need for either one of those. You did not meet QE, you did not need Zerp if you go in and take care of the bad debts. That was not a requirement for getting your economy going again.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“So, I think that is a very well articulated critique of TARP, the Treasury buying all this crap in 2008, as well as not having Sheila Bear knock on the doors of insol in banks and shut them down. But I think that's different than zero rates and QE. I mean, I think are you assuming that your FDIC insurance would have been so good? This plan was so effective that you wouldn't have to do QE and you wouldn't have to have low rates. No need.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“To the extent that it was insolvent, it's because its liabilities exceeded its assets. But the reason that its assets were so low was because of a liquidity problem. Like if there was more liquidity, I don't think the CDOs would be worth 20 cents on the dollar. So I'm saying the line.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Bankers are going to get punished. That's the story that should have been the story of 2008. Instead, we ended up with ZERP. We ended up with QE. We ended up creating zombie companies. We could not have had a worse policy response.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“It's two ways. One, they charge banks for the insurance. So there's an insurance premium. And the second one is they have a line of credit with the treasury. Now imagine rather than going to Congress and saying we want $750 billion in some blind pool that we can use however we want, they had gone to Congress and said, we think the FDIC needs $750 billion. Increase in its line of credit So that it can handle all of these bad banks and winding them down. Of how much easier that would have been to get through Congress. Because everybody knows that FDIC is out there to protect deposits. FDIC is saying, we got your deposits covered. You don't have to worry. We're just going to clean out all these bad assets. And oh, by the way, those banks are going to get broken up”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Iceland made money buying banks, but so But let's come back to what you said earlier. How can you be confident that your money's going to be good as the depositor? You just said, look, a trillion dollar institution probably has enough asset value lying around someplace that when all is said and done and we get rid of all the bad crap on there. Chances are they got enough to cover the deposits. But they don't have to have enough to cover the deposits. They just have to have enough so that when the government puts in money, the government feels comfortable, it will get its money back out.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“TARP is a strange and peculiar instrument. Because, as I said, they didn't take the losses up front. They didn't take Check for solvency All they did was they gave them twenty five billion dollars. And then people said TARP bought at...”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“So it turns out, like in Iceland's case, they got out without losing any money. Again, guaranteeing far above what people would have thought going in. You can say the same”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Remember how we shut down and how that shutdown works, the resolution. The day they shut it down is a Friday after the close of business. So you can't get your money anyhow until Monday. On Monday, we have a new entity set up that replaces it. In this case, it's a new entity. Now, let's go back to why I'm 99.99% sure. Let's look at Iceland, because Iceland's a really interesting example. Iceland literally had to replace its entire banking system. But they didn't wipe out the depositors And one of the things that happens when the country takes over its banking system, it gets the opportunity and has the preferred stock, it gets the opportunity to sell its interest in the banks. And it turns out that a clean bank with no credit problems at all is very valuable. Lots of people who are willing to pay for that interest.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“I think she closed Wamu, but Wamu, I mean, not really it got sold. I think every one of them got sold. I'm not actually sure that we actually closed one as opposed to that they got sold. Wakovia got sold. Washington Mutual got sold. I'm not convinced that there were any that were really of the big guys who actually got clothes clothes. Maybe indie math, but even then I think got sold.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“People have to be 100% sure that their money is safe. And people who know the law know it's a quarter million dollars. But to not pull your money, you have to be like 99.999999999999% sure. And I mean, it doesn't even seem like you're 99% sure.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Deposits just sitting there. Well, that's an individual with a billion dollars. Is that an investor? They might want to slice it that way. Okay, and say, well, you're an investor as opposed to. A bank as the 100 person firm we discussed earlier.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“You should be very confident because the FTIC think about what its goal is, Its goal is to protect the depositors And the real economy. Knows it's going to temporarily borrow money if it's a big enough problem from taxpayers so as to make depositors whole. That is the crux of the issue here. We talked about how there was this whole thing about how we had to nationalize banks. They didn't have to nationalize banks. They weren't going to close a bank until they were ready to resolve it. So you got to put the losses on the people who are the investors who are supposed to take losses. As I said, they're very good at distinguishing between an investor. And as I said, the firm that has the million dollars. When you say somebody has a billion dollars.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Because the FDIC has searched fees to the banking industry based on how much is covered. You said every toposit is covered, the banking industry would have to pay a whole lot more in fees to the FDIC.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“They moved all the deposits. And they wiped out everybody who I just described in those groups. The equity holders got wiped out the subordinated debt holders got wiped out, the preferred stockholders. So there's a history of doing these.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“It effectively it can and it would if that's what they intended to do was to close down those banks they would say if you've got deposits in these banks you don't have to worry we've got your back on those deposits so effectively we've given you an unlimited deposit guarantee”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“How do they know that? Because the government only has to say it. Get to say you keep your deposits, we're not going after deposits, the guys are going to lose their money, and they can list off. Where is that?”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“First quarter million backed by the FDIC, but I'm saying, let's take a company. That has 100 employees. That company will typically have more than a million dollars at a bank at any instant in time, solely to cover payroll.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“There's no reason for the government to take somebody who's a depositor and make them absorb losses. They understand who's a depositor slash an investor versus who bought Equity in a bank, who bought subordinate debt in a bank that's unsecured. All those people are the ones who are supposed to get hit with losses. Deposit rights.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“A bank wants to do a billion dollar transaction. We got to kind of come at this from a couple of different The first one is in the mid-1980s, we had an industry called the Savings and Loan Industry. It was no one to be bankrupt in the mid nineteen eighties because the Fed had raised rates and these guys had a portfolio that consisted of thirty year mortgages. That was their assets and a floating rate deposit base. So they were hemorrhaging cash. Fact is, even though they were insolvent, everybody knew they could stay afloat and continue in operation, making loans until such time as the federal government was organized to resolve them, i. e. take them on a Friday, close them down, and reopen having moved their acids that were the good acids into a new entity, and take the old assets and put them into a bad entity.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“The Right, now let's go back to 1933 a second. They had a really brilliant thought in 1933. Brilliant thought that they had was, why should we establish a financial system where the financial stability of our country is dependent on our existing banks? As opposed to making our existing banks depending on our country. In short, If you look at our financial system, we could get rid of all of our existing banks. Reopen new banks tomorrow, and our real economy wouldn't miss a beat The existing banks need the country, but the country doesn't need them. So Jamie Diamond's company would have gone away overnight. We should have done away with all the too big to fail banks. It may have taken a couple of years to wind them all down. The point is that should have occurred in two thousand eight.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Having said that, what they did with TARP money is they made that the source for putting in money as preferred stock. Into the banks. And they said to the banks, Oh, you all have to come here and we'll give you a bunch of preferred stock. And then they made up a story about how the bankers were so adverse to getting preferred stock.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Or something, but that's a distinction to draw. He wants a note of that because the treasury did not go through and take off of every bank all of their bad, all of their subprime exposures because they couldn't value the subprime exposures. TARP was originally supposed to be, oh, we'll buy all these junk subprime securities. Well, then the question became, how do you value them? And of course, people immediately said, well, you can't value them at 50 cents on the dollar if they're only worth 20 cents on the dollar, because then you're giving the banks all sorts of money they don't deserve. So that stopped the TARP purchase of those securities. Because TARP was no, you know, treasury had no more idea how to value those opaque securities than anybody else.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“TARP toxic asset relief program where they actually, the toxic shit, if I can use that phrase, and I think I can because it's my podcast, that was the actually insolvent stuff that was taken onto, I believe, the treasury's balance sheet, the Federal Reserve, when they bought trillions of dollars worth of securities, it was agency mortgage-backed securities, which are guaranteed by Fannie and Freddie, right? So it's not as if the Fed bought the mortgage that was in the big short or something like that. That was maybe bought up by the Treasury or the CDO or something. That's a distinction to draw.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, let's say again the banking losses. Okay, banks make loans. That's the business that they're in. Banks are supposed to evaluate the companies to which they make the loan. Okay? So you've got to think of a bank as nothing more than a sophisticated investor. Now we always say that all investors are responsible for all the gains and losses on their investments. In 2008, Bernanke comes in and says Banks, you're no longer responsible for your losses. i.e. we socialize the losses, we let you privatize the gains. Happens at this point is we got a bunch of companies and a bunch of borrowers who are way underwater. But the Fed's not forcing them, the banks to recognize those companies as being underwater and cutting their debts. Okay? That didn't happen. We didn't have the get rid of the debt that's a loser debt.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“According to the BIS, we are now close to 20%. Grows exponential. And why? Because the dead zombie isn't pricing for profit for shareholders, is just pricing to get enough cash flow to try to cover some of its debt payments.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“No chance You like AIG go through bankruptcy and whatever Bankruptcy estate says is what the bankruptcy estate says. And by the way, this is the point that Anna Schwartz was making in her interview. She said, you got to address. Losses that are in the financial system. You can't sweep them under the rug. And that's what Bernanke was doing. Okay, when you think of ZERP, when you think of QE, all of this was designed to put the losses under the rug and pray that something happened to take care of those losses. You look, my favorite chart comes from BIS. They track debt zombies, a concept that didn't exist in 2008 outside of Japan. A debt zombie is a firm where for the last three years it hasn't made enough money to cover its debt payments. In the US in 2008, less than 3% of corporate America would have qualified as a debt zombie.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“If the Conner Party is insolvent, then you're not doing okay. If the US government doesn't step up to bail out AIG, Goldman Isn't solvent, and it's Goldman and their shareholders who should have taken the loss, so they should have done their homework to say, ooh, AIG isn't solvent.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Economy actually started up again. While they wrote down all the debt, they opened up the Solvent Institute, the quote solvent ones, they put in preferred stock to get everybody up to a certain level. They also introduced deposit insurance. Which effectively ended bank runs from individuals because your deposits were now guaranteed by the U.S. government, so you didn't care how the bank was actually performing.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“The answer was no, they didn't. By doing that they forced Banks to take losses. The key when you have a financial crisis is that it's always triggered by the fact you have excess debt in the system, and everybody knows there are losses. They just don't know where the losses are. So your bank's got to recognize the losses, otherwise nobody trusts the bank. Okay, so that's the first thing that they were supposed to do. Bernanke didn't do that. Why didn't he do that? Well, I think it's Paulson and Geithner's influenced there, by the way. Paulson would not have wanted Goldman Sachs to have to write down all of his losses. Goldman would have been out of business. What came out of 33 with the bank holiday is they wrote down all the bad debt.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“If you look back to the Great Depression in the US, you'll notice that when FDR came in, became president, in the first week after his presidency was sworn in, we had a national bank holiday. And the interesting thing about that national bank holiday, because at the time there were lots of runs on banks, was the end of the holiday corresponded with a fireside chat. And in the fireside chat, what he said is, we aren't going to reopen a bank that isn't solved. Aye they went into various banks and they said we're looking at your books and they use bankers to do this and they said after you take your losses are you solvent or not? Are your assets worth more than your book value of your liabilities? If the answer was yes, then they reopened”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“And how they made it worse. And it says, that's not how you should run monetary policy. Okay? Fast forward to October 2008. And there is this fabulous interview. They're interviewing Anna Schwartz, and she is saying, Ben Bernanke didn't learn a single lesson from the Great Depression and what you're supposed to do. He's doing it all wrong”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“I start off when I start looking at something like the Great Depression and I go, who actually knows something about the Great Depression? So I looked for those types of people. And the first person I found who actually was living when I first looked at the Great Depression was a woman by the name of Anna Schwartz. She's an economist, and I don't know if your viewers are familiar with her, but she wrote a book, and her co-author was a gentleman by the name of Milton Friedman. And this book was the Bible. It describes all the bad things the central banks did. During the Great Depression,”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah, let's walk the clock back a little bit. So Bernanke, Ben Bernanke, he studied economics at his PhD, and I think he. Was very interested in the Great Depression and the failures of the central bankers during the Great Depression, which are quite apparent if you look back at the historical record. You have a industrial production falls 30%. And what do you do? You increase rates, you strengthen the currency instead of decreasing the currency. You remove liquidity. He's a student and he correctly pointed out just the mistakes. And he wanted to learn from it. So going in, when did he take over from Greenspan 2005, 2006, whenever he did, he was like, he said something was brewing. He said, I'm not going to make the same mistake as, let's say, Benjamin Strong or Montague Norman. But you say he did make mistakes. What were his mistakes?”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“This is exactly how it should be done. However, notice that the Swedish bank would not like that model. This was bad for the bankers. So they loved the Bernanke model, which skipped steps one and two, the first step being write down the bad debt, the second step being check to see if they're solvent or not. The Bernanke model is shown in 2008 was inject the funds immediately. If you recall”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Which is what they did. Now, as for the solvent ones, they said you got to get to a capital ratio, let's call it 5%. If they couldn't raise that amount of money from the private market, the Swedish government put in money as preferred stock. But they put it in at an incredibly high rate, so all the returns flowed to the Swedish taxpayers as opposed to the private equity investors who came in.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“Saying to the world bailouts of insolvent very large banks are a great idea, which by the way isn't surprising because the Nobel Prize for Economics is actually sponsored by a Swedish bank. And if we go back in history just a little bit to 1990s, you'll notice that in Sweden they had a financial crisis. And the way they handled their financial crisis was they said to all of their banks, you guys got all this bad debt on your books, you got to write it off. Now, we're going to look at you after you've written it all off and say, if you're solvent, you've got to go raise capital. If you're not solvent, we're going to get close you down.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT
“I was telling you this has been the world's greatest week for me. It started off with Ben Bernanke getting the Nobel Prize for his lack of insights into financial crisis in banking. Clearly, it was the Nobel Committee.”
2022-10-20 · Forward Guidance · The Fed Blundered In 2008 —And It’s Blundering Now | Richard Field · IDENTIFIED FROM THE TRANSCRIPT