Ramanisblog

Tag: bailout

  • Bail Out for Mallya’s Kingfisher? Non Sense.

    Kingfisher Airlines owned by the Liquor Baron Vijay Mallya is facing crisis after crisis,bills over due to the Oil Companies,cancellation of flights,huge out standings to its debtors both big and small, pilots leaving because of non-payment of salaries among other things.

    Fleet of King fisher Airlines
    Kingfisher Airlines

     There was a suggestion from the Civil Aviation Minister that he will talk to banks to lend money to Mallya to run the Airline.

    The Central government is reported to be contemplating a bail out Plan.

    Now Mallya comes on TV Live blaming every body for the state of his company,though graciously admitting(!?) that he has some problems(!),calling for reduction in Aviation fuel prices,high taxes on Fuel, non lucrative routes and Competition.

    A private entrepreneur enters a business  knowing all the risks.He makes profits and he does not share it with the common man or banks.

    Bottom line is you have not run your business properly and that you owe money to banks , your Creditors and the Oil companies.

    In short you are without money to run your business.

    Does any one go to a bank and say that he has suffered a loss and would the Bank extend more money?

    Would the banks agree to it?

    They will attach your property and leave you with your loin cloth.

    Why the different treatment to Mallya  who owns one of the largest Liquor companies in India,owns race horses,owns Cricket team and has a l penchant for High and Vulgar Living?

    Let him pay up or close down.

    No more talk of restructuring ,job loss non sense.

    India seems bent on Bail out mode in the foot steps US.

    If poor people are helped by the Government it is ridiculed as ‘Welfare State‘

    But bailing out criminally negligent businessmen,it is economic growth?

    Bailout. A term which till recently was alien to India.

    It was something the West did, to save their big financial institutions which had grown too big too fast and had squandered their cash positions while betting on complex instruments that even they did not fully understand.

    India, and largely Asia, was rather different. We were the growth engines of the world. The Asian giants would prevent the global meltdown from getting worse and would reverse it eventually, or so went the perception.

    Three years on and as the Greek crisis looms, the major Asian economies and their counterparts from around the world are still pondering on how to prevent the problems in Europe from spreading worldwide.

    India, meanwhile, is facing economic and policy conundrums of its own.

    From record prices of fuel, food and other essential commodities and multiple rate raises by the central bank, to a growth slowdown and a government struggling to meet its deficit targets.

    Bailouts may now become a reality for Asia’s third largest economy in the post-Lehman world. The most prominent example which comes to mind is of course that of the troubled national carrier, Air India.

    http://blogs.reuters.com/india/2011/11/14/kingfisher-situation-an-example-of-indias-free-marketwelfare-state-identity-crisis/

  • Are the bailouts working?

    Bail out is akin to lending more to your debtor to collect your old debt.
    If you borrow less the you are afraid of the creditor;if you borrow huge sums the creditor is afraid of you.
    Bail out is a political gimmick to give the impression that all is well or at least shall be.
    The past year has seen the global economy on a life support machine, otherwise known as the bailout. Just as the scars seemed to be healing, Iceland’s decision to hold off repaying billions of dollars owed to the British government has reopened last year’s wounds.

    If they don’t pay it back, it may well become yet another bailout – even if that wasn’t the intention.

    Should Britain cut the noise and accept that whilst this might be the bailout they never wanted, it succeeded in calming things down?

    Likewise, with the dust settling and things not looking as bleak as we might have predicted- should we accept that the bailouts did work?

    Many experts are certainly impressed at the speed at which the economy is getting back on its feet.

    The crisis has even resulted in some winners according to these economists for whom Asia, Australia and…urm…journalists have come out on top.

    Have a read of James Altucher on the Huffington Post. He slams every reason posed by Republican Congressman Ron Paul for why the economy is doomed.

    The bailouts have given banks a free ride and they should be more grateful according to this article.
    ‘Last summer, somebody put a bale of hay on a country intersection north of New York City, with this sign taped to it: “I got my bail out.” ‘ With bonuses back on the scene, have bankers learnt any lessons or has the money been taken for granted?

    The bailout has been in vain writes Rabbi Shmuley on the Huffington Post
    “Welcome to Wall Street, whose bankers, after nearly collapsing the global economy, have learned nothing from their greed and who have become more voracious than ever.”

    Has the bailout just fueled bankers’ bad habits?

    “Leave bankers alone,” says British banking’s most senior representative.”There are literally tens, if not hundreds of thousands of British jobs directly and indirectly related to banking – bringing billions of pounds in tax income.”

    When the bailouts were first announced many of us were fuming. Is it now time to congratulate our governments for making the right decisions? Were the bailouts a risk that paid off?

    On Air: Are the bailouts working?

  • Holiday cheer: Citigroup suspends foreclosures for 30 days

    Very Nice gesture.People who defaulted payments must make arrangements to pay up.How do you expect the organisation to thrive if you do not pay up?At least from now on live within your means.
    Citigroup is holding off on foreclosures and evictions for 4,000 homeowners. Fannie Mae and Freddie Mac are expected to make a similar announcement, and other financial institutions are expected to follow suit.
    In a TV news segment about the event, the network anchor reminds viewers about the bonuses that the bankers are raking in.

    So what’s a bank to do?

    This holiday season, some are planning to hold off on the foreclosures and evictions. Yes, Virginia, there is such a thing as a kind bank … well, at least until January.

    Starting Friday, Citigroup is giving some 4,000 homeowners 30 days without the threat of being evicted or foreclosed on. Both Fannie Mae and Freddie Mac are planning to announce a moratoriums on evictions for the holidays. Many other financial institutions are expected to follow suit in the days ahead.

    The holiday goodwill comes at a time when mortgage delinquencies are at a record level and climbing. According to the Mortgage Bankers Association, the portion of loans in the foreclosure process was 4.47 percent at the end of the third quarter – up from 2.97 percent a year ago. Some 4 million homeowners are either 90 days behind on their loans or in foreclosure.

    Things will get worse next year, the group projects – mainly because of the high unemployment rate.

    Consumer groups applaud the eviction holiday. “It’s always a good thing to give consumers more time to get paperwork and other documentation together to present a complete and persuasive case to their lenders so they can get help,” says Douglas Robinson, a spokesman for NeighborWorks America, a Washington nonprofit that tries to encourage counseling for homeownership problems.

    However, the eviction and foreclosure suspensions won’t solve the problem, these groups point out.

    “It’s a nice gesture and more than that for the families facing foreclosure. But it won’t turn the economy around, and it won’t turn foreclosures around, which is what we need to do,” says John Taylor, president of the Washington-based National Community Reinvestment Coalition, which advocates fair lending and fair housing.

    Some public-relations executives think the suspensions are a smart move. “After President Obama called them fat cats on ’60 Minutes,’ they have such a black eye it’s the wise thing to do this,” says Jeff Crilley of Real News Public Relations in the Dallas area. “To do it when they are not asked to do it makes them look good.”

    However, Mr. Taylor says, bankers have a long way to go to resurrect their image. He recalls the classic movie “It’s a Wonderful Life” and the character of Mr. Potter, a heartless banker. “Some of these bankers are making Mr. Potter look good,” Taylor says.

    Citigroup generally slows down the eviction and foreclosure process during the holidays, says Mark Rodgers, a spokesman for the financial institution.

    “It’s the right thing to do,” Mr. Rodgers says. “This is the time when there is so much anxiety. You want to give people some time to spend with their families and not think about a foreclosure or eviction hanging over their heads.”

    The bank, he says, also hopes that the suspension encourages people who are behind on their payments to contact the bank or the mortgage servicer.

    “We hope some people view this as extra time to see if they can work anything out,” Rodgers says. “Maybe there is a solution such as a short sale [you sell the property for less than the principal on the mortgage], or a deed in lieu [basically handing the keys to the lender, who sells the property].”

    http://www.csmonitor.com/USA/2009/1217/Holiday-cheer-Citigroup-suspends-foreclosures-for-30-days

  • Government Reconsiders Quick Sale of Citigroup Stake

    You have quite a few creditors and you have very little money.You want to pay your biggest creditor to escape his grip on you.You decide to pay him and announce it publicly.What will happen?
    Other creditors will be peeved and spread the word around.When you look for new creditors(investors), they are not to be found.
    This what us individuals who have credit will think.Not giant finance companies.
    Strange is the observation that Govt. should have started selling its stakes,it is akin to asking your creditor to pass on your credit to him to somebody else .
    Juxtapose this with cooking books in US and Abu Dhabi.
    Just when Vikram S. Pandit thought he was out, Washington is pulling him back in.

    Two days after Mr. Pandit trumpeted news that Citigroup would start untangling itself from the federal government, his bank stumbled — this time, on Wall Street. Badly misreading the financial markets, the company struggled on Wednesday to raise the money it needed to repay its bailout funds.

    While Citigroup managed to raise $20.5 billion in the stock market and will forge ahead with the repayment, the sale went so poorly that anxious Treasury officials reversed course and delayed their plans to start unwinding the government’s stake in the company immediately, according to a person briefed on the matter.

    The turnabout represents a significant setback for Mr. Pandit and his efforts to free Citigroup from government control. It also underscores the lingering worries over Citigroup’s financial health, as well as concerns that federal officials may have let Citigroup exit the bailout program too quickly.

    “There are questions about why the deal didn’t get done the way it was planned,” said Michael Mayo, a banking industry analyst with Calyon Securities. “I am not sure who has the answers.”

    The finger-pointing has already begun. Citigroup officials complained Wednesday that the Treasury should have begun selling its stake in the company months ago, to encourage private investors to buy the new stock. After Citigroup pressed them to sell a small stake alongside its enormous offer, Treasury officials said they warned the bank that there might not be enough investor appetite for a deal.

    Federal officials, meanwhile, argued among themselves over whether Citigroup and another big bank, Wells Fargo, should have been allowed to repay the government and sell new stock at the same time. Wells Fargo, which like Citigroup announced that it would repay the government on Monday, outflanked Citigroup and sold more than $12.25 billion of its stock on Tuesday.

    After the close of trading in New York, Citigroup priced its new shares at $3.15 each, below the $3.25 price at which the government assumed its one-third stake in the company. Before the sale, the share price of Citigroup fell 11 cents to $3.45, as investors braced for the new stock.

    Rather than suffer a loss for taxpayers, the Treasury Department will now hold on to the $5 billion stake it planned to sell alongside Citigroup’s own $17 billion stock offering. After an initial 90-day delay, the government will try to sell its entire stake — about 7.7 billion shares — over the six to 12 months.

    The trouble began on Tuesday, when Citigroup bankers started taking orders from investors for the new shares. Word began to seep out in the markets that the bank was having a hard time finding investors willing to buy the stock at the price at which Citigroup hoped to sell it.

    By Tuesday evening, Treasury officials got word that the stock might be priced below $3.25 a share. By Wednesday morning, they concluded that the government would forgo selling its shares immediately.

    Citigroup executives had hoped that repaying the federal aid that the company had received under the Troubled Asset Relief Program would help Citigroup shed its stigma as the last Wall Street giant still tethered to Washington.

    While Citigroup is continuing with plans for repayment, it now seems certain the government will maintain its entire stake in the bank for many months. That might make the shares less attractive to investors.

    The development came on the same day that the Abu Dhabi Investment Authority filed a multibillion-dollar arbitration claim on Wednesday accusing the bank of “fraudulent misrepresentation” after its $7.5 billion investment in Citigroup went south. A Citigroup spokesman said the claims were “entirely without merit” and the bank planned to vigorously defend itself against them.

    Questions also swirled about a waiver that allowed Citigroup to preserve a $38 billion tax deduction — a move that administration officials say was appropriate given that the intent of the tax rule. Still, they spent the day trying to stamp out potential outcry.

    Analysts raised fresh doubts about Citigroup’s ability to nurse itself back to financial health. The bank faces a $10.1 billion accounting charge next quarter tied to the repayment plans, its eighth consecutive quarter without a significant profit. Even after winning some six months of relief, Citigroup’s finances will be strained as it brings billions of dollars of off-balance securities back onto its books.
    http://www.nytimes.com/2009/12/17/business/global/17citi.html?_r=1&hp

  • Citi’s Internal Memo on Repaying Bailout Money.

    Touching memo,but syrupy corporate mumbojumbo.Serving customers for their needs sound altruistic.But do they really do it, with hidden financial charges and heavy penal interests for delayed payment?.Nor does the memo say any where that the Bank shall follow sound financial practice of lending to those who are in need and also who are capable of repaying.Emphasis seems to be more on catching with competitors than with sound financial management..What about the perks of their executives?Are they going to follow Goldman Sachs with bonuses?
    They should be penalized for having mismanaged to the extent of making the Federal govt. loan Citi to tide over their incompetency, though they have made arrangements to repay..
    Time that these corporates are made accountable.Mere expression of gratitude will not suffice.

    Citigroup announced Monday that it has struck a deal to repay $20 billion in federal bailout funds, capping a frenzied effort to free itself from government control and catch up to its healthier rivals.

    In an internal memorandum obtained by DealBook, Citi’s chief executive, Vikram S. Pandit, told employees that the firm still faces challenges as it seeks to recuperate from last fall’s financial crisis. He also said that Citi owes taxpayers and the government “a debt of gratitude for their extraordinary assistance.”

    Read the full memo after the jump.

    Dear Colleagues,

    Today, we announced a series of transactions to repay the $20 billion of TARP outstanding and terminate the asset guarantee we received from the U.S. government. The Treasury also announced its intention to sell its ownership in Citi stock in the coming months. These actions bring us closer to ending a very difficult period for our company, and we owe the U.S. taxpayers and the government a debt of gratitude for their extraordinary assistance.

    That we are here is a testament to your hard work and accomplishments in getting our house in order. Today we are strongly capitalized, efficient, focused on our clients with a clear strategy for the future. With your commitment and dedication, we have created a strong foundation for the future.

    Our goals near-term are clear: to achieve sustained profitability and to promote economic recovery by lending, keeping people in their homes, and helping clients with their needs. There are still economic challenges ahead that require your continued focus on clients and disciplined execution.

    Over the past few months, I have visited many of you in the U.S. and around the world. I am continually impressed by the depth and breadth of talent we have at Citi. I am also very touched by your efforts to help customers and families in need and the communities of which we are a part. Thank you for all you do every day for our clients, customers, communities and Citi. I am very proud of your accomplishments.

    Vikram

    http://dealbook.blogs.nytimes.com/2009/12/14/citis-internal-memo-on-repaying-bailout-money/#comment-343905