Brooklyn Mutt

…Taking credit for stabilizing the financial system after feeding it with massive amounts of federal money is like a teacher bragging about turning around the academic performance of a failing student after handing them all the answers to the big tests.

Here’s how the economy is really faring:

• National unemployment is at 9.7 percent, higher than last year’s 5.8 percent, with double digit jobless rates in 139 metropolitan areas this July, compared to 14 last July.
• The number of foreclosures is greater than last year: nearly 2 million new foreclosure filings occurred in the first half of 2009, up 15 percent from the same period in 2008.
• While homes in some areas have begun to slowly sell again, they are doing so at deeply depressed prices, in many instances below their mortgage value.
• Wall Street bonuses are back to pre-crisis levels. For some firms, such as Goldman Sachs, they are even higher.
• Bank leverage, or excessive borrowing on the back of risky assets—a major cause of the meltdown—is rising again.
• Geithner recently reported that his program to enable private financial firms to buy up toxic assets with government help will wind up costing less than the $1 trillion he had first envisioned. However, he did not mention that there are less toxic assets available to buy partly because the Fed has allowed banks to use some toxic assets as collateral in return for cheap loans.
• Big banks are bigger than they were last year. Since the Fed blessed more mergers last fall, the nation’s three largest banks—Bank of America, JPMorgan Chase and Wells Fargo—hold the maximum percentage of legally permissable US deposits or more.
• Mid-size and smaller banks keep closing. This year, the FDIC has closed 92 banks, and depleted its deposit insurance money in the process.
• We still don’t have detailed information on the trillions of dollars of loans the Fed handed out to the banking sector or about the quality of the collateral banks provided in return.

continue reading Nomi Prins analysis…mother jones