The Big Banks are having a hayday. First, they speculate us into a deep recession, making lots of bucks along the way as they recklessly lend and securitize with big fees at every step of the way. Then, they use the bailout money that the Fed has given them (billions) to pay themselves big bonuses and to acquire other banks so that they can be even bigger than too big to fail. Then while they continue to hold back on lending, they figure a way to game the newly announced asset buyback program intended to buy the toxic assets off balance sheets so everybody can have faith in the banks. They buy up toxic assets with TARP money, and plan on putting it (at higher prices) to the PPIF to be bought out with more taxpayer monies. How to leverage bailout monies into more high stakes for the Big Banks, in ten easy lessons. I guess the financial engineers at the Big Banks just don't know any other way in which to think. One more reason why we should give Treasury authority to take these banks over.
Here's more at Naked Capitalism, Has the Gaming of the Public-Private Partnership Begun?, Mar. 25, 2009. One good thing out of this--some trading in those toxic waste assets is taking place. But if it is with this gaming in mind--to sell them back to the government funded entity at artificially puffed prices--that will leave the taxpayer on the hook and the banks with the puffed up profits.
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