I have nothing against Wall Street – we need them. I liked and disliked a lot of things Bush did. I prayed for Obama’s success before I became convinced his fundamental transformation went against our Constitution and Bill of Rights. Yes, Bush started it all, but that does not change what is happening now.
Personally, I think these astronomical bailouts, secret bailouts in particular, need to be run past Congress and not left solely to the secrecy and discretion of the Feds and the administration – it’s too much power in the hands of too few people who work in secrecy and whose bread is buttered by real big people. We the people have nothing to say because of their arrogant disregard and blatant condescension towards us. They don’t want to deal with us and they appear to think we are too ignorant to grasp it.
Secret bailouts have been made since 2008 to shore up the banks after the housing market collapse of 2008 forced banks to borrow six times as much as they would normally borrow from the Feds.The thing that makes this aggravating is the bailouts might have only produced a temporary respite from ultimate job losses and bank failures; however, without it, the Feds say that the most important Wall Street banks would have collapsed. The bailouts are about what home owners owe on their unpaid mortgages.
If these firms collapsed, our economy, pensions, investments would have gone with them. It is interesting, however, that only the big guys get bailed out, never the little guys. Maybe we need to break up the too-big-to-fail corporations? Perhaps we need a Theodore Roosevelt with a big stick.
Many economists, like Paul Krugman, say we didn’t spend enough, but many others want the bailouts to stop. What about the generational theft? When does bailing out become theft from future generations?
Apparently, the foreigners got bailed out as well. That seems unnecessary to me or, at least, the American people should have something to say about it. Half of the secret loans were made to foreigners.
The total secret bailout figure is 1.2 trillion. This far outweighs Bush’s TARP bailout of $700 billion, half of which was left to the Obama administration to spend.
Morgan Stanley received $107.3 billion and Citigroup got $99.5 billion in secret bailout money.
Despite receiving a bailout of $91.4 billion, Bank of America, will slash 10,000 more jobs even as they sell weak assets to the taxpayers, courtesy of Bernanke. In fact these assets, with a high delinquency rate, are being touted as a boon for taxpayers. Bank of America was supposed to buy back $2.5 billion in troubled assets from Fannie, instead, they appear to be doing the reverse.
Bank of America is trying to engineer a recovery after being hit hard by the housing bubble and the Chris Dodd Countrywide debacle, which was supported politically by Chris Dodd and Barney Frank, who then, after their calamitous behavior on this and Fannie and Freddie, got to write the financial bill now killing the banks, especially smaller lending institutions.
Bank of America Corp. CEO, Brian Moynihan, has recently voiced regret about the bank’s 2008 purchase of mortgage lender, Countrywide (the Dodd-supported lender), but he said the loan losses from that deal will not force the bank to issue new shares (probably because they have their hands in the taxpayer cookie jar – just a guess on my part).
Bank of America is not alone. Other banks are in the same situation because of the weak recovery post recession and because of the Dodd-Frank Financial bill. Under this bill, CEO’s and CFO’s could actually be jailed for making a mistake on their quarterly report – that’s how crazy this bill gets. Some smaller banks are planning to throw in the towel. The cumbersome regulations are costly and anti-recovery, but that is for another article.
Bank of America’s bond-insurance prices last week surged to a rate of $342,040 a year for coverage on $10 million of debt, above where Lehman Brothers Holdings Inc. (LEHMQ)’s bond insurance was priced at the start of the week before the firm collapsed. Citigroup’s shares are trading below the split-adjusted price of $28 that they hit on the day the bank’s Fed loans peaked in January 2009. The U.S. unemployment rate was at 9.1 percent in July, compared with 4.7 percent in November 2007, before the recession began.
Homeowners are more than 30 days past due on their mortgage payments on 4.38 million properties in the U.S., and 2.16 million more properties are in foreclosure, representing a combined $1.27 trillion of unpaid principal, estimates Jacksonville, Florida-based Lender Processing Services Inc.
The bailout numbers were obtained by Bloomberg News after compiling data obtained from FOIA, litigation and an act of Congress.
Bloomberg News: Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.