LITTLE ROCK — The government of the United States appears to have been completely captured by large financial interests like Goldman Sachs, J.P. Morgan and even foreign banks. TARP has exploded into a 23 Trillion dollar program through subprograms such as TALF. TALF is a program whereby chosen Wall Street gamblers can take all of their junk "assets" to the Federal Reserve and get "loans" backed by our treasury for the book value (that is what they say the asset is worth) of the asset. And the only recourse the taxpayers have if the banks don't pay back the loans is that we get to keep the toxic asset. It's a "cash for trash" program that keeps Congresses' highrolling financial friends in the billionaires club instead of having to find honest work like the rest of us.
Once only a handful of traditional banks could take their assets to what is called the fed's "discount window" and trade off their assets. The goal was to protect depositor's money when a bank had good assets that were just a little too ill-liquid. The U.S.
government, at the behest of the investment banks, opened this process up to selected influential investment banks (where there were no depositors to protect, just investors). So these Wall Street high rollers get to take all of their losing bets to the discount window and trade them for book value, but when they make a winning bet they keep the money. While the heartland of America is hurting, Goldman-Sachs just posted record "profits."
Does that sound like a system that encourages prudent financial behavior to you? I didn't think so either, but that is exactly what is going on and every congressman we've got voted for the bill that authorizes it. It is said that the last official act of any government is to loot the country.
What do they know that we don't?
Now they are about to do it again. Fannie Mae and Freddie Mac got nationalized with bailout money to the tune of 1.5 trillion dollars, but so great was the amount of toxic assets on their books that they are still going under. These were private companies which our government simplyimplied had our backing.
Some of these same investment firms (including those in other countries) own piles of stock in these two giants.
The U.S. taxpayers are now the biggest shareholder in these dogs, but the bankers still have obscene amounts of money tied up in them. It appears they are colluding with the government to come up with a scheme to build the value of their stock back up at taxpayer expense. President Obama is floating a new plan that uses the same principles of the TALF plan that I described earlier. To quote from the article: "the firms' bad debt would be given to new government financial institutions that would then be responsible for collecting on the debts."
When they say "given" they really mean "sold." And you can also assume that this bad debt would be "sold" to us at a higher price than the debt is actually worth. If it were otherwise, they could just sell the debt on the free market, they would not need to use the government to buy it. The foreign and commercial interests who own the rest of Freddie and Fannie would prefer that taxpayers get stuck with the toxic assets of these giant firms, and leave them with the good stuff. Good for the Wall Street high-rollers and foreign bankers who own the rest of the stock in Freddie and Fannie, bad for the American people.
Opinion, Pages 4 on 08/12/2009