Monday, November 28, 2011
The second (and secret) Wall Street bailout
Forget about the $700 billion TARP program. The Wall Street banks got an additional $7.7 trillion in heavily discounted loans from the Fed, allowing them to stabilize their finances, pay back their TARP loans and net $13 billion in profit in the process. It's beyond incredible. ... Yeah, right. This is capitalism. ... From Sen. Sherrod Brown: "When you see the dollars the banks got, it’s hard to make the case these were successful institutions. ... This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”
There seems to be a cross-ideology consensus emerging that we now have an utterly broken, intolerable financial system in this country. ... Bloomberg piece via BI. Here are some other recommended items:
The first one: “Margaret Thatcher knew that capitalism must deliver for the masses.” Reader No. 1 sent in this one, with the apt note, “Something we’ve lost?” That is, something we've lost lost in the blame-game debate over how we got ourselves into such an economic mess. The current crony capitalist system isn't working for the little guy anymore.
The second piece, by Henry Blodgett, suggests a solution: Let losers lose. It’s a good post. To avoid future Wall Street bailouts, I’d suggest creating a new FDIC-like system for investment firms, in which regulators can swoop in and close insolvent companies, quickly and ruthlessly, forcing managers, investors and most creditors to take a loss. It would probably require an industry funded insurance pool of money to financially stabilize the system after a shutdown, something akin to how retail banks now have to kick in money for the FDIC’s deposit-insurance fund. Conservatives don’t like this idea. They’ve called it a tax increase and unnecessary government intervention. But what would they rather have: An orderly bankruptcy system in which losers actually lose or a too-big-too-fail bailout system that allows losers to win?
The third piece, also from Reader No. 1, is about the City’s Journal’s Fred Siegel, one of the sharpest writers out there today. Don't agree with everything he says. But ...
Forget about the $700 billion TARP program. The Wall Street banks got an additional $7.7 trillion in heavily discounted loans from the Fed, allowing them to stabilize their finances, pay back their TARP loans and net $13 billion in profit in the process. It's beyond incredible. ... Yeah, right. This is capitalism. ... From Sen. Sherrod Brown: "When you see the dollars the banks got, it’s hard to make the case these were successful institutions. ... This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”
There seems to be a cross-ideology consensus emerging that we now have an utterly broken, intolerable financial system in this country. ... Bloomberg piece via BI. Here are some other recommended items:
The first one: “Margaret Thatcher knew that capitalism must deliver for the masses.” Reader No. 1 sent in this one, with the apt note, “Something we’ve lost?” That is, something we've lost lost in the blame-game debate over how we got ourselves into such an economic mess. The current crony capitalist system isn't working for the little guy anymore.
The second piece, by Henry Blodgett, suggests a solution: Let losers lose. It’s a good post. To avoid future Wall Street bailouts, I’d suggest creating a new FDIC-like system for investment firms, in which regulators can swoop in and close insolvent companies, quickly and ruthlessly, forcing managers, investors and most creditors to take a loss. It would probably require an industry funded insurance pool of money to financially stabilize the system after a shutdown, something akin to how retail banks now have to kick in money for the FDIC’s deposit-insurance fund. Conservatives don’t like this idea. They’ve called it a tax increase and unnecessary government intervention. But what would they rather have: An orderly bankruptcy system in which losers actually lose or a too-big-too-fail bailout system that allows losers to win?
The third piece, also from Reader No. 1, is about the City’s Journal’s Fred Siegel, one of the sharpest writers out there today. Don't agree with everything he says. But ...
