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Ear to the Ground

Bailout a Boon for Bankers

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Posted on Jan 17, 2009
money bags
0-60mag.com

So, the government forks over a ton of money to flailing banks and, naturally, their customers (i.e., taxpayers) might expect to gain something from this helpful transaction as well, right? Guess again, customers.


The New York Times:

At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

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By felicity, January 20, 2009 at 8:57 am Link to this comment

Since members of Congress combined have $150 million invested in US military contractors, not a great leap of the imagination that they are heavily invested in American financial entities.

As long as corporations and elected, or appointed, government officers comprise a closed system,  “promote the general welfare” as a duty of government becomes a mere platitude.

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By Liesure Suit Larry, January 20, 2009 at 8:05 am Link to this comment
(Unregistered commenter)

samosamo, January 19 at 10:53 pm #

“You, anybody really want to put the whammy on these big money laundrying enties?  Do you really really want to??? Then pull your money out of the big boys houses and put in the small town banks and reputable credit unions.”

Ah but if it were only so, but Samosamo hasn’t been paying attention. Citi would rather not have any of our “small” (under 500K) accounts Citi, Chase, BOA and the others are banks for the banks. Credit Unions invest with them, as do “small town banks” they would be delighted if we left.

A better plan is to push the “revolution” further, and “barter” goods and services as much as one can. Use their credift cards ONLY if you can pay the full balance every month. Small savings accounts cost them money, I’ll leave it to your imagination.

The big banks are totally out of our control. US taxpayers are buying bad debt from countries around the world, because O’bama-cain and the Republicrats have vested intrests which must be served.

AND

You ain’t seen ‘noting yett!! When China,India and others call our notes (Trillions now) it’ll be Katy bar the door.  Do the US citizens know what “assets” are used to “back” those notes?  You think YOU own that houes you live in with the “paid-off” mortgage?

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By Dave Lefcourt, January 20, 2009 at 5:43 am Link to this comment
(Unregistered commenter)

The Bailout
  Amid the hoopla leading up to Tuesday’s Obama inauguration, New York Times columnist Mike McIntire’s front page article of Sunday, January 18, 2009, “Bailout is a No-Strings Windfall to Bankers, if not Borrowers”, may have been missed.  It should be required reading and reprinted coast to coast.
  People ought to be even more infuriated than when they rose up in opposition to the original bailout request last October.  Regarding the $700 billion bailout of the banks, McIntire reveals that they are hoarding the money, using it to make acquisitions of other banks, keeping it as “insurance” in the event the economy goes deeper in the tank instead of making loans as a way of restimulating the economy.  Yet it is not unfathomable to understand why the banks are acting as they are.  The banks weren’t required to reveal how they use the bailout money when the bailout was enacted into law!  It was open ended.  It was “hoped” the banks would use the largesse they received to help homeowners and businesses.  It wasn’t demanded and there were no real strings attached.
  This bailout is nothing more than a handout.  And to the very industry that was in the forefront of the financial meltdown (and continues so) when in flusher times their deceptive loan practices enticed unworthy borrowers who are now defaulting and walking away from their obligations.  They are at the heart of the housing bubble bursting and the subsequent collapse and meltdown we are all witnessing, and we’re bailing them out!  This is unconscionable!
  If the banks take the taxpayers’ money, they are essentially in receivership.  They need to be treated as bankrupt and answerable to their receiver, the U. S. government and the people, as to how they use that money.
  If they are not making the necessary loans to qualified homeowners, restructuring mortgages to keep people in their homes and acting on loan requests from sound businesses that require credit in their normal operation of their business, the government should withdraw the bailout money allocated to those banks.  Government money should come with strings.
  The way things stand the bank bailout may be the all time boondoggle.

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By samosamo, January 19, 2009 at 11:53 pm Link to this comment

This is why I knew that the bailout was a farce, really a slap in the face to taxpayers. The actions of congress getting the measure passed, bitch pelosi’s antics on the first vote were all a charade to make the taxpayer believe that it would help the economy, not cost the taxpayer a penny(bitch pelosi’s very words), no carte blanche for paulson, and accountability and oversight. None of that has happened with this $700,000,000,000.00 that we taxpayers will have to pay back to the federal reserve with interest. Same as all the other bailouts and stimulus packages before and forth coming.
And now, the banks, big or small, that are getting these big bucks at the expense of the taxpayer are setting themselves up with their idea of proper executive pay and perks, no doubt. Truly a failing in congress and most especially with those two traitorous leaders of the house and senate to come up with a good plan and not some neocon version of corporate welfare.
You, anybody really want to put the whammy on these big money laundrying enties?  Do you really really want to??? Then pull your money out of the big boys houses and put in the small town banks and reputable credit unions. Make a run on these big money black holes and make them really worry. There is no place in any country for big banks, financial houses or central banking corporations if we want a more stable economy.

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By KDelphi, January 19, 2009 at 11:02 pm Link to this comment

Sorry! Frick! Its

http://bailoutsleuth.com

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By KDelphi, January 19, 2009 at 11:01 pm Link to this comment

http://banksleuth.com

Where “it” went, ane , will proabably continue to go…

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By felicity, January 19, 2009 at 12:47 pm Link to this comment

Steve - you are perfectly free to ‘qualify’ Friedman’s statement, but he didn’t.

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By nino, January 19, 2009 at 5:57 am Link to this comment

Steven, What do you make for the D.O.D? Or is it oil/gas logistics? Some government privatized service center computerizing the how the poor and elderly gain access to the support systems?

A 1+million dollar loan is a bit different than what would/could be done to help “the people.” I get it that you will hire 50 “people” but at what wage range. My guess is low. So, more for you right?

Sorry, I could be really off base but I thought we were humans, not corporations here.

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By troublesum, January 18, 2009 at 5:11 pm Link to this comment

They’re all smiling on their boy, Obama.  He keeps on talking sacrifice for all the little people who don’t own banks.

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Eric L. Prentis's avatar

By Eric L. Prentis, January 18, 2009 at 1:27 pm Link to this comment

See how the financial ruling class is sacrificing America’s future to save their own asses. http://seekingalpha.com/article/115275-8-important-facts-about-the-federal-reserve

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By Steve, January 18, 2009 at 12:51 pm Link to this comment
(Unregistered commenter)

To correct an earlier comment, and others elsewhere, Milton Friedman was only stating the obvious: that corporations are organized around greed. He was not endorsing greed, but rather pointing out that a corporation will almost never sacrifice profit for the sake of what we all agree *should* happen.

  Milton Friedman’s ideas addressed how such greed should not be indulged by corporate welfare, because such policy will never return dividends to the public. The ideas were easily extensible to many popular policies (designed to shelter certain businesses), and so became controversial and distorted (as all controversial ideas are).

  However much one may agree or disagree with M.F.‘s ideas (and there is much room for either), it’s harmful to debate when they are misrepresented.

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By Eric L. Prentis, January 18, 2009 at 11:44 am Link to this comment

Someone has to pay the piper for this $5-$15 trillion dollar banking crisis fiasco where the rich made all the money when times were good. Now that times are bad, the financial ruling class, represented by Federal Reserve Chairman Bernanke, wants the innocent taxpayers to take the hit for the culpable crooks on Wall Street. Slimy-on-the-take politicians are torn between their already bailed out, rich banking benefactors and the need to keep their voters’ acceptance. It is all a question of who is going to pay and who is going to finally end up with all the money, the rich vs. the people, should be very interesting.

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By Harry H Snyder III, January 18, 2009 at 11:04 am Link to this comment
(Unregistered commenter)

I have no idea what it will take to get the population of this pathetic Nation to put down their remotes, and take some meaningful action.

So we elected another in a long line of corporatists Complain complain, but vote for the shills..

Sometimes I believe people get what they deserve.

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By Louise, January 18, 2009 at 10:56 am Link to this comment

“... as mounting losses at major banks like Citigroup and Bank of America in the last week have underscored, regulators are still searching for ways to stabilize the banking system. The Obama administration could be forced early on to come up with a systemic solution, getting bad loans off balance sheets as a way to encourage banks to begin lending, which most economists say is essential to get businesses and consumers spending again.”

I have a better idea. First we need massive changes in the law, beginning with forcing these Corps’ to pay an honest tax.

Then we have to have laws that actually regulate how financial institutions conduct business. You know, like we had before the conservatives started chiseling them away.

Then we need some accountability, because I am sure, there are still enough laws on the books to find a lot of these guys guilty of something or other.

And finally, people need to go to prison!

Recognizing this may not jump start the economy, I can only point out - neither will giving them more something for nothing!

The Bush pushed bailout did absolutely nothing more than add another several billions to the national debt. And unless some other someones, besides Sens. Byron L. Dorgan (D-N.D.) and Carl M. Levin (D-Mich.) grow balls and attach new regulation and control - via new law - to the remaining balance of the TARP, we will just see more debt!

[Are you listening repubs? Grow some balls! Change the laws!]

What have we got to lose? The way I see it what we lose is a lot of greedy bastards who do not deserve any help at all! And what we gain is a level of restored confidence in the governments ability to see that we, the American people, want to see some accountability!

Besides, history tells us amazing things happen when you hold banks accountable for bad banking.

If they’re serious about staying in business, miraculously they suddenly find a way to operate the way they should!

And speaking of accountability ...

“The new Government Accountability Office (GAO) report, released today by Sens. Byron L. Dorgan (D-N.D.) and Carl M. Levin (D-Mich.), lists Citigroup and Morgan Stanley as having set up hundreds of tax haven subsidiaries, along with American International Group and Bank of America. Also in the tax-haven list are well-known companies and such federal contractors as American Express, Pepsi and Caterpillar.”

“The GAO said only that the companies had subsidiaries located in jurisdictions considered tax havens and that historically the purpose of those subsidiaries is to cut tax costs.”

“The practice is legal, but Dorgan and Levin are hoping to gain the support of President-elect Barack Obama for legislation that would outlaw it.”

“To illustrate the problem, Levin said the report found that Citigroup has set up 427 tax haven subsidiaries to conduct its business, including 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. He said other havens include Switzerland, Hong Kong, Panama and Mauritius.”

NOTE: Citigroup! Poor struggling Citigroup. I say we STOP “encouraging” Citigroup and let their split fracture their spinal column!

Besides, I’m sick of reading about poor, wealthy welfare rats!

http://www.nytimes.com/2009/01/18/business/18bank.html?_r=1&emc=eta1

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By felicity, January 18, 2009 at 10:29 am Link to this comment

Milton Friedman, that Grand Pooh Bah of slash-and-burn capitalists said it all.  Corporations had no business engaging in socially beneficial acts.  They had no social responsibility.  They were only responsible for making as much profit as possible.  Safe to say bankers have taken him at his word.

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By hippy pam, January 18, 2009 at 6:13 am Link to this comment

“ole bullshits” legacy…...his “buddies”[madoff etc] get a FREE RIDE to CASH while our Manufacyuring Base which could provide jobs/wages get a 3 month loan…..Now that IS “bush justice”....

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By G.Anderson, January 17, 2009 at 10:51 pm Link to this comment

Not much of a surprise… one thing all crooks, share is a sense of entitlement, and surprise when their crime spree comes to an end…

We’ve been living in Republican times for a long time. The bankers have gotten used to being deregulated…

Hopefully that’s about to change..

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By Steven, January 17, 2009 at 9:25 pm Link to this comment
(Unregistered commenter)

One bank in North Carolina which received TARP money is doing exactly what the money was intended for…making loans. 

I have just received a 1+million dollar loan for the expansion of my business to employ over 50 people in the current year.  The strings attached are minor, I must use them as my primary bank for the business.  The loan process was much more stringent than for a previous loan application filed last year, but reflecting back, this loan process is probably how it should have been done in the first place.  This particular bank is using the funds to grow it’s exsisting business, not for takeovers or mergers. 

In fact, my loan officer yesterday complained of a lack of business, not enough people looking for loans.  I know this is one example but I think the TARP money should be given to smaller local and regional banks, not to save these giant useless national banks.  BB&T, the bank I’m using, and banks like it will have greater and far reaching effects for each individual communities than any of the nationals.  The should just need to display solid balance sheets which many smaller banks in fact do have.

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