The ‘Greatest Swindle Ever Sold’ Swindles On and On and On…
I’ve been blogging quite a bit at MotherJones.com, where I’m now working, on the ever-growing swindle that is the government bailout. It’s at around $13 trillion dollars now, and as I show, it’s painfully clear that the bailout has nothing to do with taxpayers or small-business owners or normal citizens. Instead, this has been a bailout of the banks, by the banks, for the banks.
Below is a compilation of some recent blogging. I’d love to know what you think!
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‘The Next Big Bailout Bamboozle’ (July 10, 2009)
One of the main watchdogs over the government’s $13 billion financial bailout, the Congressional Oversight Panel, released its monthly report for July today, bringing some much needed scrutiny to therepayment of TARP funds and the Treasury Department’s questionable oversight of that process. The COP highlighted the sale of government-held warrants (options to buy stock for a set price over a predetermined time period) back to bailout recipients exiting TARP, who, according to Treasury’s guidelines, get the first crack at repurchasing their own warrants. This repurchasing process began earlier this spring, when the first bailed-out banks bought their stocks and warrants to extricate themselves from the taxpayer-funded TARP; since then, the process has been dogged by numerous reports showing that the Treasury sold warrants for much less than they could have. By one estimate, taxpayers were shortchanged in those early transactions by millions of dollars.
The COP’s latest report puts a number to what many suspected: The Treasury, the panel estimates, sold warrants back to the 11 small banks who’ve so far completely exited the bailout for only 66 percent of their value. If the Treasury had sold them for closer to market value, taxpayers could’ve recouped $10 million more—a small sum compared to the entire bailout, but nothing to scoff at. And though the warrant-repurchasing process will differ for megabanks like JPMorgan Chase, Wells Fargo, and several others currently trying to buy back their warrants, applying that 66-percent rate to all government-held warrants could result in a loss of $2.7 billion. (READ MORE…)
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‘Recovery’ You Can’t Believe In (July 16, 2009)
If there was any doubt before today who the federal government’s $13 trillion bailout was truly meant to benefit—homeowners and small businesses or megabanks like Goldman Sachs and JPMorgan Chase—a pair of telling, yet depressingly familiar, headlines should put that to rest.
Reuters reports:
Foreclosures at Record High in First Half 2009 Despite Aid
New York – U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated.
Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.
The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year.
“Despite everybody’s best efforts to date we’re not really making any headway against the problem,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.
Meanwhile, The New York Times reported this today as well:
JPMorgan Earnings Soar as It Finds Profit in Slump
Even as it weathers the worst economic downturn in decades, JPMorgan Chase on Thursday announced a $2.7 billion second-quarter profit from stellar trading and investment banking results.
The strong showing may put to rest some worries that the bank was allowed to pay back its $25 billion taxpayer investment too early, after it passed the Treasury Department’s stress test in May. But its quick resurgence in earnings, along with Goldman Sachs’s announcement of a $3.4 billion quarterly profit on Tuesday, is bound to raise fresh concerns about soaring pay levels and growing influence in Washington.
Toss in Goldman Sachs’ announcement on Tuesday that it had recorded its richest quarterly profit in the bank’s 140-year-history and that it has so far earmarked $11.4 billion in compensation this year (NYTheadline: “With Big Profit, Goldman Sees Big Payday Ahead”), and the writing is on the wall. Treasury Sec. Tim Geithner called these absurdly large profit announcements an “important sign of recovery.” For the financial behemoths in whose pockets he so neatly fits, recovery it sure is. But for the 1.9 million homeowners who filed for foreclosure in the first half of this year and the small businesses teetering on the brink of bankruptcy, “recovery” couldn’t be farther from the truth.
