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Government Is Trying to Make Bailouts for the Giant Banks PERMANENT
On September 25th, I wrote:
Paul Volcker and senior Harvard economist Jeffrey Miron both testified to Congress this week that the government is trying to make bailouts for the giant banks permanent.
Writing Wednesday in The Hill, Congressman Brad Sherman pointed out that :
In
my opinion, Geithner’s proposal is “TARP on steroids.” Section 1204 of
the proposal [the proposal being the "Resolution Authority for Large,
Interconnected Financial Companies Act of 2009"] allows the executive
branch to use taxpayer money to make loans to, or invest in, the
largest financial institutions to avoid a systemic risk to the economy.Geithner’s
proposal reminds me of the Troubled Asset Relief Program (TARP), the
$700 billion Wall Street bailout adopted last year, but the TARP was
limited to two years, and to a maximum of $700 billion. Section 1204 is
unlimited in dollar amount and is a permanent grant of power to the
executive branch. TARP contained some limits on executive compensation
and an array of special oversight authorities. Section 1204 contains
absolutely no limits on executive compensation and no special oversight.
When
I asked Geithner whether he would accept a $1 trillion limit on the new
bailout authority (if the executive branch wanted to spend more, it
would have to come back to Congress), he rejected a $1 trillion limit,
insisting that the executive branch be able to respond without coming
back to Congress.
Both TARP and the Treasury proposal have
vague provisions under which taxpayers might possibly recover any money
lost through a special tax on the financial services industry. Under
the Treasury proposal, only the very largest institutions could benefit
from a bailout, but the special tax, if ever collected, would fall
chiefly on medium-sized institutions.Thus, the medium-sized
institutions will be at a competitive disadvantage for two reasons.
First, the largest institutions will be able to borrow money more
cheaply because their creditors will believe that if the institution is
unable to pay, the taxpayers will. Second, if there ever is a bailout
benefitting a very large financial institution, the tax will be imposed
on the medium-sized institutions.Sherman is a
senior member of the House Financial Services Committee and a certified
public accountant, so he has a good nose for analyzing proposed
financial regulations.
Last week, Sherman made the following comments to the Washington Independent regarding Congress' proposed bill on the too big to fails:
That
is a huge gravy train to the top 20 [financial institutions] because it
allows them to borrow money at a lower rate. Think of what this does to
moral hazard.I’m not looking for a TARP on steroids with oversight. I’m looking for an end of TARP.
The House Committee on Financial Services will hold a hearing on the bill tomorrow,
with Tim Geithner, Sheila Bair, John C. Dugan (Comptroller of the
Currency), Daniel K. Tarullo (Governor, Board of Governors of the
Federal Reserve System), John E. Bowman (Acting Director, Office of
Thrift Supervision), Richard Trumka (President, AFLCIO), and others as
witnesses.
As the Washington Independent points out, Sherman is going to try to take Tarp off of steroids:
Sherman
said he intends to offer a series of amendments addressing the issue
during the Financial Services panel’s markup of the bill, which has yet
to be scheduled. Included will be a provision to cap the president’s
bailout authority at $1 trillion, and another to strip out the
resolution authority language entirely. A potential third proposal — to
create an oversight panel like that monitoring TARP funds — is one he’s
leaning against.
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agrotera the issues within the regional structure are far beyond the singular. I agree that a natural byproduct of this process will be the attempt to make the TBTF even bigger and more "systematically important". Can't have business be responsible for its own conduct and able to fail or face justice..... The conversation continues to lead back to a few foundational issues. You know well my perceptions on these.
GW - Excellent work once more. Thank you.
We are going to lose so much money...
Last November, M&I received $1.7 billion from the U.S. Treasury through the Troubled Asset Relief Program for bolstering the financial system. While some banks have made it a priority to exit the TARP program as soon as possible, M&I isn't in a rush to get out, Furlong said. Regulators don't want regional banks like M&I to pay back TARP just yet, he said.
"All the banks that are M&I's size have been told, 'Don't pay it back. That's not the focus. We want excess capital in the system.' And so that really isn't a focus for M&I," Furlong said.
http://www.jsonline.com/business/66727712.html
What is it going to take to get rid of Geithner, Summers, Bernanke, and the rest of the clowns ?????
Revolution
JUST WITHDRAW ALL FAKE PAPER MONEY FROM YOUR BANK, BUY PHYSICAL GOLD, AND STOP PAYING ALL DEBTS.
And they all go away, as the fake Paper Ponzi System we live in evaporates!
Its so easy! No protests, no battles, no blood shed. Just stop playing their stupid game with their stupid fake paper/electronic money!
Doing EXACTLY this starting TODAY!
+1000000000000000000000000000
Done! (That was FUN!) Bought some food and ammo too.
Gold, Food and Ammo on credit, then default. Brilliant!!
I am moving in that direction
It is becoming very tempting
Yes it is.
Nuke them from orbit. It's the only way to be sure.
i thought cockroaches can survive a nuclear blast...