18
Sep
09

bankgangsters continue to swallow the american economy

the money’s gone and some of it into politician’s pockets

The intention of Congress when it passed the bailout bill could not have been more clear. The purpose was to buy up defective mortgage-backed securities and other “toxic assets” through the Troubled Asset Relief Program, better known as tarp. But the bill was in fact broad enough to give the Treasury secretary the authority to do whatever he deemed necessary to deal with the financial crisis. If tarp had been a credit card, it would have been called Carte Blanche. That authority was all Paulson needed to switch gears, within a matter of days, and change the entire thrust of the program from buying bad assets to buying stock in banks. [from link 1]

Despite the financial crisis that nearly sank us a year ago, the front page of the Sept. 12 New York Times reports that, “Backstopped by huge federal guarantees, the biggest banks have restructured only around the edges. Employment in the industry has fallen just 8 percent since last September. Only a handful of big hedge funds have closed. Pay is already returning to precrash levels, topped by the 30,000 employees of Goldman Sachs, who are on track to earn an average of $700,000 this year. Nor are major pay cuts likely, according to a report last week from J.P. Morgan Securities. Executives at most big banks have kept their jobs.”

If nothing is changed, MIT’s Simon Johnson, former chief economist of the International Monetary Fund, told the Times, the banks “will run up big risks, they will fail again, they will hit us for a big check.” [from link 2]

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