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by Zandar1
It's no surprise that the insolvent banks being propped up by taxpayer trillions continue to play games with America's money. After all, we've firmly established that the Obama administration is taking their cues from the financial industry on everything from accounting rules to the so-called "stress tests".
Ahh, but it gets even worse: Now we see the sweetheart deal the banks were given under the Geithner Plan were never acceptable in the first place...and the banks have no intention of participating in the program at all. The Wall Street Journal reports that the Public-Private Investment Program -- better known as Geithner's Plan -- might never live at all.The Legacy Loans Program [LLP], being crafted by the Federal Deposit Insurance Corp., [as] part of the $1 trillion Public Private Investment Program [PPIP] ... is stalling and may soon be put on hold, according to people familiar with the matter.[...]Given how much publicity -- and controversy -- Geithner's plan received when it was announced last March, that might seem a bit odd. But the reasons appear to be twofold. First, few investors or banks want to work with the government. And second -- and maybe more importantly -- few investors and banks now think they'll have to. The banks, in particular, are apparently enthused by their ability to raise private capital, and now think they can wait out the market turmoil and sell their toxic assets in a few years, when they'll be worth more money.
And after all, with the back door bailout of the banks through AIG, and the mark-to-market accounting rules, the banks have all the money they need to appear solvent. Why muck around with the government's overt rules and regulations -- including limits on executive pay -- when they have all the money they need to "provide an adequate cushion" from the taxpayer to begin with?
And considering the cushion was negotiate down by billions anyhow, the banks are more than willing to let bygones be bygones. They want the TARP money off the books, but they want to keep the AIG counter-payments, meaning they get free money without any strings attached. Considering they continue to hold trillions in Weapons of Financial Destruction, the banks can continue to extory the under the table cash while looking like heroes denying the need for more overt government monies. It's a brilliant plan. Confidence restored! All it did was cost us trillions in taxpayer money that will never be repaid. Ahh, but the last laugh may be on the banks. With the commercial real estate market falling apart and the housing market still in shambles, rapidly rising unemployment will come back to haunt banks very soon. Once again they will be in danger of going under...and then people will ask "Hey wait a minute...didn't you guys just say you were all fine back in April and May?" Alas, this second phase of the financial collapse may scuttle everyone. So batten down the hatches, folks. The rest of 2009 is going to be a nasty reckoning. Be prepared. Also available at ZVTS.
Global No-Confidence Vote: Let Them Eat TARP | 0 comments (0 topical, 0 editorial, 0 hidden)
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