By Greg Hunter’s USAWatchdog.com
The uneven form the financial bailout has taken is really quite galling to me. The headline: Not a single bank president has been asked to step down or a single plan asked for from the big banks. Chuck Prince did leave on his own last November with a 38 million dollar pay package but I would call that “getting out while the getting was good.” Since then, all the major banks in this country have been at the public Fed begging bowl. The big money has come from the many “lending” facilities such as the TAF, TSLF, PDCF and many more that have been created by the Federal Reserve. This money, experts say, is necessary to keep these institutions solvent. Has Congress asked the banks for a plan to make sure these insolvency problems will not happen again? Contrast that with the big 3. These companies are being asked for detailed plans for recovery before they get somewhere in the neighborhood of 25 billion dollars. It has been reported the CEO’S of the big 3 could be asked to resign as part of the deal!!! We’ve already handed out 150 billion to A I G and recently about 325 billion to Citi!!! So far the financial rescue has cost a total 8.5 trillion dollars. The money by and large has gone to any banker with a sad story or stupid investment into derivatives. Today Meredith Whitney said on CNBC that all …”the big banks are going to need more capital!!!! ” More Capital and NO PLAN!!!!! WHAT GIVES???? Where is the outrage!!!!!!!!!!!!!
This all gets back to OTC DERIVATIVES… THE REAL UNDERLYING PROBLEM! I am talking about securitized debt. The financial wizards of the world securitized every debt imaginable…mortgages, credit cards, car loans, student loans. You name the debt and it was wrapped up into some sort of security. It is safe to say the size of the problem is somewhere between 500 and 1000 trillion dollars depending on who you talk to. Whatever the amount is the problem is BIG, VERY VERY BIG!!!! The biggest financial problem ever in the history of the world! THERE IS NO PUBLIC MARKET FOR OTC DERIVATIVES and nobody is talking about creating one as part of a solution!!! THERE IS NO WAY THAT THIS FINANCIAL CRISIS WILL EVER BE OVER UNTIL THERE IS A FINANCIAL MARKET FOR THIS CRAP. But of course, if there is a market that would provide a “price discovery” and then we would find out this stuff is worthless or near worthless. So the powers that be are just throwing good money after bad. I think the most outrageous part of the whole story is even though the taxpayer is on the hook for several trillion dollars we do not get to know which banks are getting the money and what “assets” the banks are unloading on the government. I suspect these “assets” are probably akin to candy wrappers and toilet paper. Fed Chairman Ben Bernanke has said the reason they will not disclose this information to the public is that it would not be “helpful”. THE SECRECY BEHIND ALL THIS GOVERNMENT ACTION IS OUTRAGEOUS!!!!! What in fact the powers that be are hoping for is this money printing will “unclog” the credit markets and get things back to “normal.” These toxic “securities” or derivatives can then start trading again the way they used to without a public market. No public market means trading would again be done without regulation, guarantee or standards of any kind. I say no way! We do not have a credit problem but a collateral problem and the banks do not trust the collateral. There is going to be a new “normal” and most people are not going to like what that feels and looks like. I guess then there will be OUTRAGE!!!