America: The Land of the Fleece Scam

The Wikipedia entry for "list of confidence tricks" details an extraordinary variety of schemes, frauds, and swindles, with colorful names like "the wire game" (featured in the Paul Newman and Robert Redford classic, The Sting), "false charity," "goldbricking," "three card Monte," and "pig-in-a-poke."

What this list does not include, however, is one of the biggest con games of all time, whereby a group of, perhaps, thousands of wealthy, corrupt, or politically- connected individuals used their power and influence to rip off hundreds of millions of taxpayers who've been led to believe that their hard-earned money was being used to "rescue" their country from the clutches of financial catastrophe.

In a column at TomDispatch.com, "The Greatest Swindle Ever Sold," Andy Kroll gives us the lowdown on what some might call the "land of the fleece scam."

How the Financial Bailout Scams Taxpayers, Subsidizes Wall Street, and Props Up Our Broken Financial System

On October 3rd, as the spreading economic meltdown threatened to topple financial behemoths like American International Group (AIG) and Bank of America (BAC) and plunged global markets into freefall, the U.S. government responded with the largest bailout in American history. The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems and restore the flow of credit in the economy.

The legislation's guidelines for crafting the rescue plan were clear: the TARP should protect home values and consumer savings, help citizens keep their homes, and create jobs. Above all, with the government poised to invest hundreds of billions of taxpayer dollars in various financial institutions, the legislation urged the bailout's architects to maximize returns to the American people.

That $700 billion bailout has since grown into a more than $12 trillion commitment by the U.S. government and the Federal Reserve. About $1.1 trillion of that is taxpayer money -- the TARP money and an additional $400 billion rescue of mortgage companies Fannie Mae (FNM) and Freddie Mac (FRE). The TARP now includes 12 separate programs, and recipients range from megabanks like Citigroup (C) and JPMorgan Chase (JPM) to automakers Chrysler and General Motors (GM).

Comments

[Fighting Yoda:]

Per WSJ, the latest is banks want to buy their own securities under PPIP. The ultimate self dealing - banks can sell at high price get it financed by tax payer - book the profits, the buyer can incur losses - dump is on the tax payer.

This is what was feared when the program was proposed, it was expected banks would be restricted form doing it, but they could still doo it through front companies. Now all semblance is of fair dealing is given up. We should simply declare US as a banana republic and be done with it.

May 27 02:34 AM

[john s. gordon:]

not a banana republic, it's a casino republic.
> jack

May 27 08:58 AM

[fireball:]

the illusion of great national wealth during the decades of looting gave the complacency and cover to drain the middle class.
i wonder how many americans have no debt so they can say what belongs to them is truly theirs.

May 27 09:07 AM

[sunnsea:]

As long as we do not insist on reviving Glass-Stegall and separate banks from the financial markets, we will be in continuing peril. They have been and will continue to use Fed and taxpayer money to play the market and little else.

May 27 10:14 AM

[Genesis:]

I don't see an exposé here - just a review of TARP and what it was supposed to accomplish. Headlines on Seeking Alpha often promise more than what they deliver.

May 27 10:39 AM

[Gregman2:]

In the end, it may have caused a World War. We'll see.

May 27 11:47 AM

[carey_jim:]

The sad part about it is that we Americans, from the beginning in 1620, have felt ourselves to be an exception and exempt from the normal rules of history.

John Winthrop, our first founding father, called us a 'City on a Hill' and a beacon of hope for the rest of the world. He thought we had a unique chance to begin again, free from the tyrannies of European kings.

This original hope has developed into what is called American Exceptionalism and it prevents us from seeing that we are subject to the same rules of history and human nature as everyone else.

It is one of the reasons that Americans are ready to believe any snake oil salesman who comes along preaching riches and prosperity for all if we will only purchase his snake oil.

May 27 12:05 PM

[Sober Realist:]

Here's an interesting article explaining in detail 6 major ways the taxpayer is being taken to the cleaner:

1. By overpaying for its TARP investments, the Treasury Department provided bailout recipients with generous subsidies at the taxpayer's expense.

2. As the government has no real oversight over bailout funds, taxpayers remain in the dark about how their money has been used and if it has made any difference.

3. The bailout's newer programs heavily favor the private sector, giving investors an opportunity to earn lucrative profits and leaving taxpayers with most of the risk.

4. The government has no coherent plan for returning failing financial institutions to profitability and maximizing returns on taxpayers' investments.

5. The bailout's focus on Wall Street mega-banks ignores smaller banks serving millions of American taxpayers that face an equally uncertain future.

6. The bailout encourages the very behaviors that created the economic crisis in the first place instead of overhauling our broken financial system and helping the individuals most affected by the crisis.

www.alternet.org/modul...

May 27 01:39 PM

[notsosmart:]

made-off is a piker.wall st & wash dc. are real ponzi scheme crooks & the dumb-dumb american sheeples deserve the fleecing.they care more for the sport scores & pay their drugged sport stars more than the pres. of the u.s. capitalism is commiting suicide & investing has become a game.

May 27 03:06 PM