User 283977

What’s My Payment?

LOL - Your comment reminded me of a great quote from the movie Mr. Blandings Builds His Dream House…

Ms. Stellwagon says advertising makes people who can't afford it... ...buy things they don't want with money they haven't got.

Bailout Accountability: Something's Rotten in the Treasury's Kingdom

The following is fiction presented for your amusement…

The stated purpose of the money was to allow banks to make loans again. No strings suggests the stated purpose provided to Congress was a spin and the funds were provided in an attempt to shore up the financial institutions to cover some kind of large common loss. Given the highly interrelated nature of the banking system, if several of the larger institutions went into insolvency, they would probably take the entire US financial system down with them. If the financial system went down, it would also take out a large number of other businesses as well.

The people that set up the program felt it was absolutely necessary to prevent the chain of dominos from falling. They also knew that trying to sell Congress on the wisdom of giving money to the financial institutions in order to forestall bankruptcy would be a very difficult sell. So they invented the spin that the funds would free up the flow of credit. Which story is an easer sell? Giving money to the financial institutions to forestall insolvency ala the automakers scenario, or telling people that the money would be used to increase individual and business access to needed credit? They reasoned that a "prevent insolvency approach" would take a lot of time, so they sold TARP with an access to credit rationale accompanied with wishful thinking that the funds would help free up access to credit.

Its an interesting possibility that explains the seemingly inexplicable stupidity of providing public funds with no guidelines with respect to their usage. Would something like this be illegal (lying to Congress), or was it a typical political ploy used to get needed financial relief to the financial institutions as quickly as possible while performing an end run around likely Congressional opposition from members of their own political party? What was the basis of that alluded to large common loss? Was it mortgage based derivatives, or was there something else, something that the Government and the large financial institutions were involved in? Something related to say …. oil speculation?

It might make an interesting movie plot… conspiracy, secret agendas, Harrison Ford figuring it out… Its kind of telling that in order to explain the complete incompetence of providing funds to financial institutions with no strings attached, I had to resort to fiction. It just does not seem realistic under real world conditions.

Oh well, I had some fun writing this up, I hope you had some fun reading it.