MAMorris

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

You need to see Sunday's 60 Minutes show. Your fiction it turns out . . . is a documented reality. Check out their facts it will make you sick.



On Jan 12 12:44 PM Bob Lunn wrote:

> 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.