Geithner Plan Already Being Abused by Citibank and Bank of America
The Economist’s View explains how the banks are going to drive a bunch of Brink’s trucks through the holes in Geithner’s plan to stick the middle class with bankers’ losses:
It certainly looks as if Citigroup and Bank of America are using TARP funds, not to lend, which was one of the primary goals of the program, but to scoop up secondary market dreck assets to game the public private investment partnership.
So not only are they seeking to extract far more than was intended even with the already generous subsidies embodied in this program, but this activity is also speculating with taxpayer money.
This sort of thing was predicted here and elsewhere. Welcome to yet more looting.
Well, well, what a surprise. They are using Troubled Assets Relief Program (TARP) money to buy up toxic assets, and selling them for a profit because they know that funds which split half the profits, but only take 15% to 20% of the losses, are going to overpay.
Perhaps you wondered why the markets rallied? It was because Geithner said very clearly that the government was going to give away a ton of money and not nationalize.
The plan will eventually lead to a technical GDP recovery, and to employment not recovering before the next recession. That’s the Japanification phase. After that, well, we get a real depression, because the US (and the rest of the world) will have used up too many resources to be able to handle the next catastrophe. Since nobody will have put in place the necessary structural changes to avoid a catastrophe or gotten rid of the fools who caused this one, a catastrophe will occur.
Is anyone else noticing anything significantly different between Geithner’s actions and those Paulson would have taken? Because frankly, I’m not.
(Hat tip to Dave Johnson)