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Do you know where another $30 billion of your tax dollars are going? You guessed it. The Federal Reserve and the Federal Deposit Insurance Corporation announced that they will spend $30 billion dollars to buy toxic assets.
To do this they have chosen nine firms out of 100 that applied for the program. The guts of the program are that the government will partner with private companies to buy toxic assets.The Treasury supposedly did background checks to be sure that none of the firms chosen had any "conflicts of interest."
The specific securities must have been purchased before 2009 and have been originally rated AAA and be secured by mortgage loans, leases or other assets. Other specs include the prohibition to buy or sell eligible securities to affiliates. Each firm must invest $20 million of its own money.
By all measures, this is a good deal for the nine partners. Where else can you invest your money and have the US government as your partner, and have the US government be the bigger player in the transaction? The firms reap the greatest benefits.
All of these schemes point up the severe damage that the bankers wrecked upon our economy with their reckless speculation and leveraging. Now that the banks are doing better, why not let them clean up their own messes? There doesn't seem to be any need to spend another $30 billion to bailout these bankers.
Do you believe that the government should spend another $30 billion to bail out the bankers?
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Reader Comments (Page 1 of 1)
7-09-2009 @ 9:59PM
william lindblad said...
When one has a choice -
More bank failures? More money to prevent this?
I think that answers the question.
The underlying reason is simply the world confidence and that is a difficult illusion when unemployment is exceeding 10%.