After trillions of dollars issued to various failed financial institutions to bailout failed companies, to stabilize the financial system of the United States and to stimulate the economy, the banks failed to cooperate. Bank lending continues to plummet.
So why are trillions of taxpayers’ bailout money going out the door?
April 1 (Bloomberg) — Bank loans fell to a record low in the first quarter as the Obama administration steps up efforts to jump start debt markets and revive corporate lending.
Bank of America Corp. and JPMorgan Chase & Co. led banks in providing $79.6 billion of syndicated loans in the three months ended yesterday, a 61 percent drop from $203.2 billion a year earlier, according to data compiled by Bloomberg. The volume has dropped from $446.4 billion in the first quarter of 2007, before credit markets seized up amid the worst financial crisis since the Great Depression.
Banks are hoarding cash and driving up borrowing costs as Treasury Secretary Timothy Geithner seeks to spur them to resume lending by enticing private investors to buy troubled assets clogging their balance sheets. Companies including casino operator MGM Mirage and toymaker Mattel Inc. are agreeing to pay higher interest rates to maintain their credit lines.
“Banks are very much reducing their credit commitments overall, there’s no question about that,” Nicholas Bijur, assistant treasurer of PG&E Corp., said yesterday in a telephone interview. “In addition to the dollar amount, the pricing terms seem to have changed.”
When will the US government stop the senseless bailout of failed financial institutions and their greedy insiders?
When will the US government demonstrate they value the taxpayers and the voters more than the “too big to fail” financial corporations?
When will the US government put the same amount of money towards people who pay the taxes and those that have lost the jobs, homes and their dignity of no fault of their own?
Jobless rates are rising higher and so are home foreclosures. President Obama argued that Bush’s “trickle down approach” has failed. So how is giving trillions to financial corporations to help the economy not a trickle down approach?
March 31 (Bloomberg) — The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.
New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.
President Barack Obama and Treasury Secretary Timothy Geithner met with the chief executives of the nation’s 12 biggest banks on March 27 at the White House to enlist their support to thaw a 20-month freeze in bank lending.
“The president and Treasury Secretary Geithner have said they will do what it takes,” Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said after the meeting. “If it is enough, that will be great. If it is not enough, they will have to do more.”
Commitments include a $500 billion line of credit to the FDIC from the government’s coffers that will enable the agency to guarantee as much as $2 trillion worth of debt for participants in the Term Asset-Backed Lending Facility and the Public-Private Investment Program. FDIC Chairman Sheila Bair warned that the insurance fund to protect customer deposits at U.S. banks could dry up because of bank failures.
‘Within an Eyelash’
The combined commitment has increased by 73 percent since November, when Bloomberg first estimated the funding, loans and guarantees at $7.4 trillion.
“The comparison to GDP serves the useful purpose of underscoring how extraordinary the efforts have been to stabilize the credit markets,” said Dana Johnson, chief economist for Comerica Bank in Dallas.
“Everything the Fed, the FDIC and the Treasury do doesn’t always work out right but back in October we came within an eyelash of having a truly horrible collapse of our financial system, said Johnson, a former Fed senior economist. “They used their creativity to help the worst-case scenario from unfolding and I’m awfully glad they did it.”
Federal Reserve officials project the economy will keep shrinking until at least mid-year, which would mark the longest U.S. recession since the Great Depression.
The following table details how the Fed and the government have committed the money on behalf of American taxpayers over the past 20 months, according to data compiled by Bloomberg.
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--- Amounts (Billions)---
Limit Current
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Total $12,798.14 $4,169.71
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Federal Reserve Total $7,765.64 $1,678.71
Primary Credit Discount $110.74 $61.31
Secondary Credit $0.19 $1.00
Primary dealer and others $147.00 $20.18
ABCP Liquidity $152.11 $6.85
AIG Credit $60.00 $43.19
Net Portfolio CP Funding $1,800.00 $241.31
Maiden Lane (Bear Stearns) $29.50 $28.82
Maiden Lane II (AIG) $22.50 $18.54
Maiden Lane III (AIG) $30.00 $24.04
Term Securities Lending $250.00 $88.55
Term Auction Facility $900.00 $468.59
Securities lending overnight $10.00 $4.41
Term Asset-Backed Loan Facility $900.00 $4.71
Currency Swaps/Other Assets $606.00 $377.87
MMIFF $540.00 $0.00
GSE Debt Purchases $600.00 $50.39
GSE Mortgage-Backed Securities $1,000.00 $236.16
Citigroup Bailout Fed Portion $220.40 $0.00
Bank of America Bailout $87.20 $0.00
Commitment to Buy Treasuries $300.00 $7.50
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FDIC Total $2,038.50 $357.50
Public-Private Investment* $500.00 0.00
FDIC Liquidity Guarantees $1,400.00 $316.50
GE $126.00 $41.00
Citigroup Bailout FDIC $10.00 $0.00
Bank of America Bailout FDIC $2.50 $0.00
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Treasury Total $2,694.00 $1,833.50
TARP $700.00 $599.50
Tax Break for Banks $29.00 $29.00
Stimulus Package (Bush) $168.00 $168.00
Stimulus II (Obama) $787.00 $787.00
Treasury Exchange Stabilization $50.00 $50.00
Student Loan Purchases $60.00 $0.00
Support for Fannie/Freddie $400.00 $200.00
Line of Credit for FDIC* $500.00 $0.00
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HUD Total $300.00 $300.00
Hope for Homeowners FHA $300.00 $300.00
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he FDIC’s commitment to guarantee lending under the
Legacy Loan Program and the Legacy Asset Program includes a $500
billion line of credit from the U.S. Treasury.
Yield Curve – difference between interest rate of borrowed money versus the interest rate earned on the same money lend out.
Essentially, AIG was allowed to hide a hedge fund in a solid insurance business.
AIG was a hybrid company hiding from different government agencies and was allowed to create exotic financial products went unregulated and therefore selected by economic terrorist to be used as a weapon of mass destruction.
Enormous risks were allowed to built up hidden from the American public within its four walls which once triggered will allow vast wealth to be transferred from the American people to these yet to be identified terrorists.
According to the Ray De Lorenzi, American Association for Justice at Justice.org: “…The Starr Foundation is one of the largest foundations in the United States. It is chaired by Hank Greenberg, CEO of AIG until 2005. AIG gave $23 million to U.S. Chamber through the Starr Foundation to push anti-regulatory efforts. The majority of this money, $15 million, was pledged in 2003 immediately after the passage of Sarbanes-Oxley to initiate a “capital campaign for educational and research programs.” Effectively, this money was to begin setting the groundwork to roll back post-Enron reforms…”
The money was given from Starr to U.S. Chamber’s own foundation, which freely moves money to the corporate arm. Of U.S. Chamber’s 17 foundation grants, seven came from a variety of corporations totaling $2.2 million. The remaining 10 grants to U.S. Chamber, equaling $24.25 million, all came from Greenberg and the Starr Foundation.15
Democratic House Representative Alan Grayson of 8th District Florida notice that AIG may need $500 billion more if yield curve moves by 1%. See video # 1 below.
AIG 2008 10K filing with SEC reveals this in plain sight but Bernanke and Geithner makes no mention of it to the American Taxpayer who owns AIG despite receiving the recent stress test results.
Bernanke and Paulson go before Congress and asks Congress for $700 billion and creates TARP which AIG takes $40 billion.
Geithner arranging additional lending facilities to AIG of $30 billion.
AIG has $1.6 trillion to “unwind” according to AIG CEO Liddy. But these are really paper losses. It’s not like AIG sold oranges and the oranges are rotten have to be thrown away. So where are all these hundreds of billions going? Watch video #2 of Democratic House Representative Carolyn Malony from New York’s 14th District. She says it’s going to foreign countries. Now how are foreign governments “systemic risks” to the United States? Sounds fishy? You betcha’!!! So why was the US Congress and the American Taxpayer rushed into this bailout strategy using “fear and scare” propaganda since Sep 2008? Hmmm…
