Best of 30POV: The Trillion Dollar Con Game, or I'll See You in Hell, Mr. Banker
“Best Rage-Inducing Post”We like to laugh around here at 30POV. But some things, just aren’t funny.
Few topics incite such strong opinions as the “Great Bailout” of 2008. The fear mongers say that we were mere hours away from ATM failure and you could almost see the soup lines starting to form. Anyway, that’s how they managed to shove it down the throat of the public. Scare tactics were the order of the day. I didn’t buy it then and I don’t buy it now.
How did “healthy” banks get into such trouble in the first place? Because you know only “healthy banks” were supposed to have received bailout money, don’t you? In spite of this, as of this writing, nearly 100 banks that received funds are showing signs of a potential failure. Seven have ALREADY failed to the cost of 2.7 Billion dollars of TARP (Troubled Asset Relief Program) funds. That sure doesn’t sound very healthy to me.
A total of 317 recipients received the $700 billion used in the TARP program. Of those 317, only the top 20 beneficiaries were required to disclose how they used the funds. According to a report by the House Oversight Committee, Citigroup received $45 billion. $8 billion of that government and taxpayer money was used to finance a deal in Dubai. Bank of America also got $45 billion and used $7 billion spending in China. JP Morgan received $25 billion and invested $1 billion in India. Just those three banks alone took $16 billion dollars of our money out of the country. Some say that $16 billion is a negligible amount of money compared to the $4.7 trillion reportedly given to the banks. But, surely that money could have been put to good use in our own country.
It is not widely known that banks received assistance from the TARP program as well as other assistance programs through the Federal Reserve and Treasury Department. For example, in addition to the $45 billion Bank of America received from TARP funds, they also got an additional $142.2 billion through other programs.
How did the banks decide to repay the favor? By hiking interest rates and slashing lines of credit. Overnight, consumers saw interest rates on their credit cards jump by as much as 20%. Not much of a thank-you to the millions that contributed their tax dollars to the survival of mismanaged, Goliath corporations.
Surprisingly, many of those in favor of rescuing banks and their multimillionaire CEOs from ruin suddenly turned anti-bailout when it came time for the auto industry to receive a piece of the pie. Of the $700 billion, the Detroit 3 received $80 billion dollars. From where I stand, that is a pretty small price to pay for saving over a million jobs the industry stood to lose. If anything, maybe the auto industry “deserved” to receive government dollars before the banking and insurance industries.
A main goal of this corporate welfare was to keep Americans in their homes and working. Why is it then that industries whose product is basically money – the lending and safe keeping of money, received the vast majority of the funds? They certainly didn’t “share the wealth” by making loans available to the minions funding their extravagant lifestyles.
The Making Home Affordable Modification program was created and funded with $440 million dollars. The goal was to pay banks to modify the junk mortgages they wrote in the first place. So, they make money off interest, and then fees, then they get paid again to modify the loan. But they aren’t even willing to do that. After almost two years, only 607,000 homeowners have been granted permanent modifications. In 2010, for the first time ever, the US had over 1 million foreclosures. It is widely reported – and my own experience in the Real Estate Industry confirms – that banks make it a habit to draw the processes out. Lost documents, hold times exceeding an hour and disconnected calls are the rule, not the exception.
Proponents of the bailouts say the banks needed funds to keep credit flowing. Taxpayer’s would benefit from this because their employers would be able to secure the capital needed to stay in business. A portion of the funds the banks received was for small businesses and was appropriately titled Unlocking Credit for Small Businesses. A measly $15 billion was committed and only $316 million of that was dispersed. Mere pocket change compared to the $16 billion sent overseas by BOA, JP Morgan and Citigroup.
Since the bailout, unemployment has skyrocketed almost two full percentage points. In 2008 unemployment was at 6.7 percent, today it stands at 9.5 percent. Americans continue to face a bleak economic forecast and unethical banking practices. Banks are reportedly engaging in questionable foreclosure practices, but who cares?! The shareholders are ok and most of the CEOs are just fine and many TARP fund recipients are posting record profits.
There is no way of knowing where we would be if the costliest swindling of the American public hadn’t been perpetrated upon the US. But, I’m pretty sure I wouldn’t be standing in a soup line for dinner tonight.