FT’s Martin Wolf says (ht Tech Ticker),
…the Fed is helping the banks recapitalize themselves. The banks aren’t lending because they’re still trying to recover from all the lousy loans they made three years ago (and because there aren’t all that many folks to lend to). So there’s nothing else to do with the money other than hoard it, buy safe Treasuries, and pay huge bonuses…
From the New York Times:
Last June, with a financial hurricane gathering force, Treasury Secretary Henry M. Paulson Jr. convened the nation’s economic stewards for a brainstorming session. What emergency powers might the government want at its disposal to confront the crisis? he asked.
Timothy F. Geithner, who as president of the New York Federal Reserve Bank oversaw many of the nation’s most powerful financial institutions, stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele A. Smith, then an assistant Treasury secretary.
Geithner’s proposal was quickly dismissed, but it highlights Geithner’s incredible loyalty to his banker friends and his desire to protect banks at all costs…to the taxpayer. (ht naked capitalism)
Bill Moyers interviews Bill Black, a former regulator involved in the liquidation of the S&L’s. Hat tip Option ARMegeddon. Mr. Black details how liars’ loans were used to defraud as regulators never examined loan files under the Bush administration. The recent attempts to cover up the banking problems by Geithner and company is one focus of his attention:
“Geithner is…covering up. Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have massive losses, and that they’re fine.”
There is much more. How can the American people fix these guys? …check out the video (1 of 3):
