Goldman Sachs was into AIG insurance policies for at least $20 billion, which is why the firm got that $12.8 billion while Paulson was in charge. It took six months for the embarrassing facts to finally come out. The bailout program was administered by Neel Kashkari, a former Goldman Sachs VP; why are we not surprised at that?
http://www.huffingtonpost.com/robert-scheer/perp-walks-instead-of-bon_b_176145.html
What, then, is staying the federal government's hand? Have the banks become too difficult or complex to regulate?
The government is reluctant to admit the depth of the problem, because to do so would force it to put some of America's biggest financial institutions into receivership. The people running these banks are some of the most well-connected in Washington, with easy access to legislators.
Prompt corrective action is what is needed, and mandated in the law. And that is precisely what is not happening."
The Bailout: A Year in Review
A year ago, as the banks fell apart, the federal government moved in with a variety of programs to bail them out and prevent them from taking the entire economy into freefall.
Although the $700 billion Troubled Assets Relief Program (TARP) is the best-known, in reality the federal government set up a variety of programs to backstop, guarantee, infuse, and hold up the banks. Taxpayers have already committed $4.7 trillion to the financial sector over the last year through an alphabet soup of programs like TLGP, TALF, and HAMP.2Moreover, while banks like Goldman Sachs, Morgan Stanley, and JPMorgan Chase can now brag about getting approval for and, in some cases, actually returning TARP funds, they will continue to benefit from this plethora of other taxpayer handouts,3 such as the $12.9 billion that Goldman Sachs received as a counterparty to AIG that it will never have to pay back.4
The Federal Reserve has set up emergency lending facilities that give banks access to cheap money to get them to start lending again. The FDIC has unveiled guarantee programs to protect the banks against losses. The Treasury has pledged $200 billion to support Fannie Mae and Freddie Mac. HUD has put $300 billion into the Hope for Homeowners Program. Once all of the crisis-related programs are factored in, including the stimulus package and the auto bailout, the total that taxpayers could be on the hook for is close to $18 trillion.5
These programs have saved the banks from their risky bets on toxic securities. However, banks now claim they are back to profitability and doing well, despite their continued reliance on taxpayer-funded programs.
Trillions of Dollars in Wealth Lost to the Banksters
One year later, the American families who funded the bailout are not doing well. The fallout from this bank-induced economic crisis has hit Americans hard. American families lost $11 trillion in wealth in 2008 alone, nearly 18% of their net worth.6 Millions of us have lost our jobs or been thrown out of our homes. Personal bankruptcies have shot through the roof. Our life savings and retirement funds have been decimated. And because of billions in budget shortfalls, our state and local governments are being forced to cut back on services like public health programs and childhood education. This is all above and beyond the trillions in bailouts and backstops that we've had to fork over to the banks.
Rising Foreclosures
Our communities have been devastated by the foreclosure crisis. American families have lost $6.1 trillion in homeowner wealth since 2006.7The average homeowner has lost $110,000 in equity.8 In a vicious cycle, foreclosures cause property values of neighboring homes to decline, making it more difficult for neighboring homeowners to refinance their loans, in turn causing them to fall into foreclosure as well. Every thirteen seconds another American home goes into foreclosure.9
According to the New York Times, a recent survey by the Mortgage Bankers Association found that "six million loans were either past due or in foreclosure in the second quarter of 2009, the highest level ever recorded by the group."10 By 2011, nearly half of all Americans will be underwater on their mortgages.11In parts of California, Nevada, and Florida, the number will be over 90%.12
For most Americans, our home is a major source of wealth for our families. This is a staggering loss of wealth that most of our families will likely never recover.
