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Are US tax payers being scammed by Hank Paulson, the US Congress and America's biggest banks?

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Turns out (surprise, surprise) that the big banks had not the slightest intention of increasing their lending after receiving the huge federal handout for that ostensible purpose.  Tsar Paulson simply scammed the ever-gullible citizens of the US into handing the biggest and most avaricious institutions in the country a little less than $2,300 per every man, woman, child and infant in the US -- so that they could resume business as usual: namely, letting the strong banks buy out the less-strong banks, by that means reducing the competition, thereby enabling the strong banks to have even more leverage over the ever-gullible citizens of the US who inadvertently empower them. 

Here are details, courtesy of Alan Nasser, professor emeritus of political economy and philosophy at The Evergreen State College in Olympia, Washington, writing in the pages of the Canadian site, Centre for Research on Globalisation.  His report comes from Joe Nocera, economics reporter for the New York Times:

 

Nocera reported in Saturday's New York Times that he was able to gain access to a recording of an employee-only October 17 conference call by a top (unnamed) executive of JPMorgan Chase, the beneficiary of $25 billion of federal largesse.

 

At one point in the conference call, one participant asked whether the $25 billion will "change our strategic lending policy."  One executive then proceeded to spill the beans: "What we do think is that this will help us to be a little bit more 'active' on the acquisition (leveraged buyouts) side as regards the (vulnerable) banks that are still struggling."  (Translation: "Say what?  Lend to folks up to their ears in debt already?! Do we look like morons??  You know as well as I that breakneck financial consolidation has been the name of the game since the early nineties.  So have leveraged buyouts.  The latter are normally accomplished with private money.  But now we get to leverage our bank acquisitions with public money!  Is this a sweet deal or is this a sweet deal?")

 

The executive assures his questioner that JPMorganChase's voracious appetite for gobbling up debt hawkers was not sated by its recent government-backed digestion of two major competitors.  To wit: "I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers.  I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way.  And obviously, depending on whether recession turns into depression, we have that as a backstop."  Moments later the exec speaks openly about Morgan's intentions regarding loans: "We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side."

 

Was all this taking place behind Paulson's back?  Not at all.  In fact, we have good evidence that Paulson's stated rationale for the bailout was sheer mendacity.  There was virtually no mention in the mainstream press of Paulson's move earlier this month to promote the further concentration of bank wealth.  He enacted a new multi-billion-dollar tax break allowing an acquiring bank to immediately deduct any losses on the books of the acquired bank!  

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The message was not lost on the Times's Nocera: "It is starting to appear as if Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation."

 

Though they won't admit it publicly, most political decision makers are fully aware of the real and underlying purpose of the bailout.  Otherwise, wouldn't they have imposed lending requirements on the banks? 

 

More:

http://globalresearch.ca/index.php?context=va&aid=10724

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)
 

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