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OpEdNews Op Eds    H2'ed 3/26/20

The Senate's Coronavirus Relief Package Must Be Stopped!

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By the way, Mnuchin's personal bio is worth reviewing. According to Senator Ron Wyden:

"Mr. Mnuchin's career began in trading the financial products that brought on the housing crash and the Great Recession. After nearly two decades at Goldman Sachs, he left in 2002 and joined a hedge fund".

"In early 2009, Mr. Mnuchin led a group of investors that purchased a bank called IndyMac, renaming it OneWest. OneWest was truly unique. While Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the street faster than just about anybody else around.

"While he was CEO, a OneWest vice president admitted in a court proceeding to 'robo-signing' upward of 750 foreclosure documents a week"between 2009 and 2014, a period during which the bank foreclosed on more than 35,000 homes. 'Widow foreclosures' on reverse mortgages - OneWest did more of those than anybody else. The bank defends its record on loan modifications, but it was found guilty of an illegal practice known as 'dual tracking.' One bank department tells homeowners to stop making payments so they can pursue modification, while another department presses on and hurtles them into foreclosure anyway." ("Stimulus Bill: The Fed and Treasury's Slush Fund Is Actually $4 Trillion", Wall Street on Parade)

Does that sound like someone who can be trusted in the distribution of $4.5 trillion in government funds?

The media is not even trying to hide the sordid details of what's going on behind the scenes. Take a look at this excerpt from an article at Bloomberg:

"The Federal Reserve could now have as much as $4.5 trillion to keep credit flowing and make direct loans to U.S. businesses through the massive coronavirus stimulus bill being considered by U.S. lawmakers. The bipartisan agreement, which still needs to be passed by the Senate and House and signed into law by President Donald Trump, will include $454 billion in funds for the Treasury to backstop emergency actions by the Fed to support the U.S. economy, Senator Patrick Toomey said on Wednesday.

The central bank will work with the U.S. Treasury to use that money as a backstop against credit risk as it supports markets for corporate and short-term state and local debt, while also loaning directly to large and medium-sized businesses".

"It is a very, very big thing; it is unprecedented," the Pennsylvania Republican told reporters Wednesday on a conference call, adding it was an opportunity to lever up "the unlimited balance sheet of the Fed."

Toomey's comments suggest Fed facilities could be expanded with the new funds, in effect doubling the Fed's current $4.7 trillion balance sheet if necessary. On Sunday, Treasury Secretary Steven Mnuchin said the bill would provide up to $4 trillion in liquidity through broad-based lending programs operated by the Fed." ("Fed's Anti-Virus Lending Firepower Could Reach $4.5 Trillion", Bloomberg)

Toomey is an idiot! Can't he see what's going on? Why does he say: "This is a very, very big thing."" "an opportunity to lever up "the unlimited balance sheet of the Fed"??? Doesn't he know that the US Treasury has now accepted full liability and credit risk for the Fed's emergency bailout operations. Does he like the idea that the American people will now be on the hook for the CEOs who blew up their own companies to fatten their own bank accounts?? That's what this means. Readers should parse these articles very carefully, word by word, phrase by phrase. The ugly truth is spelled out in black and white. Here's the key phrase in the Times article:

"Because the Fed cannot take on substantial credit risk itself, the Treasury Department backs its emergency lending."

And here's the key phrase in the Bloomberg article: "The central bank will work with the U.S. Treasury to use that money as a backstop against credit risk as it supports markets for corporate and short-term state and local debt, while also loaning directly to large and medium-sized businesses."

There it is: Credit risk, credit risk, credit risk. Who assumes the credit risk for this $4.5 trillion dollar giveaway??

The American taxpayer. Look: The Fed has always had the ability to print as much money as it chooses. (Remember: "Unlimited QE"??) So why did the Fed need to link-up with the Treasury for this operation?

Because the Fed is unwilling to accept the credit risk. Who will ultimately be accountable for all the bad bets and worthless bonds that are being downgraded as we speak? Who is going to mop up the trillions in red ink created by crooked, scheming, cutthroat corporations (and their financial counter-party accomplices) who plundered their companies for the sole objective of enriching themselves and their shareholders?

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Mike is a freelance writer living in Washington state.

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