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Bank Robs You: Chase's Hefty Profits Put Lie to Claim That Consumers Have to Spend More to End the Recession

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opednews.com Headlined to H2 10/14/09

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Reprinted from The Smart Asset

It looks as if the Great Recession is now just great and no longer a recession, at least for the some of the giants. JPMorgan Chase reports third-quarter profits of $3.6 billion. The other big banks' 3Q reports will also roll in; hard to imagine they'll be any different.

Chase got $25 billion of TARP taxpayer money. And thanks to more infusions of public money through the Public Private Investment Program (PPIP), the taxpayers will subsidize the removal of toxic assets from the banks while in effect guaranteeing BlackRock and other money-manager firms from losing on the purchase deals.


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Even sweeter: Treasury Secretary Tim Geithner's current closest aides earned millions last year working for Goldman Sachs and other Wall Street firms, Bloomberg reveals this morning. As New York Fed chief, Geithner was intimately involved in last year's bailout of those big firms.

You might think that a bailout of taxpayers is overdue, that Barack Obama's administration could at least stop subsidizing the big banks and stop guaranteeing the leveraged-buyout firms' purchase of toxic assets and instead help make some of those assets (your mortgages, and so on) less toxic.

Go back to what FDIC Sheila Bair said exactly one year ago in her plea that the government needed to focus on bailing out homeowners instead of the big banks.

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She was a lone voice among top officials, while Hank Paulson, Ben Bernanke, and Geithner were figuring out how to spend taxpayer money to bail out Goldman Sachs, Chase, and other big banks. Marginalized by the Bush administration and now by the Obama administration, Bair shouted into the wind:

"Why there's been such a political focus on making sure we're not unduly helping borrowers but then we're providing all this massive assistance at the institutional level, I don't understand it. It's been a frustration for me."

See the October 16, 2008, Wall Street Journal story about Bair's comments. The headline and first two paragraphs are frank enough:

"FDIC Chief Raps Rescue for Helping Banks Over Homeowners"

Federal Deposit Insurance Corp. Chairman Sheila Bair ... criticized the federal government for failing to take more aggressive steps to prevent Americans from losing their homes, highlighting a rift between her and other senior U.S. officials over terms of the $700 billion rescue package.

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The government plan will help stabilize financial markets but it doesn't do enough to address home foreclosures, the root of the crisis, she said in an interview with The Wall Street Journal.

One year later, the banks are saying that it's up to consumers to spend their own way out of the recession and make the economy whole again. The banks are moaning that people have to spend more to get the money flowing. But the leveraged-buyout firms, like Steve Schwarzman's Blackstone, are already flipping with joy; now that the government has printed enough money to prop up the market, they're pouring their own hoarded money into deals.

Happy holiday shopping! Be sure to go into more credit-card debt so you can complete that bailout of the banks.


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Ward Harkavy is currently Senior Editor at the Village Voice, for which he writes The Smart Asset.

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