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Bailing out the Crooks

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 “The road goes on forever and the party never ends.”Robert Earl Keen 

The national psyche seems a bit more out of whack than usual. We are being swamped by the biggest moral crisis in the history of the country, which is widely ignored by the press, while Opra hitting 200 lbs. dominates the news. Every newspaper in the country should have the headline “Wall Street Crooks Get Bailed Out by Victims”.

 

On Wall Street and in Washington we have the very same group of crooks that robbed the American public managing and leading the bailout on both the public and private side. They are the beggars and main beneficiaries of the very government intervention for that they so successfully destroyed before. The hypocrisy has never been louder.

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How bad is it? Let me list the financial companies who are receiving bailout monies who walked away from any responsibility for its causes so far:

CitiGroup received $125 billion in bailout money. They paid billions to settle charges of engaging in securities fraud by paying bond insurers to rate their products more than their actual worth. Of course there was no admission of guilt as part of the deal. They developed specialized structured investment vehicles found to be illegal to conceal their risky mortgage holdings (lied) and competed with other investment houses to create and sell abusive tax evasion schemes.  All direct causes of the meltdown

AIG received $40 billion in bailout money so far. They were found to have lied about their huge losses on credit default swaps, another direct cause of the meltdown.

Bank of America, including Merrill Lynch who received $25 billion, was found to have deceived investors by selling them risky auction-rate securities as perfectly safe and developed illegal tax schemes. Add another cause.

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JP Morgan Chase received $25 billion, who in addition to selling the bogusly rated securities above, paid billions for securities fraud stemming from paying for inflated ratings.

Morgan Stanley who received $10 billion also committed securities fraud and created illegal tax shelters.

In addition to these TARP funds they and the others who created the monster have received an additional $2 trillion (increasing the official public deficit by 20%) in loans and government guarantees for questionable assets they hold. The best part, the Fed, the Treasury and the recipients refuse to tell the public who received this $2 trillion, how much they received or what it is for. Taxpayers gave $2 trillion of credit to these guys and they don’t think we should know what we are on the hook for, nor do the people who “represent” us. This debt that was financed through untenable lending offers that they knew was never likely to be paid back, now will either be paid by the original victims or with money our children and grandchildren will pay in taxes.

What have these companies done with their TARP bailout money? In many cases stuffed in their vault to help them survive whether the rest of the self destructive economy they created does or not. The have used it to make acquisitions of competitors, issued bonuses and party in some cases (like AIG). The main goal of lending to free up credit has been largely ignored. The companies’ answer when it was pointed out that they weren’t implementing the intent was to respond that they weren’t required to.

And for encores…

Detroit’s big three show up, the first time in private jets with no plan on how they wanted to use $35 billion in handouts. Now they want $25 billion for conspiring with government officials (through lobbying and campaign contributions) to allow them to operate in a way that was not responsive to market demands and still maintain profit levels.  

 

How do you think the Japanese got such a huge part of the car market? They catered to market demand for smaller, better, more fuel efficient cars, while Detroit and Washington distorted the market to keep them from having to deal with their legacy costs. Instead they manipulated regulations to allow the continued domination of the large truck and SUV and high profit market by the American companies.

 

Their fate was clear when their initial support for the Clinton healthcare plan was withdrawn because of Republican resistance. Wall Street and the Republicans had made clear going back to Reagan their contempt for people negotiating for their common labor, the tool that creates wealth. The political way was easier. The goal was not innovation and competition, but to distort market and political processes to sustain short term profits damaging the environment and future competitiveness. More and more of the companies’ stock was owned by private equity companies, hedge funds and takeover specialists not interested in long term business but short term profits.

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Cerebus Capital bought Chrysler for its finance division and refuses to put up any of its own capital to save the company. The company headed by Dan Quayle and former Treasury Secretary John Snow also owns 40% of GMAC Finance.  They purchased them with the sole purpose of getting into the mortgage and consumer debt packaging game. They bought them by selling junk bonds that pay such high interest as to demand extraordinary profit production in normal times. This car charade was maintained by the big three, wall street bankers and the oil business which of course profited enormously from increased petroleum use.

Leaving it to Bush was the fatal mistake. He pumps out $15 billion, just enough to kick it into Obama’s term, but in all likelihood, not enough to succeed. The only reason he supports the auto bailout is because he doesn’t want three million laid off before he gets out of office. Then there are the regional vultures, Southern Republicans and some Democrats who want their own foreign producers to profit from Detroit’s demise. They hide behind the free market excuse after giving the foreign auto makers billions to locate there.  

Republicans also aren’t going to pass on the chance to destroy the largest union in the country, the UAW.  Three million jobs, so what, our foreign producers will gobble up the market and we will be able to lower worker rights, wages and benefits across the country. Its interesting that no one is questioning how much of the Big Three’s cost is premium interest on junk bonds and other such recently created financial trash the masters of the universe referred to above created.

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www.wethepeoplenews.org
John Kelley is the Managing Editor of a monthly progressive newsmagazine, "We the People News", in Corpus Christi, Texas

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