Big Banks Continue to Suck at the Government Teat With Never-Ending Stealth Bailouts
Open-Ended Bailouts Are Continuing
We’ve previously documented the fact that bailouts of the big banks are continued in stealth mode up to the present day.
True, the banks claim they’ve repaid the Tarp bailout funds … but nearly half of the banks “repaid” such bailout funds by borrowing from other government bailout funds (and the rest could only repay money by fudging their accounting and using stealth bailouts which are are a little harder to detect).
Indeed, the government has decided on perpetual bailouts for the too big to fail banks.
Some of the ongoing stealth bailouts include:
- The mortgage settlement (and see this and this; indeed, settling prosecutions for pennies on the dollar is always a backdoor bailout)
- The Transaction Account Guarantee program, an extension of FDIC insurance coverage to all transaction balances
- And the fed is going easy on the big banks in many other ways as wells
But the biggest ongoing bailouts include interest rate spreads, interest on excess reserves and other constant streams of bailout revenue:
There are so many rivers and streams of bailout money going to the big banks, I will start with the specifics and end with broader monetary policies.
The TARP bailout is peanuts compared to the numerous other bailouts the government has given to the giant banks [and even the numerous rounds of quantitative easing are a drop in the bucket compared to stealth bailout programs].
And I’m not referring to the $23 trillion in bailouts, loans, guarantees and other publicy-disclosed programs that the special inspector general for the TARP program mentions. I’m talking about more covert types of bailouts.
Mortgages and Housing
*** PhD economists John Hussman and Dean Baker, fund manager and financial writer Barry Ritholtz and New York Times’ writer Gretchen Morgenson say that the only reason the government keeps giving billions to Fannie and Freddie is that it is really a huge, ongoing, back-door bailout of the big banks.
Read more: Washington’s Blog