Wall Street Wins-We Lose
Dear editor:
It’s already started. The plan of Sect. of the Treasury Henry Paulson to “save” our Wall Street financial system and help Main Street Americans from losing their homes to foreclosure has expanded to where $700 billion of additional debt will probably be just a beginning and will balloon to well over $1 trillion. How will this happen? Mr. Paulson has already changed the program with new interpretations of the ground rules. News reports are now showing that banks, investment and brokerage houses, financial institutions of all types, their CEOs and executives will be the true beneficiaries of this program. And not just domestic corporations, but also foreign ones.
Even as our Congress is being pushed by the administration to pass the Treasury’s “simple” program with no strings attached to protect the American taxpayer, Wall Street is already playing its money making games. Not only do the financial institutions want to be relieved of their bad debt for their own poor, money grabbing lending practices involving mortgages, they want all manner of troubled investments covered. In other words they want the American taxpayer to relieve them of all their bad debt, return them to profitability, turn their falling stock prices around, and reap huge benefits at our expense. This would increase the value of their individual stock portfolios, open the door for raises of pay and perks, and allow the return of year-end bonuses that boggle the mind.
The Treasury Department has increased the proposal to buy up bad assets not only of residential mortgages but also commercial mortgages and “any other financial instruments.” Small banks are now pushing the government to buy loans they made to home builders and commercial developers. Some bankers are even pushing for government support for municipal securities. It’s becoming a fire sale at our expense. But, it doesn’t stop there.
It has now been reported in the news that, ”Foreign banks, which were initially excluded from the plan, lobbied successfully to be able to sell their bad American mortgage debt by their American units to the Treasury, getting the same treatment as United States banks.” This would make the open-ended nature of the Treasury’s plan to mean that the government was open to acquiring any asset, anywhere in the world.
The real kicker, though, is that many of these firms are now vying for the opportunity to manage the assets that Treasury acquires which could earn them $1 billion a year. They want to (and probably will) make huge dollars thanks to our losses, that they created in the first place.
Per usual, the American taxpayer will come out last in this program and will have to cover the cost of interest on our new $11.5 trillion dollar national debt. It can never be paid off. Many important domestic programs that we now enjoy, and the plans of whoever becomes our next president, will suffer because of this gigantic give-away of our money. This will not solve our financial problems but rather exacerbate them.
It’s already started. The plan of Sect. of the Treasury Henry Paulson to “save” our Wall Street financial system and help Main Street Americans from losing their homes to foreclosure has expanded to where $700 billion of additional debt will probably be just a beginning and will balloon to well over $1 trillion. How will this happen? Mr. Paulson has already changed the program with new interpretations of the ground rules. News reports are now showing that banks, investment and brokerage houses, financial institutions of all types, their CEOs and executives will be the true beneficiaries of this program. And not just domestic corporations, but also foreign ones.
Even as our Congress is being pushed by the administration to pass the Treasury’s “simple” program with no strings attached to protect the American taxpayer, Wall Street is already playing its money making games. Not only do the financial institutions want to be relieved of their bad debt for their own poor, money grabbing lending practices involving mortgages, they want all manner of troubled investments covered. In other words they want the American taxpayer to relieve them of all their bad debt, return them to profitability, turn their falling stock prices around, and reap huge benefits at our expense. This would increase the value of their individual stock portfolios, open the door for raises of pay and perks, and allow the return of year-end bonuses that boggle the mind.
The Treasury Department has increased the proposal to buy up bad assets not only of residential mortgages but also commercial mortgages and “any other financial instruments.” Small banks are now pushing the government to buy loans they made to home builders and commercial developers. Some bankers are even pushing for government support for municipal securities. It’s becoming a fire sale at our expense. But, it doesn’t stop there.
It has now been reported in the news that, ”Foreign banks, which were initially excluded from the plan, lobbied successfully to be able to sell their bad American mortgage debt by their American units to the Treasury, getting the same treatment as United States banks.” This would make the open-ended nature of the Treasury’s plan to mean that the government was open to acquiring any asset, anywhere in the world.
The real kicker, though, is that many of these firms are now vying for the opportunity to manage the assets that Treasury acquires which could earn them $1 billion a year. They want to (and probably will) make huge dollars thanks to our losses, that they created in the first place.
Per usual, the American taxpayer will come out last in this program and will have to cover the cost of interest on our new $11.5 trillion dollar national debt. It can never be paid off. Many important domestic programs that we now enjoy, and the plans of whoever becomes our next president, will suffer because of this gigantic give-away of our money. This will not solve our financial problems but rather exacerbate them.
posted by Sam Schoolsky | 10:38 AM
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