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View Diary: Taibbi, Naked Capitalism Re: Our Bipartisan "Fraudemocracy" (261 comments)

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  •  I know this. (3+ / 0-)
    Recommended by:
    ilex, elwior, James Kresnik

    I also know that they handed over all their toxic MBS to us, the taxpayer.

    I also know that they took the bailout money and kept it to recapitalize themselves and for their own bonuses and not to lend.

    I also know that their quant trading is a insiders' game.

    I also know that they are nothing but legalized gambling houses not banks in any sense of the word.

    But do most Americans know this?

    •  One teeny correction... (5+ / 0-)

      The toxic MBS are on the Fed's balance sheet.  They are not yet the Treasury's problem.  Fed officials have floated this as a reset; that's outright theft at that point.

      When they sit on the fed's balance sheet, they are assets.  They must be matched to liabilities, which are (a) dollars and (b) excess bank reserves.  This is why excess reserves are so high.  

      The fed preposterously carries these assets at face value.  One of the assets the fed assumed in the wake of bear stearns' collapse was a loan to the red roof inn.

      There is no mechanism in place to get these assets off the fed's balance sheet.  Obviously, they could sell them, but that won't work because there are no buyers at anything near face value.  Or they could hold them to maturity, at which point they would be paid off.  Many of these assets, which are loans, will never be repaid.  So holding to maturity is laughable.

      The point is, we the people need to know immediately what the federal reserve has on its balance sheet.  The argument against this is the same one the fed always uses: it could spark a run on the dollar and collapse the system.

      Just like with TARP, they're holding us hostage.  It's time to call their bluff.

      •  thanks for posting this (0+ / 0-)

        This is one of the Fed's crooked moves that gets little news coverage (if at all).  I bet 90% of Americans don't even know about this.  

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