Wouldn't you know it, if there's a way for the banks to profit off a national crises, even if it's one they haven't directly caused, they're going to find a way to do it. And if they can find a way to screw the little guys, why not take advantage of that too!
From an article on CNBC, How a debt ceiling standoff could help the banks.
people and businesses owed money by the government would become involuntary creditors. The government would still owe them the money it promised but they wouldn't not get government checks on schedule. Which is to say, the government's suppliers, contractors and other creditors would find themselves holding one of the world's safest obligations—a liability backed by the full faith and credit of the U.S. government—but short on cash.
This is a situation tailor-made for bank intermediation. Banks could advance funds to companies holding government obligations that are secured by those obligations. In exchange for this liquidity provision service, banks would receive some fee.
more below the fold:
Ok, so the banks are actually planning on lending businesses money that they should have gotten from the government. Well, that ought to lessen the impact of going over the debt ceiling cliff. But the question becomes, is that a good thing or a bad thing for the country?
But is this realistic, or just some speculation?
In fact, we know that the largest bank in the U.S. is already making plans to do this on the level of individual customers who might be owed Social Security or veterans benefits. Speaking at a meeting of the Institute of International Finance on Saturday, JPMorgan Chase chief executive Jamie Dimon announced that his bank would fill the gap.
Well now, who would have thought that Jamie Dimon wanted to dress up as Santa Clause and give an early Christmas present to the people who get government benefits?
Waldman thinks that the banks could wind up putting the screws to the proverbial little guy.
They would, as usual, compete to offer cost-efficient products to wealthier and more astute customers, while charging smaller, weaker, more desperate customers large fees. In the end, the Federal deficit would be reduced and bank profits would swell, primarily on the backs of the least-savvy, lowest-bargaining-power government payees.
Oops, looks like Jamie may be renting a Scrooge suit and leaving the Santa Clause suit for the other saps.
So the banks may be planning on sucking the scum off the top of the economic pond as the Tea Baggers cut off the fresh water supply and cause the pond to stagnate. Pretty nasty behavior on their part, but what the hell, they're banksters!
But here's the big problem I have with this plan. We've all been waiting for Wall Street to put the hammer down on the Tea Baggers before they crash the world economy. But if Wall Street has found a way to profit from economic catastrophe, and actually make it a bit less catastrophic for the 1%, what are they likely to do?
UPDATE: Twitter is filled with reports that Fitch just issued a credit watch warning on U.S. credit.