"Sucking Up to the Bankers..."

[WhiskeyGirl]

Editor's Note: Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books). The first part of a two-part excerpt appears below.

After the inauguration, the new Obama administration made it clear from day one that pleasing Wall Street rather than distraught homeowners would be the focal point of policy. On February 10, 2009, new Treasury secretary Timothy Geithner, rising to what he termed “a challenge more complex than any our financial system has ever faced,” committed to give up to $2 trillion more to the very folks who profited from that malignant complexity. For all the brave talk about transparency and accountability in the banking bailout, he gave the swindlers who got us into this mess yet another blank check to buy up the “toxic assets” they gleefully created.

Thus was launched the government’s No Banker Left Behind program, begun by Paulson and continued by Geithner when Obama picked him to succeed Paulson. Within six months, the special inspector general in the Treasury Department would report that the bill had already run to nearly $3 trillion, an amount six times greater than would be spent by federal, state, and local governments the entire year on educating fifty million American children in elementary and secondary schools.

Where did the money go?

It took major pressure from a Congress reacting to an outraged public to discover that AIG, in addition to handing out hundreds of millions in bonuses to the very hustlers who created the firm’s swindles, was a conduit for at least $70 billion in taxpayer money to reimburse the banks and stockbrokers who got us into this crisis with their bad bets.

No surprise there, given the incestuous world of finance. The revolving doors between the Treasury Department, the Fed, and executive offices in the industry have been swinging throughout Republican and Democratic administrations. As a result, those orchestrating the bailout and those grabbing the money are for the most part friends and former colleagues, with enormous respect for each other but not for the American taxpayers and homeowners experiencing massive foreclosure rates.

For all of its criticism of the original program, designed by the Bush administration, the report was equally severe in denouncing the Obama administration’s plan to partner with hedge funds and other private capital groups to buy up the “toxic” holdings of the banks. Charging that the plan carries “significant fraud risks,” the inspector general’s report pointed out that almost all of the risk in this new trillion-dollar plan is being borne by the taxpayers. The so-called private investors would be able to put up money they borrowed from the Fed through “nonrecourse” loans, meaning if the toxic assets purchased proved too toxic and the scheme failed, the private investors could just walk away without repaying the Fed for those loans.

The reason those loans may prove even more toxic than expected and the price paid by this government-underwritten partnership far too high is that the government is purchasing the most suspect of the banks’ mortgage packages. In addition, the plan is to accept at face value the evaluation of those packages by the very same credit-rating firms whose absurdly wrong estimates of the dollar worth of these securities helped create the problem that now haunts the world’s economy.

As with the entire banking bailout, the new Obama plan was likely to enrich the very folks who impoverished the rest of us, as the report notes: “The significant government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit.”

read more here - http://www.thenation.com/article/155034/sucking-bankers-i

I wonder how much IndyMac has cost taxpayers?  How much OneWest has made?

How many Americans lost their homes?