See, That’s What I’m Talking About – Banks are Broke & Broken

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This past Tuesday, federal regulators made the decision to extend the bank debt guarantees for six more months.  Because after six months… that’s it and that’s all.  No more.  No matter what.

The program being extended is really cool. I wish I could participate, that’s for sure.  It works like this:

We the taxpayers guarantee the banks losses, and they keep the gains.  How cool is that?

You see, the banks need money.  So they issue bonds and other forms of debt securities, but no one wants to lend them the money because they know that the recession’s over and the banks are just solid as rocks.  Got it?

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So, the government… being the incomprehensibly understanding and rich uncle we’ve all dreamed about at one time or another… guarantees the bank’s debt.  If the bank ends of not being able to repay the loans, then we pick up the tab.  And if they do well and profit as a result of the transaction, well good for them.

Oh yeah… the price tag = $Hundreds of Billions was the best I could come up with, which means it could be TRILLIONS in Treasury-speak.

According to FDIC, the program was established a year ago at the height of the financial crisis, and was intended to “help thaw the freeze in bank-to-bank lending,” and it’s obviously been very effective in that regard.  Mark that one down as a win.

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MSNBC.com reported that in order to qualify for the extension banks will have to show they are unable to issue debt securities without the government backing due to circumstances beyond their control, and submit information on collateral they could provide to the FDIC.

Circumstances beyond their control… don’t get me started.  I think you know when you’re robbing your own bank, don’t you think?

“It should be clear that this is not a continuation of the program but an ending of the program,” FDIC Chairman Sheila Bair lied before the vote.  She has no idea if this signifies the ending of anything.

MSNBC.com also reported that the FDIC proposed the extension early last month and opened it to public comment, along with the option of simply ending the yearlong program.  And what happened exactly?  Are you trying to tell me that public comment said to… oh, no you didn’t… I want to see that public comment and I want to see it right now mister.

More than $600 billion in debt has been issued by 118 financial institutions under the program, so at least we know it’s a program that’s being used.  And I’m sure it’s only used sparingly as needed.

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The FDIC’s release explaining the new extension closed by saying that the program “has been an important factor in restoring liquidity and confidence in the banking system.”  Yeah… bang up job so far Tim.

If there was liquidity and/or confidence in the banking system, the banks wouldn’t need the program that was just extended, FDIC morons.  And if the banks believed their own financial statements… they’d be lending.

Sell it somewhere else, would you please?


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