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Monday, January 4, 2010
Boomer with Attitude / News Bank of America, others, 'making a killing' off fed program
Posted By John Grooms on Mon, Jan 4, 2010 at 12:37 PM
If anyone out there still thinks big banks can be trusted to do anything other than line their own pockets, please read today’s story from Bloomberg.com about the PPIP. Here’s a reminder: PPIP, the Public-Private Investment Program, began last March and was supposed to be a way for banks to unload toxic mortgage securities so they could start lending money again and boost the economy. Well, guess who found ways to make a killing off the taxpayer-funded program? That’s right: Bank of America, Morgan Stanley, Citigroup and Goldman Sachs — the Four Horsemen of the Financial Apocalypse.
Bloomberg explains the way PPIP was supposed to work: “Under the program, asset managers were supposed to raise money from investors and, with additional capital and loans from taxpayers, buy as much as $1 trillion in toxic assets from U.S. banks, freeing up money for lending.”
Instead, reports Bloomberg, the Four Horsemen bought even more risky loans before PPIP got off the ground — $2.74 billion worth between the four banks, since March — in order to increase their profits from the program. Meanwhile, one of the underlying purposes of the overall bank bailout, increased bank lending to jumpstart the economy, has only happened in small spurts.
Today’s story confirms what we’ve written numerous times: The feds have done a miserable job of overseeing the bank bailout, handing over unfathomable amounts of our money to the likes of the Four Horsemen without setting strict enough conditions for the funds’ use.
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