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When the Federal Reserve unilaterally offered up U.S. tax dollars to guarantee that JP Morgan Chase would negotiate a merger with the worthless Bear Sterns, not many supply siders batted an eye. $30 billion of tax revenues going to help out the "investor" class is just standard operating procedure from a group of people who honestly believe that the "investor" class should be given special treatment because they're....the investor class.
Bernanke was quoted yesterday in his Congressional testimony saying this....
"We did what we did because we felt it was necessary to preserve the integrity and viability of the American financial system, which in turn is critical for the health of the economy," Bernanke said. Link
The "viability" of families trying to hold on to their homes? Well....that's just not Bernanke's department. Alan Greenspan, Bernanke's predecessor, had said he was all for the wonderful, fabulous, new and creative financing schemes bloated gambling institutions, like Bear Sterns, had been offering to unknowing consumers. Now that so many consumers have gone for the bait, sadly, helping those ensnared is simply not the FED's jurisdiction.
Here's how the Federal Reserve became an active negotiator in the middle of the you're-on-your-own free market....
As part of marathon negotiations over the weekend of March 15-16, the Fed originally agreed to take $30 billion in securities off the books of Bear Stearns to facilitate the acquisition of the firm by JP Morgan Chase & Co. for an original price of around $2 a share. A year ago, Bear Stearns was trading at around $150 a share.
After an uproar over the terms of the sale, the share price was boosted to around $10 and JP Morgan agreed to assume the risks for the first $1 billion in losses that might occur, lowering the Fed's potential risk to $29 billion.
Not only did Bernanke negotiate a tax dollar bailout for Bear, he also did ongoing mediation work helping the failed free market financial giant get 5 times more out of the deal than Morgan originally offered. The government's financial wizards took a very hands-on approach, helping the overall welfare of all bloated and corrupt concerns.
The Federal Reserve exists as a welfare office for the wealthiest industries in our country. That's how it's been run under Greenspan and now Bernanke. The myopic concern of the FED is always the welfare of the most powerful in our land.
What about a government bill bailing out homeowners who were misled or otherwise tricked into signing on to new and improved gotcha loans, homeowners who are right now losing their houses to bankruptcy and foreclosure at astounding rates?
What the bill would have done....
(Dick) Durbin(D-Sen-ILL) said more than 2 million homeowners face foreclosure by the end of 2009, many of whom were duped into signing mortgages with unfair terms. The Center for Responsible Lending, which combats predatory lending practices, estimates about 600,000 people would keep their homes under Durbin's plan instead of ending up before bankruptcy judges who aren't permitted to adjust mortgage terms, regardless of how onerous they are. Link
The bill would, for the first time, allow bankruptcy judges to reset mortgages on primary residences. It would also provide $4 billion for local communities to buy and refurbish foreclosed properties; provide $200 million for counseling to help homeowners avoid foreclosure; give tax breaks for the homebuilding industry; and improve loan disclosure and transparency.
Republicans threatened to block the bill, as they did before the recess, unless Democrats gave in to their demands to allow votes on certain GOP amendments.
the controversial bankruptcy provision, which Republicans vehemently oppose. They argue it will force banks to increase mortgage rates across the board. Link
The political party representing the filthiest of the most wealthy, making sure their base never suffers but instead is always rewarded, even in reckless failure, especially in reckless failure I should say.....rallied once more to the side of the powerful....
In a 58-36 vote, the Senate defeated an amendment offered by Assistant Senate Democratic Sen. Richard Durbin to empower bankruptcy judges to ease mortgage payment terms for distressed borrowers under strictly limited circumstances.
The Durbin amendment -- which would have affected only mortgages already in place upon enactment -- was opposed by the influential banking industry and Republicans, who were joined by 11 Democrats in voting to kill it.Link
This is typical of the economic cult in America that has been leading a crusade against average homeowners and workers for a very long time. In this Republican, investor class, cult.....huge wealthy industries, like oil or banking, are always protected and helped with tax dollars from working class America. Tax subsidies for Big Oil awash in Big Record Profits? Absolutely. Negotiated tax dollar guarantees for huge paper and money shuffling industries who cheat and scheme new ways to trick and trap average consumers? Sure thing.
Help those who were duped, cheated, trapped, conned or otherwise effed over? Help them try to stay in their homes? Abso-goddamn-lutely not. Why....what would that teach those going into foreclosure? That money grows on trees? Surely bailing out punked homeowners would be teaching the wrong lesson, wouldn't it? Schemers and scammers? Well....their "integrity" must be "preserved". THAT doesn't teach the wrong lesson. Why, heavens no.
The lesson that should be learned is that if you belong to the big, fat, connected, GOP adored investor class industry of Casino Wall Street....and you schemed and scammed and gambled recklessly....and finally got buried by your own paper shuffling leveraged bullsh*t.....then government leaders are waiting for you with open arms....willing to shower you with billions of tax dollar bailouts.
If you are a simple working class person who was on the receiving end of all the scamming and scheming and gambling......and lose your home because of all the shenanigans going on inside the Casino.....then basically...the GOP'ers, the GOP president and a handful of corporate Democrats will tell you to eff off. They can't be using tax payer dollars to bail out every little minnow caught up in the net of strategically planned financial trawling schemes for suckers.
Message to consumers....pull yourself up by your bankrupted bootstraps.
Message to the money schemers......let me tie those shoes for ya', and can I give you a free ride somewhere?