Sunday, April 05, 2009

Banks Find Way to Pass the Losses to Taxpayers

This is what happens when a program designed by stupid people is manipulated by smart people:
"US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.

The plans proved controversial, with critics charging that the government’s public-private partnership - which provide generous loans to investors - are intended to help banks sell, rather than acquire, troubled securities and loans.

Critics say that would leave the same amount of toxic assets in the system as before, but with the government [taxpayers - duh] now liable for most of the losses through its provision of non-recourse loans."
I've wondered who is going to take the final loss on all this mess and the mechanism for transferring that loss and now I know. The taxpayers are going to take the loss and here is how. The only thing to wonder is when the next diversionary magic show a-la AIG bonuses will start.


Post a Comment

Links to this post:

Create a Link

<< Home