If the Fed didn’t already know that the mega banks had squirreled away ill-gotten gains in the trillions of dollars they would never have thought about forcing them to cough up $120 Billion in the first round of creating a bailout fund from Bank money instead of Taxpayer money.
And they wouldn’t be doing this unless they were already aware that the TBTF banks were floating on thin ice using “money” from the shadow banking system that is probably “worth” less than 5 cents on the dollar.
And they wouldn’t be doing this unless they knew that this wasn’t risky loan appraisals, this was theft and cover-up.
The operating assumption of the FED remains the same: that challenging the balance sheets of the TBTF banks will tank the entire financial system and the economy with it. This might be correct if the FED failed to declare the loans to be fatally defective and subject to renegotiation between the actual creditors and actual debtors — which is the only way they could challenge the balance sheets of the TBTF banks. The result would, as it did in Iceland, produce an immediate restoration of wealth into a growing middle class instead of allowing the banks to retain their ill-gotten gains.
The problem with the FED is that it sees its primary purpose as the protection of the banks instead of protection of the country that allows it to exist.
Filed under: foreclosure |