Perfecting the Savings and Loan Shell Game
What was the banking bailout all about?
Just look at the acronym–TARP(Troubled Asset Relief Program). Did Paulson and Team Bush simply throw a tarp over their real intentions, covering up a final round of profiteering before riding into their own version of a sunset?
The NY Times ran an interesting piece in last Sunday’s paper:
"Bailout Is a Windfall to Banks, if Not to Borrowers"
One thing jumps out of the middle of the piece:
Most of the banks that received the money are far smaller than behemoths like Citigroup or Bank of America. A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.
Speaking at the FBR Capital Markets conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury.
“With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.”
Did he say what it sounds like he said?
Is the money being used, in some cases, by financially sound banks to acquire troubled assets? To gobble up cut-rate opportunities at bargain-basement prices? Was this bailout just a way to shoring up buddies to ride out the storm and get…richer? We all see that it has not, thus far, been used to ameliorate the still-spiking rate of home foreclosures.
In keeping in the tradition of the Bush Family, did W and Company simply find a way to improve on the Savings and Loan Scandal?
The S&L deal was this:
Fears about Social Security stoked, and savings from those near retirement pulled in by huge interest rates on Certificates of Deposit (it was not unusual to find CDs between a 6%-12% rate of return…yeah, insane…huh?)
That money was, in turn, loaned out to fuel a massive construction boom across the West and the Southwest…housing, office buildings, etc.
It was an unsustainable, funny-money economic boom that (surprise!) collapsed.
Savings & Loans collapsed, lead by the first domino…Neal Bush’s Silverado Savings and Loan.
People lost their savings.
S&L crowd is protected…many walk away without penalty.
Government steps in, creates Resolution Trust Company (RTC) to acquire assets and auction them off to get some money back to pay off bailout.
Those assets created in the false boom are then gobbled up, often by the people who ran the S&Ls in the first place, for pennies, nickels and dimes on the dollar.
It was the greatest Three Card Monty game ever.
Because it looks like Team Bush’s bailout simply cut out the middle steps…and just handed the money directly to their cronies. No RTC, no need to set up secondary companies to buy up assets or a government agency to try to get money back to people who lost it. No shame.
Nope, just a straight transfer.
At least they weren’t "resting on their laurels."