Ever hear of the term "corporate welfare"? Want an example? After the financial meltdown of '08 the Federales quietly did what they could to get the banks back on their feet. We know about the bailout loans, but did you know we just flat-out gave them money, too?
The Federal Reserve dropped the interest rate on post-crash loans they made to the banks (a regular occurrence) to 0%. The banks borrowed by the truckload, which meant the Fed had to sell paper to finance the "deficit" this caused. Then the banks turned right around, using their free borrowed money to buy government notes which paid them several percent (?) interest.
THAT'S how you re-capitalize a bank at taxpayers expense.
Imagine....free money! It was a 100% risk free transfer of money from your government directly to the banks. I would have liked a little piece of that, too. *Dream on Scott*
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I saw an interesting piece on TV last night about rogue traders. These are bankers (think: "London Whale") who work with little direct oversight buying and selling things such as foreign currencies, etc. I have virtually no idea how it works but suffice it to say it amounts to high-stakes gambling with bank money.
If they lose, they can bring down the bank. True! It's happened. On the other hand, if they win, it's a mega payday for the bank, and the bankers. Lose, they get a government handout. Win, and it's party time!
The program interviewed some well known (within financial circles) rogue traders who got caught. They told of how easy it was to fool their bank's risk management people, the regulators, and how easy it was to hide losses.
Here is what I took away: It's still going on today. Internal red flags are still brushed aside....as long as the profits keep coming.
You'd think that after the financial interests nearly blew up the world in 2008, we, the taxpayers who baled them out, would know better than to let them go right back to conducting risky business as usual, but we did.
Our politicians are stuffing their pockets with bank "campaign contributions" and signing off on whatever the bankers want. Post-meltdown bank "reform" was a joke. Our regulators are inept. The bankers are still living extremely well on their ill-gotten gains while the rest of us are struggling to recover from the mess they made.
Remember this: There will someday, sooner rather than later, be another giant financial catastrophe. Don't think that things have stabilized and go back to living like all is well. Scary, but all the ingredients are in place right now. Don't say you weren't warned.
Now, go have a nice day. :)
S
