Friday, January 22, 2010

The Top 10 Ways Banks Are Still Getting Secret Bailouts And Subsidies

President Obama may have shifted his posture on banks, but he still as a lot of operations tha are doing nothing but creating value and pumping money into them. Here's Reggie Middleton with the Top Ten ways the government is shoveling money to the banking elite:
#1 What was the value for bank charter, to get cheap access to the Fed's funds? did they pay back this value yet? No!

#2 How about the payment of interest on the banks' excess reserves at the Fed. Have the banks repaid that yet? No!

#3 The Fed and the Treasury have purchased hundreds of billions of dollars of Agency debt, Agency mortgage-backed securities (MBS) and related securities through Treasury purchase programs. Have the banks paid back the capital behind those purchases yet? No!

#4 How about the Term Auction Facility? Has the capital behind the benefits of that program been paid back? No!

#5 Then there is the Primary Dealer Credit Facility (PDCF), has this been paid back? No!

#6 Do you remember the Term Asset-Backed Securities Loan Facility (TALF)? Have the funds behind that been paid back? No!

#7 What about the PPIP? No!

#8 Hey, there's the Foreign Exchange Swap programs (the currency swap lines, that saved not only our banks but out banks facing counterparties who were short on dollars), has that been paid back? No!

#9 There's the Commercial Paper Funding Facility (CPFF), have the funds behind that been paid back? No!

#10 Most importantly, the opportunity cost of ZIRP [Zero Interest Rate Policy], which hurts those who do not speculate (or have not speculated) with near free money! How do you pay that back to grandma and her .017% CDs?

(From Middleton via Henry Blodget. Note: These Top Ten are in a piece by Middleton where he calls for more regulations, seemingly not getting that the ten points he lists above are all the result of government agencies in action. What is needed is less government interference, not more. The more power centers you create, the more opportunities for the bad guys to capture power for their own advantage.)

1 comment:

  1. Robert - I agree its frustrating to see Middleton identify these abuses of government power and then ask for more as a solution. But your suggestion that we need fewer "power centers" assumes, as does Middleton that the government's monopoly on the use of force is legitimate. Its not. And to continue acting as if it is continues the old discredited political game. We need a new one.

    Each individual is sovereign and has the right to defend themselves with the use of force. IN this case they have the right to refuse to fund these bank bailouts and defend themselves by force if necessary. We need this idea to be embraced throughout the U.S. increasing power centers by the number of individuals that exist.

    For those who think this would lead to chaos they are wrong and I suggest they study the work of Maria Montessori. Her work is more basic and in some ways more powerful than Hayek on the issue of spontaneous activity in humans.