Friday, August 23, 2013

Banks robbed Americans during bailouts - don’t be fooled again

by Jason Kendall, contributing columnist | June 05, 2013
In between parties, vacations, repealing Obamacare for the 37th time and naming post offices, someone in Congress has an idea. Apparently, the bailouts of the American banking industry did not have the outcome Congress desired. Shocking that the strategy of blindly handing billions of dollars to bankers has yet to do much good for anyone except, of course, bankers.
The Terminating Bailouts for Taxpayer Fairness Act was introduced in the Senate in April, and if it survives from the onslaught of banking lobbyists, the bill may be able to do some good.
The act would require banks with more than $500 billion in assets to keep capital reserves of about 15 percent, about twice the current amount. Simple enough, but if you don't understand the impact of this on big banks, don't worry - just look at their response and you can see the threat this poses.
Before you question the motives of this bill, let's take a look at the 2008 bailout and what the banks have done with your money.
The Emergency Economic Stabilization Act of 2008 gave billions to banks, whether they were financially healthy or not. Secretary of the Treasury Henry Paulson threatened Congress that America would lose more than $5.5 trillion in wealth and the "world economy" would collapse if Wall Street did not get $700 billion. It was such a scary moment that the Senate added another $150 billion - you know, to cover the vig.
Well, what happened?
Let's start with the money loaned to help reduce mortgage deficiencies; this was one of the main justifications for the bailout. Most large banks took bailout money but failed to modify home loans. This is why they are constantly being sued.
Next, millions in bailout funds went directly to pay bonuses for bankers. Priceless.
Even more interesting is that your money is probably in the banks of the Federal Reserve. Up until 2008, the money banks had to give to the Fed gained no interest. The money was there to help stabilize banks. By not charging interest, banks would invest any access money, over what they had to put into the Fed, into the marketplace. Now that the Fed is paying interest, why would they invest that money elsewhere? Before the 2008 bailout, only about $2 billion was held in the reserve - now there is more than $1.6 trillion earning $5 billion in interest yearly.
The Fed printed money, Congress gave it to banks and the banks then returned it to the Fed in order to earn interest on that money.
Lastly, and to lock your children further into debt, in 2010, Congress and the president established the Small Business Lending Fund, loaning community banks $30 billion to invest. What did these banks do? They paid back their TARP loans from the 2008 bailout. The banks were given taxpayer money to loan but the money was instead used to pay back loans that the taxpayers had originally loaned them. They were bailed out of their bailout.
Former President George W. Bush said, "Fool me once, shame on - shame on you. Fool me - you can't get fooled again." The saying goes, "Fool me once, shame on you. Fool me twice, shame on me."
Americans were not fooled - they were

What Happened to the $2.6 Trillion Social Security Trust Fund?

Here’s how President Barack Obama answered CBS’s Scott Pelley’s question about whether he could guarantee that Social Security checks would go out on August 3, the day after the government is supposed to reach its debt limit: “I cannot guarantee that those checks [he included veterans and the disabled, in addition to Social Security] go out on August 3rd if we haven’t resolved this issue.  Because there may simply not be the money in the coffers to do it.”
And Treasury Secretary Timothy Geithner echoed the president on CBS’s Face the Nation Sunday implying that if a budget deal isn’t reached by August 2, seniors might not get their Social Security checks.
Well, either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades.  It must be one or the other.
Here’s why: Social Security has a trust fund, and that trust fund is supposed to have $2.6 trillion in it, according to the Social Security trustees.   If there are real assets in the trust fund, then Social Security can mail the checks, regardless of what Congress does about the debt limit.
President Obama’s budget director, Jack Lew, explained all this last February in USA Today:
“Social Security benefits are entirely self-financing.  They are paid for with payroll taxes collected from workers and their employers throughout their careers.  These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries. … Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years.”
Notice that Lew said nothing about raising the debt ceiling, which was already looming, and it shouldn’t matter anyway because Social Security is “entirely self-financing” and off budget.   What could be clearer?
Unconvinced, syndicated columnist Charles Krauthammer wrote a subsequent column questioning Lew’s assertions.  “This [Lew’s] claim is a breathtaking fraud.  The pretense is that a flush trust fund will pay retirees for the next 26 years.  Lovely, except for one thing: The Social Security trust fund is a fiction. … In other words, the Social Security trust fund contains—nothing.”
Social Security status-quo defenders have assured us for the past 25 years that Social Security is fully funded—for the next 25 years, or 2036.  So if there are real assets in the Social Security Trust Fund—$2.6 trillion allegedly—then how could failure to reach a debt-ceiling agreement possibly threaten seniors’ Social Security checks?
The answer is that the federal government has borrowed all of that trust fund money and spent it, exactly as Krauthammer asserted.  And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money—which, of course, it can’t do because of the debt ceiling.

Rand Paul: Obama 'Flouting the Law' by Continuing Aid to Egypt

   President Barack Obama is "directly flouting the law" by not immediately cutting off financial aid to Egypt following the ouster of President Mohammed Morsi and the Muslim Brotherhood, Sen. Rand Paul of Kentucky says.

Paul pointed to the federal law that says the United States will not give money to countries operating under a coup — a designation the Obama administration has not given.

"There never should have been any debate. The law's explicit. If you have a military coup or a military takeover, the aid has to end unless you want a president who disobeys the law," Paul told "The Steve Malzberg Show" on Newsmax TV.

"This president is directly flouting the law and he's in direct disobeyance of the law. So, no, there's no question. The aid has to end.


Paul, who is considering a run for president in 2016, said following the law of the land is not up for debate.

"You can debate whether aid's a good idea and it's a bad idea, but the law you don't get to debate. You have to change the law if you don't like the law," he said.

"All of these Republicans who stand up and beat their chest and say, 'Oh, we're the party that's the rule of law and we criticize the Muslim Brotherhood for not obeying the rule of law.'

"Well, it's a valid criticism only if you obey the rule of law. … Our law says when an elected government is toppled, there's no wiggle room. You have to end the aid."

Rand likened the coup debate to a fight among youngsters.

"It's more like third-grade playground. … People say, 'Well, yeah, it's a coup, but you can't make me say it's a coup.' So it's a bunch of third-graders on the playground saying you can't make me," he said.

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