by Jason Kendall, contributing columnist |
June 05, 2013
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
