So now the Bush administration proposes to make the federal guarantee explicit and even to offer taxpayer money to help recapitalize the two banks if needed. Everything has been nationalized -- except the profits and the pay scales of the bank's executives.
That's right. If the guarantees work, private speculators, having driven the stock down, will clean up on the upside. And the bank's CEO's will continue to pocket the multi-million dollar salaries that are de rigueur on Wall Street. Call it Wall Street socialism. Their losses are socialized; their profits are pocketed. You and I will pay for their failures. And if conservatives have their way, their families will pocket their successes, without even having to pay a tax for the transfer of the estates we've helped to create.
So one hand washes the other. No need for conspiracies. The players just do what they know to be right to preserve the system. The "hidden hand of the market" helps all their pals. We the smaller players suffer, but that is the law of the jungle. If we weren't so stupid we would not get taken.
In 2003, the company revealed that it had understated earnings by almost $5 billion, one of the largest corporate restatements in U.S. history. As a result, in November, it was fined $125 million--an amount called "peanuts" by Forbes. [4]
A 200-page report issued by Office of Federal Housing Enterprise Oversight indicated that the company's records were manipulated to meet Wall Street earnings expectations. The firm signed a consent order promising to improve internal controls and corporate governance. [5]
On April 18, 2006 home loan giant Freddie Mac was fined $3.8 million, by far the largest amount ever assessed by the Federal Election Commission, as a result of illegal campaign contributions. Much of the illegal fund raising benefited members of the House Financial Services Committee, a panel whose decisions can affect Freddie Mac. Notably, Freddie Mac held more than 40 fundraisers for House Financial Services Chairman Michael Oxley, R-Ohio. wp
Last year, for example, the Chair of Freddie Mac took home a cool $18,289,575.
That's what you get when you keep your nose clean.
Posted by: tom | July 16, 2008 at 09:09 PM
Thanks, Tom. No, you don't need conspiracies to explain how things work, you just have to understand the basic dynamics of the gift economy. Among friends, what goes around comes around. Friends look out for friends.
Posted by: Phil | July 16, 2008 at 09:37 PM
After a verbal lashing from senators of both parties, Paulson emphasized the urgency of the proposal.
This ``will be a great confidence-builder throughout the world, to see Republicans and Democrats, both houses come together and do something quickly here,'' he said. bloomberg
Posted by: tom | July 16, 2008 at 10:19 PM
The Superclass rallies to protect us from our folly. Knaves rush to defend the impoverished fools, while repossessing their property. This is not about politics, it is about keeping the game going a little longer.
Posted by: Phil | July 16, 2008 at 11:10 PM
http://www.solari.com/blog/?p=764
A shrewd guesser, one who has served amidst the knaves.
Posted by: Phil | July 16, 2008 at 11:12 PM