By Mike Whitney
Officials in the Treasury Dept—-working with their colleagues at Citigroup, J.P. Morgan and Bank of America—have concocted a scheme to rescue the banks from their massive losses in mortgage-backed securities. The group is planning to set up a $100 billion emergency fund which will purchase non-performing assets for short term debt. In truth, the fund is a bailout which provides the financial giants with an excuse for not reporting their enormous losses from bad bets.
The story first appeared in Saturday’s Wall Street Journal and was followed on Monday with a second headline piece:
“RESCUE READIED BY BANKS IS BET TO SPUR MARKET”
WSJ: “The high stakes plan to RESCUE BANKS FROM LOSSES on mortgage securities amounts to a big bet that a consortium of financial giants—AT THE PRODDING OF THE US GOVERNMENT—can PERSUADE INVESTORS TO POUR MORE MONEY INTO THE TROUBLED CREDIT MARKET.”
That’s right; the Treasury Dept is directly involved in a scam that saves the banks while trying to “persuade” investors to “pour more money” into toxic mortgage-backed sludge. Treasury Dept officials clearly have a different idea of “moral hazard” than the rest of us.