Looting America to preserve the fortunes of the financial aristocracy. What about small investors?

[Karmadillo]

What follows is an interesting analysis of the Obama/Geithner bailout scam. Yes, the WSWS is socialist, but given the workings of our kleptocracy as of late, I think their writings are well worth considering. The article discusses the possibility small investors may be allowed to take part in the plundering of the treasury. If so, would such a development change the nature of the scam into something more benign, or would it be nothing more than window dressing to distract us from the massive transfer of wealth from the taxpayer to the wealthy, a transfer Joseph Stiglitz has characterized as robbery? The article also discusses the transformation of the FDIC from an entity designed to protect the accounts of small savers to a guarantor of the financial speculations of the rich. Change we can believe in or change to which we ought to call a halt?

http://www.wsws.org/articles/2009/apr2009/pers-a10.shtml

The New York Times on Thursday published a front-page article that provides further insight into the economic and class interests that are being served by the Obama administration’s economic “recovery” policies.

Headlined “Small Investors May Be Enlisted in Bank Bailout,” the article outlines discussions between the administration and Wall Street investment firms on structuring the so-called “Public-Private Investment Program” announced last month in a manner that will allow people of modest means to invest in the scheme, whose purpose is to enable the banks to offload their toxic assets at public expense.

When the plan was announced March 23 by Treasury Secretary Timothy Geithner, it sparked a wild rally on the stock market. The Dow Jones Industrial Average rose 497 points when it became clear that the government was offering to provide up to 95 percent of the capital, insure almost all potential losses and virtually guarantee large profits for hedge funds and other financial firms that agree to purchase the bad debts of the banks at inflated prices, with the taxpayers underwriting the windfall for Wall Street and assuming virtually all of the risk.

Thursday’s Times article indicates that opening the scheme up to small investors is seen as a way of providing a “democratic” gloss to what is, in reality, a brazen plan to plunder the public treasury for the benefit of the very bankers and speculators who are responsible for the financial crash. Evidently not seeing a contradiction, the article also makes clear that the bailout measures are being drawn up in the closest consultation with the Wall Street insiders who stand to profit from them.

<edit>

In other words, the function of the FDIC is being transformed from guaranteeing the bank deposits of small savers to guaranteeing the investments of multimillionaire investment fund managers. And, as the article notes, this is occurring without a vote by Congress.

The FDIC will be insuring more than $1 trillion in new obligations incurred as the government covers the bad debts of the banks. However, the FDIC’s charter limits the obligations it can take on to $30 billion. The Times article quotes one “prominent securities lawyers” as saying, “They may not be breaking the letter of the law, but they’re sure disregarding its spirit.”

more...

[Karmadillo]

1. Kick to see if someone can debunk this article.

nt

[girl gone mad]

5. What's to debunk?

Geithner's plan will put the FDIC at risk to incur great losses. It is designed to transfer hundreds of billions of dollars of debt from the wealthy to the public.

"Bailout bonds" are an exercise in extreme cynicism. To believe "bailout bonds" are an equitable solution is to believe that the critics of Geithner's plan are really only upset because they can't participate in the looting and if they are given a little cut of the action they'll shut up and go away.

[truedelphi]

7. I didn't notice that Black mentioned this FDIC aspect in his interview with Moyers

In fact, the one point he made that was positive, was that the FDIC could be relied on. I have no idea why he said that, it seems to me that the Ship of State will sink further. And there is not much way the FDIC can rescue a bank or a bad investments, if so many banks, and so many investments are designed to be picked up at taxpayer expense.

Any light you can shed much appreciated.

[girl gone mad]

6. dupe.

sorry.

[truedelphi]

2. When the value of the dollar is cut in half by Obama's current giveaway (to the thieves') policies

People might awaken.

Otherwise there's nothing here to see.

BTW, I think intelligent people read everything they can from all perspectives in order to get a handle on major occurrences.

[nichomachus]

3. Some are too big to fail -- others are too small to matter

[inna]

4. i don't see anything wrong with (true) socialism....

in fact, i'll take it any time over out-of-control predatory capitalism.

just sayin'. ~