Remember this

Government is allowing banks to hide losses. Government is allowing banks to disregard those accounting rules that force everyone else to account for their assets and liabilites at market prices.

This is not a victimless crime.

Government has given Trillions of cash to banks

Government allows banks to appear solvent

Result:

Banks appear solvent and can attract institutional money from insurance companies (your life insurance money for example), from mutual funds (your IRA money for example), from local government funds (the money that is set aside for road maintenance, refuse removal or policing for example.

Subsequently, banks appear even more solvent thus pay obscene bonuses to their employees.

If government did not allow banks to circumvent the law, bonuses would not be paid.

The rationale for allowing banks to circumvent the law is to buy time in the hope that things recover and everyone can get back on their merry way.

Maybe the markets will recover maybe they wont. Either way the banks make out like bandits. If the markets recover, banks keep all the profits they have made thanks to public money. If markets do not recover, banks keep the money they were given and the profits they made till the crash.

This is what passes for fiduciary duty nowadays.

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One Response to “Remember this”

  1. Splash Says:

    guido –

    Great article. And The Big O says he is going to funnel money to small businesses in greater amounts even though those banks are no less toxic they were before TARP.

    And now they are trying to sell us that high unemployment is the new norm. The O-botic Downloads have already started!

    http://wp.me/pywxb-H8

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