Another Bank Bailout Under Cover of a Virus

Insolvent Wall Street banks have been quietly bailed out again. Banks made risk-free by the government should be public utilities.  

When the Dodd Frank Act was passed in 2010, President Obama triumphantly declared, “No more bailouts!” But what the Act actually said was that the next time the banks failed, they would be subject to “bail ins” – the funds of their creditors, including their large depositors, would be tapped to cover their bad loans.

Then bail-ins were tried in Europe. The results were disastrous.

Many economists in the US and Europe argued that the next time the banks failed, they should be nationalized – taken over by the government as public utilities. But that opportunity was lost when, in September 2019 and again in March 2020, Wall Street banks were quietly bailed out from a liquidity crisis in the repo market that could otherwise have bankrupted them. There was no bail-in of private funds, no heated congressional debate, and no public vote. It was all done unilaterally by unelected bureaucrats at the Federal Reserve.

“The justification of private profit,” said President Franklin Roosevelt in a 1938 address, “is private risk.” Banking has now been made virtually risk-free, backed by the full faith and credit of the United States and its people. The American people are therefore entitled to share in the benefits and the profits. Banking needs to be made a public utility. Continue reading

The Fed’s Baffling Response to the Coronavirus Explained

When the World Health Organization announced on February 24th that it was time to prepare for a global pandemic, the stock market plummeted. Over the following week, the Dow Jones Industrial Average dropped by more than 3,500 points or over 10%. In an attempt to contain the damage, on March 3rd the Federal Reserve slashed the fed funds rate from 1.5% to 1.0%, in their first emergency rate move and biggest one-time cut since the 2008 financial crisis. But rather than reassuring investors, the move fueled another panic sell-off.

Exasperated commentators on CNBC wondered what the Fed was thinking. They said a half point rate cut would not stop the spread of the coronavirus or fix the broken Chinese supply chains that are driving US companies to the brink. A new report by corporate data analytics firm Dun & Bradstreet calculates that some 51,000 companies around the world have one or more direct suppliers in Wuhan, the epicenter of the virus. At least 5 million companies globally have one or more tier-two suppliers in the region, meaning their suppliers get their supplies there; and 938 of the Fortune 1000 companies have tier-one or tier-two suppliers there. Moreover, fully 80% of US pharmaceuticals are made in China. A break in the supply chain can grind businesses to a halt. Continue reading

“We’re All Greeks Now” — Stephen Lendman on “It’s Our Money”

It isn’t just the Greeks, or the Cypriots, or the Irish, or the Icelanders suffering the price of financial terrorism – the extractive demands of global central banks on display in Greece are actively draining the marrow of impoverished communities the world over. Ellen speaks with author and expert Stephen Lendman about the financial powers forcibly overruling Greek democracy, and their intentions to do so everywhere.  Co-host Walt McRee speaks with an official of one California county government pushing back against convicted bank felons, and later discusses new human evolutionary awareness about our relationship with money with philosopher Robert Bows.  And Matt Stannard discusses our myths about “the Great American Entrepreneur” on the Public Banking Report.

Listen here.

Building an Ark: How to Protect Public Revenues from the Next Meltdown

Concerns are growing that we are heading for another banking crisis, one that could be far worse than in 2008.  But this time, there will be no government bailouts. Instead, per the Dodd-Frank Act, bankrupt banks will be confiscating (or “bailing in”) their customers’ deposits.

That includes local government deposits. The fact that public funds are secured with collateral may not protect them, as explained earlier here. Derivative claims now get paid first in a bank bankruptcy; and derivative losses could be huge, wiping out the collateral for other claims.

In a September 24th article titled5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives, Michael Snyder warns:

Trading in derivatives is basically just a form of legalized gambling, and the “too big to fail” banks have transformed Wall Street into the largest casino in the history of the planet. When this derivatives bubble bursts (and as surely as I am writing this it will), the pain that it will cause the global economy will be greater than words can describe.

Continue reading