Lehman Brothers, it was
announced Sunday, are not to receive a government
bailout. Well whoopdee-do.
In the business world that I live in if my business
fails it goes bust or bankrupt. However, it seems that
if a bank or financial institution goes bad, the
Federal Government bails them out.
We’re being taken for suckers. Why? Because the
governments generosity draws from the same place – the
taxpayer’s pocket - yours; mine. It may be wrapped in
a ribbon and a bow and called something technical, the bottom line is, it’s your money
they're shoveling.
Take Lehman for example. They lent money on iffy
loans. Times were good. Brokers, shareholders and bankers made
money. What a party. The economy turned, the loans
went bad and the bank CEO, with blubbering lower lip
and tears in his eyes, turned to the government for
help. Unfortunately for Lehman there is an election weeks away
and they got shown the door. That is not always the
case.
Interestingly, when funds are given to the banks only
the bank shareholders benefit. That’s right, the poor
guy in foreclosure benefits not one bit. They’re out
one way or the other.
What a business model.
When times are good they make money; when times are
bad we give them money. You can’t beat that. Next time
you’re downtown count how many of the buildings owned
by banks (most) are for sale (none) to get an
indication of how lucrative a business it is. It’s
truly a beauty.
And to show just how good it is here’s how a bailout
works. The average Joe with a troubled loan can't
repay the bank and loses his home. The bank gets money
from the Federal Government to cover the financial
loss and the bank gets to keep the home. Think
about that for a second. That’s the best deal ever.
These are the same banks that, with a straight face,
charge their customers $32 for an overdraft - to the
tune of $19 billion in annual revenues - regardless of
what straits those customers might be in; even those
earning $7 an hour, for whom an overdraft fee is
a half day’s wages. (A story for another time about a
potentially devastating lawsuit for the banks that’s
bubbling away on the back burner.)
Meanwhile the Federal Government is giving Fannie and
Freddie’s CEO’s, Herb Allison and David Moffett – the
leaders of two of the largest failed financial
institutions in the history of mankind - an ‘exit
package’ of up to $24 million each. As opposed to say
20 years in jail for gross mismanagement.
Bollix I say! We’ve been collectively bent over a
barrel and supremely shafted for too
long.
It's time to stop the
merry-go-round, allow the banks fail and let the chips
fall as they may. For those who don't make it,
McDonalds is always hiring.
Evin Daly is a
writer and the publisher of the ButlerReport
(www.butlerreport.com).
edaly@goldcoastmedia.net
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