Sunday, July 13, 2008


This is high drama

So says Charlie Rose in his recent interview with JP Morgan Chase CEO Jamie Dimon in regards to what has been called the Bear Stearns bailout. Bear Stearns did not get bailed out. Bear Stearns was given to JP Morgan Chase by American taxpayers. Senator Christopher Dodd, chair of the Senate Banking Committee, made this clear in this All Things Considered interview at NPR.
This is an unprecedented action. For the first time ever, taxpayer dollars of this magnitude were paid at risk without a huge guarantee that we're going to be protected as taxpayers.
In the spirit of the shock doctrine, JP Morgan has acquired the fifth largest investment bank with taxpayers footing the bill if it doesn't work out. Dodd also wonders about what seems to be a conflict of interest:
I have great respect for Jamie Dimon who is the head of JP Morgan. He also sits on the board of directors of the Federal Reserve in New York...and so the question is here: having decisions be made over the weekend with an institution where its leader is also a member of that board raises some serious issues that ought to be addressed...I've had some people over the last several days say that we're creating a model for future events. If that's the case, then I'm deeply worried about it. I'm willing to accept that this was a one time-event. We were under a clock and decisions had to be made but the idea that we are creating a permanent model for future events like this is troubling to me because of the idea that the American taxpayer is being put on the hook.
However, there was no mention of the conflict of interest by Dodd in the senate hearings on April 4.

Later this week the Netroots Nation conference will be here in Austin. House Speaker Nancy Pelosi will be giving a keynote on Saturday. Part of that is taking questions from the highest rated questions at Ask the Speaker. I have submitted a question here. If you agree, please vote it up.

Of course, I'll be twittering live from the conference too.

Update 7/14 - Ellen Brown who helped me craft the question has a new post on
Rather than bailing out bankrupt banks and sending them on their merry way, the Federal Deposit Insurance Corporation (FDIC) needs to take a close look at the banks’ books and put any banks found to be insolvent into receivership. The FDIC (unlike the Federal Reserve) is actually a federal agency, and it has the option of taking a bank’s stock in return for bailing it out, effectively nationalizing it. This is done in Europe with bankrupt banks, and it was done in the United States with Continental Illinois, the country’s fourth largest bank, when it went bankrupt in the 1990s.

A system of truly "national" banks could issue "the full faith and credit of the United States" for public purposes, including funding infrastructure, sustainable energy development and health care. Publicly-issued credit could also be used to relieve the subprime crisis. Local governments could use it to buy up mortgages in default, compensating the MBS investors and freeing the real estate for public disposal. The properties could then be rented back to their occupants at reasonable rates, leaving people in their homes without the windfall of acquiring a house without paying for it.


This is how just about EVERYTHING has been done for the past 8 years. Absolute arrogance.
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?