-=> ED HULETT wrote to WAYNE CHIRNSIDE <=-

 EH> On 04/23/2010 06:27 PM, WAYNE CHIRNSIDE -> ALL wrote:
 WC> Well well, it seems General Motors has paid back ALL
 WC> it's TARP funds with interest and 5 years early at that
 WC> so the U.S. taxpayer no longer owns GM as was
 WC> recently maintained here.

 WC> Another bit of good news.

 WC> Only a year ago the TARP bailouts were project to cost
 WC> 500 Billion, now the projected figure is 87 billion
 WC> with most of that accounted for by Freddie and Fannie.

 EH> Ahem, GM used the TARP money that was put in an escrow account to "pay
 EH> back" the smaller amount that was called a loan. So, basically, all
 EH> they did was take taxpayer money to pay back taxpayer money. Plus, the
 EH> US government is still 60% owner of GM with the Canadian government
 EH> being a 12% owner. GM says they plan to fix that by issuing an IPO and
 EH> go public... again... as if 72% government ownership isn't already
 EH> public.

 EH> Fannie and Freddie are the quasi government agencies that were at the
 EH> center of the housing bubble collapse.

Nope, that's the propaganda now being sold.

Freddie and Fannie were the result of bad derivative packages sold to 
investors.

Fannie and Freddie were thus a result of Wall Streets misbehavior and
irresponsibility
as in the Abacus Investments derivative packages now in the news sold by
various investment 
firms such as Goldman Sachs.

Then Goldman Sachs and other investment firms shorted the very Abacus
Investment
accounts they'd promoted to their clients betting against the very investments
they had promoted.

Since those deriviative investment packages largely consisted of sub-prime
loans of course when their lack of any value it impacted Fannie and Freddie

Large banking institutions engaged in speculation with investors monies
in derivatives is the cause.

Bill Clinton is partially to blame while the Republican Congressman from
Texas who first proposed the repeal of the Glass Steagall act is dead center
to blame.

Bill Clinton could have vetoed the repeal of Glass Steagall but his financial
advisors
advised him they would be good for the economy, he's recently come out and
admitted
his mistake.

BTW The Glass Steagall Act was first enacted after the Great Depression to
prevent 
PRECISELY this sort of irresponsible lending by banking institutions.

It took a mere eight years after the repeal of the Glass Steagall Act 
repeal for the house of cards to come crashing down.

Actually only two years as the first down was Enron then WorldCom
which should have alerted to these bad practices as these were precisely
the sort of speculative packages sold as derivatives.

IOW's both the Great Depression AND the current massive recession had
almost identical causes.

The Great Depression was caused by buying on margin and the current recession
by speculation on derivative packages engaged in by large banking at up
to 32 to 1 margin.

Just as the current recession hit investment banking was gambling with 
derivative packages of dubious value at the margin of 30 - 1 actual
dollars, banking dollars, like those kept in checking anbd savings accounts.

It's rather easy to gamble with other peoples monies for short term huge
personal
financial gain.

The current "fix" proposed by Democrats is to reduce the magin from 32 - 1
to 10 to 1 and to limit the size to which large banks can grow.

This amounts to a reinstatement of a rather watered down version of the Glass
Steagall Act that had been rather effective in preventing such enormous
financial meltdowns since the 1930's.

The banks after the repeal of Glass Steagall rolled themselves into investment
firms buying on margin just like individual investors in 1929 and just as in 
1929 this came back and bit the American economy in the a**.  



 


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