Corporate Welfare Turns BofA into a Fat, Lazy, Extorting Corporate Welfare Queen [View All]

[McCamy Taylor]

I am gonna make this real easy.

In 2008, Bank of America got $25 billion of our money. By early 2009, they were back in line asking for another handout.

http://www.nytimes.com/2009/01/15/business/15bank.html

“It feels like a black hole.”

By 2010, it was clear even to the federal government that welfare for the banks had backfired.

A quarterly report to Congress on the $700 billion Troubled Asset Relief Program, or TARP, made available in draft form late on Saturday, said financial firms seen as too big to fail before 2008 have only grown larger as they feasted on subsidies from the bailout program.

"To the extent that institutions were previously incentivized to take reckless risks through a 'heads I win, tails the government will bail me out' mentality, the market is more convinced than ever that the government will step in as necessary to save systemically significant institutions," the report from the Office of the Special Inspector General for the Troubled Asset Relief Program, said.

http://www.reuters.com/article/2010/01/31/us-usa-economy-bailout-idUSTRE60U09L20100131

In other words, when you pay a bank to be a lazy, greedy, lying corporate welfare queen, it will continue to be a lazy, greedy, lying corporate welfare queen. Because hey! It's easier than working.

The article above points out that in exchange for the money, banks were supposed to free up credit to small businesses to encourage new jobs and they were supposed to rewrite mortgages to prevent foreclosure. In other words, they were supposed to be doing work-for-welfare. No one gets a free ride anymore, not even corporate welfare queens. However, once the banks were dining on steak at taxpayers expense, they lost the will to do anything---except beg for more money.

The report noted, for example, that while TARP was supposed to encourage banks to increase financing for U.S. businesses and consumers, lending is actually decreasing on a month-by-month basis…and only a small fraction of troubled mortgages have been permanently modified to lower borrowers' monthly payments.]

Lazy, lazy, lazy. And mean! There was money sitting around, just waiting to be used to help out people facing foreclosure, but the banks sent it back to Washington, unused, presumably because they thought it was funny as hell to throw people out into the streets. Unfortunately, being lazy and mean is no way to make money. B of A is in trouble again, for stealing little old ladies pensions. California has indicated that it will not accept the pennies on the dollar that the Obama administration wants banksters to pay for this crime of the century. California wants all its money back. And that will cost B of A billions. Many billions.

http://www.rollingstone.com/politics/blogs/taibblog/attorneys-general-settlement-the-next-big-bank-bailout-20111005

None of us should be surprised that Bank of America---which already received two hefty welfare checks---now wants a third. But BofA knows that if it strolls up to Congress and says "Gimme!" Congress will say "Get lost! I'm campaigning for re-election." So, what does BofA do? It conspires with the fed to force America to give it a handout. Here is how:

The fed told BofA it can put all its debt into its bank, which is insured by the FDIC. That way, if California gets a $20 billion judgment and France gets a $10 billion judgment and your dad's credit union wins a $30 billion judgment, BofA will not have to pay a cent. Instead, it can take the money out of its bank----the one where your savings are kept. And, when it runs out of your savings it can go to the FDIC and demand a trillion dollars.

Now, this is just fundamentally wrong . The FDIC was created to reward people who put their money in a bank, where their neighbors can use it for loans etc. until we need to withdraw it years later. It was not created to protect folks who like to engage in risky investments. Key word here is "risky" as in "at your own risk, not the risk of the FDIC."

Who knows what was going through the minds of the folks at the Fed when they agreed to this scheme. I suspect that the guys at the FDIC's response must have gone something like “Holy crap! WTF! We only have $3.9 billion. Where the hell are we gonna find the other $997 billion.” Or something to that effect.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/20/bloomberg_articlesLTBZHS1A1I4J.DTL


But, of course, the FDIC will never be called upon to pay the trillion dollars. The FDIC doesn't have a trillion dollars . With the U.S. government now on the line for a trillion dollars in FDIC payments, thanks to Bernake and the Fed, Bank of America will be able to demand many more billions to keep its investment division afloat. And, if Congress says “Fuck off! You already had two bailouts” BofA can say “Ok, we are broke. Pay us a trillion.”

Wow. BofA isn’t just a welfare queen. BofA is now in the extortion racket. It is riding high in its gold plated Cadillac, sipping champagne and giving the finger to Occupy Wall Street and the American people.