Record Bank Bonuses Based On Record Bank Fraud

[girl gone mad]

Record Bank Bonuses Based On Record Bank Fraud
Barry Ritholtz, http://www.ritholtz.com/blog/2010/01/record-bank-bonuses-based-on-record-fraud/">The Big Picture

The biggest banks and brokers are on pace to award $145 Billion in bonuses for 2009, Up 18% from the year before, according to a WSJ study.

This bonus bonanza is based on two simple factors: Zero % money, courtesy of the Fed, and a massive accounting fraud — one that happens to be legal.

Ask yourself how hard it is for any finance firm to make money — risk free! — when they can borrow from the Federal Reserve at a rate of zero, and then turnaround and “lend” that same cash to the Treasury (buying bonds) at 3% ?

I suspect this was essentially the Bernanke/Paulson plan (now Bernanke/Geithner) all along — to s-l-o-w-l-y recapitalize the banks via the Japanese model. They selected the easier but less effective Japan option versus than the Swedish model, which forces insolvent institutions to reorganize, write down bad loans, recapitalize the banking sector (which allows banks to start lending again), but punished bondholders and wipes out shareholders.


Barry Ritholtz, http://www.ritholtz.com/blog/2010/01/record-bank-bonuses-based-on-record-fraud/">continued..

[aquart]

1. Well, yeah.

[SergeStorms]

2. Only in America......

Of course this will go on unimpeded. There will be a short period of feigned media outrage, but the lunatics who run the asylum will get what they want in the end.

And the right-wingers are all in a tizzy about "socialized" health care. But unbridled, out of control, crooked capitalism doesn't concern them in the slightest. :eyes:

What a great country we live in. The corporations can socialize their risk and privatize their rewards, and nothing is said about THAT! Try to get this countries citizens decent health care for all? Preposterous. That's socialism! :banghead:

[dickthegrouch]

3. Unbelievable /nt

[bemildred]

4. Silence is expensive. nt