Big Welfare Mommas

Why am I not surprised to learn that the banks received $1.2 trillion in near-zero interest loans during the financial crisis?  Apparently the Fed netted $13 billion on these loans between Aug 2007 and Dec 2009, which amounts to a 1% return.  The “collateral” that the Fed accepted for these loans included junk bonds and stocks.

So let me get this straight.  The US taxpayers took an enormous risk and in exchange were compensated with an annual return of less than 1%.  There is no way to see this as anything but a massive subsidy to the banks.  Perhaps that subsidy was necessary, but given that it took all the risk, why was the government not compensated with billions of shares in these institutions so that it could share in the upside?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s