Federal Reserve Bank Researchers Proposed Bailing out 99%, Action not taken

[Huey P. Long]

Federal Reserve Bank Researchers Proposed Bailing out 99%, Action not taken

For Immediate Release: Federal reserve bank researchers proposed plan to save people from foreclosure, and through them the banks and the financial system. Action not taken by government.

CAMBRIDGE, MA December 20, 2011 - The US government saved the "too big to fail" banks in 2008. The reason? People were unable to pay their mortgages causing the banks billions in losses. The US Government authorized $700 billion to save the banks. The Federal Reserve Bank also gave them short-term loans that were even larger.

According to a report of the Federal Reserve Bank of Boston, there was another way. Why not save the people who were at risk? If the people were helped, they would be able to pay their mortgages, the banks would not have needed to be rescued and the financial crisis would have been considerably less severe. The cost? They calculated up to $50 Billion dollars overall - less than 10% of what was approved for banks.

Refined variants of the proposals that the researchers have worked on would reduce the amount to just $1 billion dollars, the interest cost of deferred payments, which could be paid either by borrowers or servicers.

The Treasury decided to bail out the banks instead. At the time the US Treasury Secretary was Henry Paulson, previously Chairman and Chief Executive Officer of the investment bank Goldman Sachs.

full-
http://necsi.edu/news/2011/bailouts.html

[xchrom]

1. Toto? -- i don't think we're in a Democracy any more. nt

[Huey P. Long]

2. I wonder who else is a Goldman Sachs puppet? -eom

[xchrom]

3. sadly, i think the list would be long. nt

[Huey P. Long]

9. Well, I'm thinking of whose campaign they gave most to. -eom

[tavalon]

21. I have a request

May I take this post and make it my sig line. I'll be happy to attribute. It's so painfully and truthfully concise.

[xchrom]

22. oh sure.

i'm glad to see others of like mind.

[tavalon]

23. Thank you

It's time to switch up and that just rocks. Painfully rocks, but rocks nonetheless.

[atreides1]

4. Not surprised

[redqueen]

5. +1

[Laelth]

6. k&r for the truth, however depressing it may be. n/t

-Laelth

[RKP5637]

7. "We the People" needs to be stricken everyplace and changed to "We the Corporations." It's now

been blatantly obvious for a long time that TPTB in this country over several decades have no interest in "We the People" other than as fresh meat to feed the corp. structures and the 1%. It's become an egregious country in my lifetime in being not beneficial for "We the People." Damn, but any not seeing this have their head soooo far in the sand or up their butt.

[ms.smiler]

8. Many DU members suggested the same approach at the time.

That would have been helpful and productive and that is not how Wall Street operates.

From the article: “The US government saved the "too big to fail" banks in 2008. The reason? People were unable to pay their mortgages causing the banks billions in losses.”

What losses? The mortgages were securitized, turned into mortgage backed securities and owned by investors. The banks weren’t owed any money on the mortgages.

Ah, I know what losses. Wall Street banks had purchased Credit Default Swaps on the garbage MBS they constructed and intended to collect on that insurance. If homeowners were bailed out, helped in some way, the banks wouldn’t be able to collect their Swaps when the MBS market failed.

[Huey P. Long]

11. Thats because it made the most perfect sense and preserved the middle class. There was no profit

for the criminals who committed this theft though. They had to profit, and the puppets we call representitives and 'administrations' get taken care of, and we get crushed into powder.

[hootinholler]

14. Yep it would have preserved the status quo

Not provided a huge pool of money that let the favored banks buy out the less favored struggling banks for pennies on the dollar.

[jwirr]

18. That approach would have been directed at the real problem. The banksters and the corporations

are the ones who caused the problem with their economic practices for the last 30 years but they are not the victims. We are. As Lawrence O'Donnell says the problem is that the people do not have enough money to spend anymore because our jobs are gone and deregulation of banks allowed us to borrow much more than we could ever repay. Until someone addresses those two problems this mess is not going to get better.

[msongs]

10. our millionaire presidents & congresspersons take care of their friends first nt

[Huey P. Long]

17. true statement. -eom

[SammyWinstonJack]

12. THANK GOD IT PASSED!

What a huge waste of taxpayer $$$.


BANKS GOT BAILED OUT! WE GOT SOLD OUT! The Occupiers have it righ

The cost...50 billion and now the banksters are handing out bonuses in the 150 billion neighborhood.

[Huey P. Long]

13. Say it often, say it LOUD. -eom

[Bolo Boffin]

15. Sadly, I'll bet they didn't do this because they didn't want homeowners to think

it could happen again.

Of course, the banks aren't ever going to think that, are they? They've got living wills and no more bailouts for them, we promise!

Sigh...

[fasttense]

16. Seems to me the only job of congress and the Fed is to keep ultra rich people, ultra rich.

The hell with everyone else.

We have no rule of law or even rule of common sense. We are all ruled by the whim of a few rich men.

[joeybee12]

19. Bailing out the 99% wouldn't make the banks rich...which

was the original intention of this shit.

[Huey P. Long]

25. Exactly. Cause the disaster through criminality, then cash in again on the 'fix'.

Bought and paid for corporate government just doing what it does best, stealing from us!

[L. Coyote]

20. The banks were too deep in the red to save them via saving the 99% it seems

How could that situation have arisen? CRIMINALS?

[lumberjack_jeff]

24. In fairness, Obama did try to bail out the homeowners.

They set up a system of relief refinances, but the problem is that the big banks such as BofA simply refused to do the loans, because it wasn't profitable for them.

http://www.freddiemac.com/news/archives/servicing/2009/20090304_relief-refi-mtge.html