Fed's Massive Secret Wall Street Bailout Still Going Strong

Remember last fall, when our government explained that the reason we needed to give $800 billion to Wall Street was so the banks could lend it back to us and shock the economy back to life again?

What happened, of course, was that the banks took the money, stopped lending, and used it to pay themselves and their shareholders through the nose.

Not only are they too big to fail..they are too big not to make money. In order to recapitalize the banks they need to make a profit. Hence borrowing money and zero and lending it at 28% on credit cards. They must make profit to get more stock investors and accumulate more retained earnings. In the meantime, their toxic assets are probably declining in value.
Since they are destined to succeed with your money..maybe this is a good time to invest in IYF..the fiancial sector ETF..too big to not profit.

Related Even as Tim Geithner was boldly lying today on national TV, claiming that he abhors the concept of too big to fail, and condemns moral hazard, behind everybody's back he, together with the entire Obama administration, was trying to pass a law that would shift TBTF from a temporary program into officially canonized law. This is a scandal that has gotten little recognition in most of the MSM: in essence it guarantees that the massive mega banks like Goldman Sachs, BofA, and JPM will take on so much disproportionate risk the next time around (and with a moral-hazard encouraging Federal Reserve as risk regulator virtually guarantees their implosion) that not only will they blow up spectacularly once again, but that their bailout next time around will surely force America, already strapped with trillions of new upcoming debt courtesy of stimulus after stimulus, into sovereign insolvency. One of the side effects of the TBTF policy is that it is essentially a subsidy of the mega banks at the expense of the smaller, regional ones, as the cost of capital of anyone perceived Too Big To Fail will approach zero due to their implicit guarantee by the US government in perpetuity: an unfortunate side effect of moral hazard becoming a national doctrine. An analysis by the Center For Economic and Policy Research has quantified the funding differential as one of 49 basis points, which translates into a bank subsidy of $34.1 billion per year for all banks with more than $100 billion in assets. Comparing this thus quantified subsidy to other controversial programs as Foreign Aid Appropriations for 2009, indicates that the TBTF subsidy is 20% higher, and TBTF is more than double the projected budget allocated for the Temporary Assistance to Needy Families (TANF). What is more relevant for shareholders of these banks, is that the subsidy, when represented as a fraction of bank profits, accounts for nearly 50% of all bank profits. And as profits are a function almost exclusively of banker comp as the only substantial banking overhead (consisting of base and bonus) the sad conclusion is that the government directly is funding at least half the bonus pool for all the TBTF institutions. The table below highlights what portion of an institution's total profits is owed to Geithner's and Obama's generosity.

http://www.zerohedge.com/article/quantifying-too-big-fail-governmental-subsidy

Wish someone who was a tax person would wade in..

I have a suspicion that is is profitable for banks to lose a certain amount of money on credit card defaults.

If they are able to maneuver a certain percentage of the people into defaulting can they not write off far greater losses (fees, interest, service charges) than they actually loaned? Thereby being able to offset actual cash profits from other ventures with those credit card paper losses?

Heck I don’t understand it. Is that part of their game?

Wish someone who knew tax law would comment.

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