State of Innovation

Still Subsidizing Banks and Wall Street

The TARP bailout of Wall Street may be over but we are still bailing out the millionaires on Wall Street.  The Federal Reserve has purposely set the fed funds rate to zero in order to “recapitalize” (bail out) Wall Street and the big banks.  This is nothing more than crony capitalism, where middle class Americans are forced to bail out multimillionaires.  As if this were not bad enough the bankers on Wall Street are acting like they are genius because they can borrow money from the federal government for zero percent interest and loan it back to the government at three percent interest.  This transfer of wealth from the rest of America to the politically connected in Wall Street is not moral and it is not good for the country.  An excellent video on this point is   Huge, Ongoing Wall Street Subsidy Allows Banks to Coin Money Every Day at Savers’ Expense .

Pat Choate’s book “Saving Capitalism”  points out that middle America has bailout Wall Street at least nine times since 1980.  Many of these bailouts are framed as bailouts for a country such as Greece today or Mexico in the early 1990s, however the bailout funds are not used to help the people of Greece or Mexico they are used to pay back big banks that made bad loans.

The finance industry and Washington have conspired to steal all the wealth generated from hard working Americans.  If we want our country to be great again and our economy to grow again Wall Street has to be allowed to fail and Washington’s budget needs to be cut in half.

May 13, 2010 - Posted by dbhalling | -Economics, Innovation | Federal Reserve, Pat Choate, TARP, Wall Street