Pelt of the dog that bit them

(Via CJR)

It's official: the banks believe they can do no wrong. Having quietly captured all the forces that posed a threat - they believe anything they do is somehow defensible.

The Wall Street Journal reports today that banks are lobbying the government to let them buy their own toxic assets under the trillion-dollar Public-Private Investment Program, or PPIP.

[snip]

Here we have a trillion-dollar bailout program (on top of the many other trillion-dollar bailout programs) to get banks out of the deep holes they’ve dug themselves. Not only do they want their, um, dirt shoveled, they want to get paid for shoveling it.

Bailout upon bailout upon bailout.

So, to recap:

We have banks that

• Subsidized the production of subprime loans
  (to the point where FICOs and byzantine equations replaced underwriting because the "right now" profit was all that mattered)
  
• Purchased the majority of the resulting subprime loans
• Repackaged them into Collateralized Debt Obligations (CDOs), securities they sold to investors.
• Insured subprime-laden CDOs using unregulated derivitives like Credit Default Swaps (allowing them to sell these securities to risk averse investors AND allowing them to short the housing market)
• Ran screaming like babies to the Fed - when the CDO tranches they still owned started to implode

And NOW, we not only have these same banks rushing out to buy more of the same toxic assets they demanded bailouts for-

-not only are they asking for government subsidies to buy these toxic assets off other banks, (i.e. "I need this crap off my books. Please pay me to buy someone else's crap.")-

-we actually have banks asking us to subsidize their purchase of their own toxic assets.

Which is insane.

...obviously it sets up an untenable incentive for banks to sell themselves assets at high prices, offloading the risk onto the government, and hoping that somehow, maybe, the economy recovers, people pay off their credit cards enough for the investments to pay off. And if they don’t? So what, the banks are only out 6 percent, and the government eats the rest.

Read Chittum's article (aptly entitled, An Innoculation For Wall Street Outrage Fatigue)


This sh!t's gotta stop.