“Welfare for the Rich” – Matt Taibbi Exposes Disgusting Practices at the Federal Reserve
In a typical jaw-dropping article for Rolling Stone Magazine The Real Housewives of Wall Street, Matt Taibbi reveals the shocking practices of the Federal Reserve during the Great Recession.
With the nation staggering, the Federal Reserve took it upon itself to lend trillions of dollars at nearly zero percent interest. Then, as collateral, the Fed took the securities that were bought with the loans. The arrangement meant that if the securities lost money, the Fed would be stuck with the losses but if the securities made money, then the investors would pay back the loans and keep the higher priced security. Privatizing gains, socializing losses, all in an effort to stimulate the economy. Such loans were not made available to everyday folks; only to the important pillars of our economy: Japanese car companies (while bailing out their competitors), Middle Eastern banks (including one later bought by Muammar Gaddafi), tax dodgers in the Cayman Islands (imagine, subsidizing tax evasion), and the spouses of Wall Street executives. No, that isn’t a typo, the wives of Wall Street executives were offered risk free loans guaranteed by you, the taxpayer.
Taibbi looks at the case of Christy Mack and Susan Karches, the wife and widow respectively of the CEO and the late president of investment banking at Morgan Stanley. While Morgan Stanley itself received over $2 trillion in Federal Reserve risk free, subsidized loans, Christy and Susan also received $220 million for their company, Waterfall TALF Opportunity. With the money, the duo bought student loans and commercial mortgages. If the loans or mortgages ever decrease in value, Waterfall effectively will not have to pay back the Fed and let the Fed keep the devalued securities.
It’s shocking to see that while Washington is debating which social programs to cut and how to get the deficit under control, the Federal Reserve feels it is ok to give nearly a quarter of a billion dollars in risk free loans to two “desperate” housewives who already have more money than they will ever need.
Maybe we all need to marry a Wall Street executive? Let us know your thoughts on this in the comments section.