Policymakers beg hedge funds to help the banking system

This is pathetic.

FDIC Chairwoman, Sheila Bair, set up an invitation only meeting in New York for hedge fund managers so that she could "pitch" the government's plan to rescue the banking system--a system that is a construct of the government itself.

It is very likely that if this plan goes through, some hedge fund will be the proud owner of your mortgage. And the government will essentially "pay" these speculators to buy the assets from banks.

The whole thing is so perverse that it is almost comical.

Banks are agents of the government, created, ostensibly, to act as a credit conduit between the government and the private sector. They get their funds from government guaranteed deposits; they have lifelines to the Fed and the assets they own are regulated by the government so that they can only be the safest assets.

With absolutely no effort whatsoever the government can sustain the banking system so that it functions in its mandated public purpose, which is to make loans to the private sector. But once again, a belief system, keeps them from doing that.

The very idea that gov't might have to guarantee all deposits and/or provide sufficient and ongoing, non-collateralized liquidity via the Fed, is viewed as unacceptable because in the minds of out-of-paradigm thinkers, that translates to, "having to provide more taxpayer dollars."

So instead, we will guarantee windfall profits (with taxpayer dollars) to a small group of wealthy speculators by ceding the nation's bank assets (which, at least obliquely, are the property of the public), while the average working person gets $10 per week more in his or her paycheck!