Read it at Economonitor | Great Leap Forward
$30 TRILLION TO PROMOTE CRONY CAPITALISM: The Fed’s Bail-Out of Wall Street
by L. Randall Wray
Randy continue to follow the money trail wrt to cumulative liquidity provision by the Fed to the financial sector (read TBTFs), while also granting "forbearance" regarding solvency and pursuing an "extend and pretend" policy to buy time.
5 comments:
If he is now saying $30T of "liquidity provision" then I can now see where he is coming from...
resp,
@ Matt:
"Liquidity provision" is my term, but Randy makes it very clear that this was no ordinary provision of liquidity. It was part of an overall scheme to prop up failed instituions that were too big to fail. But "big" here does not only mean in size but also influence. It was crony capitalism pure and simple. Randy is joining his colleagues Bill Black and Michael Hudson in laying this out, and he promises more detail to come.
Wray's writes that the collateral presented by Fed borrowers was in his words, "Junk." He goes on, "Their assets are junk, their liabilities cannot be serviced." -- I'm curious if he has received any data of specific collateral that was 'junk' -- was most of the collateral junk?
He also made statements like, "No—these institutions were mostly insolvent, with earnings far below costs of servicing liabilities." The Federal Reserve relies on the FDIC, NCUA and solvency regulators to monitor that banks and their assets are solvent. They have the power and the Responsibility to dismantle institutions that are insolvent. With a well defined process and usually a single letter from these regulators, they can cause a bank to cease and desist risky behavior and shed bad assets.
If Wray can point out specific Banks and specific collateral that were indeed insolvent or junk, then the risk managers at the banks could be identified and the specific regulators that failed to do their jobs could be prosecuted, fired and dis-barred or lose their accounting licenses. This would be a huge step forward in demonstrating the government can once again act as an effective regulator and that business can be held responsible for corruption and ethics.
@ TB
This is what Bill Black has been researching and documenting. I am quite sure that Randy is privy to this work.
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