How Banking Bailouts, Buyouts and Nationalization
Can Only Prolong America\u2019s Second Great Depression
and Weaken Any Subsequent Recovery
Copyright \u00a9 2009 by Weiss Research
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Joy Howell
Phone: 202.828.7838
Email: joy@cambridgestrategicpartners.org
Martin D. Weiss, Ph.D., president of Weiss Research, Inc., is one of the nation\u2019s leading advocates for investors and
savers, helping hundreds of thousands find safety even in the worst of times. Issuing warnings of future failureswithout
ambiguity and with months of advance lead time, Weiss predicted the demise of Bear Stearns 102 days prior to its
failure, Lehman Brothers (182 days prior), Fannie Mae (eight years prior), and Citigroup (110 days prior). Similarly, the U.S. Government Accountability Office (GAO) reported that, in the 1990s, Weiss greatly outperformed Moody\u2019s, Standard & Poor\u2019s, A.M. Best and D&P (now Fitch) in warning of future insurance company failures. Dr. Weiss holds a Ph.D. from Columbia University, and has testified many times before Congress, providing constructive proposals for reform in the financial industry.
The following individuals also contributed to this paper:
Mike Larson, Interest Rate and Real Estate Analyst, Weiss Research, Inc.
Philip W. van Doorn, Senior Banking Analyst, TheStreet.com Ratings
Mathieu\u2010Louis Aoun, Financial Research Analyst, Weiss Research, Inc
Amber Dakar, Personal Finance Analyst, Weiss Research, Inc
How Banking Bailouts, Buyouts and Nationalization
Can Only Prolong America\u2019s Second Great Depression
and Weaken Any Subsequent Recovery
and pump up financial markets than any of their counterparts in history.
But it\u2019s not nearly enough; and, at the same time, it\u2019s already far too much.
Two years ago, when major banks announced multibillion losses in subprime mortgages, the world\u2019s central
Six months later, when Lehman Brothers and American Insurance Group (AIG) fell, the U.S. Congress rushed to
pass the Troubled Asset Relief Program, the greatest bank bailout legislation of all time. But as it turned out,
that wasn\u2019t sufficient either.
Subsequently, in addition to the original goal of TARP, the U.S. government has loaned, invested, or
committed $400 billion to nationalize the world\u2019s two largest mortgage companies, $42 billion for the Big
Three auto manufacturers; $29 billion for Bear Stearns, $185 billion for AIG; $350 billion for Citigroup; $300
billion for the Federal Housing Administration Rescue Bill; $87 billion to pay back JPMorgan Chase for bad
Lehman Brothers trades; $200 billion in loans to banks under the Federal Reserve\u2019s Term Auction Facility
(TAF); $50 billion to support short\u2010term corporate IOUs held by money market mutual funds; $500 billion to
rescue various credit markets; $620 billion in currency swaps for industrial nations, $120 billion in swaps for
emerging markets; trillions to cover the FDIC\u2019s new, expanded bank deposit insurance plus trillions more for
other sweeping guarantees; and itstill wasn\u2019t enough.
If ithad been enough, the Fed would not have felt compelled yesterday to announce its plan to buy $300
billion in long\u2010term Treasury bonds, anadditional $750 billion in agency mortgage backed securities, plus $100
billionmore in GSE debt.
hundreds of billions, the wealth destruction taking place at the household level in America is occurring in the
trillions \u2014 $12.9 trillion vaporized in real estate, stocks, and other assets since the onset of the crisis,
according to the Fed\u2019s latest Flow of Funds.
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| Upload Date: | 05/22/2009 |
| Copyright: | Attribution Non-commercial |
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