Wednesday, May 27, 2009

Geithner Should Just Back Up the Cash Truck

Now that the PEU boys have a captive bank, guess who wants in on the PPIP program? Banks! Both Treasury and the FDIC plan to create "functioning markets" for toxic assets. Both offer huge government subsidies. Treasury's is $100 billion and the FDIC's pilot program is $1 billion.

Banks want to buy bad assets from themselves, with a kicker from Uncle Sam. The WSJ reported:

"Sensible restrictions should be placed on banks, especially those that have received government capital, from investing their own balance sheets in a backdoor effort to reacquire what could be their own assets with an enormous amount of federally guaranteed leverage," said Daniel Alpert, managing director at Westwood Capital LLC, an investment bank.

Recall greed and leverage imploded America's financial system. PEU boys buying banks? Greed is back. Uncle Sam subsidizing toxic asset sales and guaranteeing financing? Check off leverage. The more things change, the more they stay the same. Obama corporafornicates as well as Bush. Both love private equity underwriters (PEU's).