Systemic risk came from poor credit screening, artificially low interest rates, off balance sheet items, risky financial instruments and leverage. Greedy CEO's swung for the fences to maximize their executive incentive compensation and hit annual profit growth expectations of 15-20%. The Fed came to the rescue with:
1. Direct capital injections to banks of $900 billion
2. Buying massive amounts of corporate commercial paper ($1.3 trillion qualifies)
1. Direct capital injections to banks of $900 billion
2. Buying massive amounts of corporate commercial paper ($1.3 trillion qualifies)
3. Holding commercial paper in an off balance sheet vehicle
4. $700 billion toxic asset bailout program (includes risky financial instruments)
Under consideration is a cut in interest rates. The taxpayer funds a $3 trillion resetting of America's financial table, so all the above sins can be repeated. Private equity firms, with their 20-25% annual return targets, are touted as the savior to troubled banks. Much more needs to change, but the signs aren't there. The big money boys keep dumping risk on citizen's shoulders.
4. $700 billion toxic asset bailout program (includes risky financial instruments)
Under consideration is a cut in interest rates. The taxpayer funds a $3 trillion resetting of America's financial table, so all the above sins can be repeated. Private equity firms, with their 20-25% annual return targets, are touted as the savior to troubled banks. Much more needs to change, but the signs aren't there. The big money boys keep dumping risk on citizen's shoulders.
