Geithner, Summers and Bernanke aren't just allowing transnational financial institutions to game government assistance programs purportedly required to stabilize the economy, no, it is bigger than that. They are allowing them to game the entire American political system, with the intention of consolidating even more power within a small financial elite.
On Monday, Treasury Secretary Timothy Geithner announced his plan, long anticipated, for addressing the trillions of dollars in toxic debt held by US financial institutions:
Administration officials outlined a three-part Public-Private Investment Program that offers private investors vast amounts of cheap, taxpayer-supported financing for every dollar they put up of their own money.
In essence, the Treasury and the Federal Reserve will be offering at least a tablespoon of financial sugar for every teaspoon of risk that investors agree to swallow.
"There is no doubt the government is taking a risk," Mr. Geithner acknowledged at a briefing for reporters. "The question is how best to do it."
Under one main component of the plan, the Federal Deposit Insurance Corporation would oversee a program in which banks offer bundles of whole mortgages for sale to investors. The F.D.I.C. would set up an auction for each bank portfolio, allowing a bank to sell the mortgages to the investor that offers the highest bid.
But the crucial incentive for investors — traditional fund managers, hedge funds, private equity funds, pension funds and possibly even banks — is that the government would lend as much as 85 percent of the purchase price for each portfolio of mortgages.
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