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Matt Taibbi Asks Why The Fed Gave $220 Million In Bailout Money To The Wives Of Two Morgan Stanley "bigwigs"

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http://www.zerohedge.com/article/matt-taibbi-asks-why-fed-gave-220-million-bailout-money-wives-two-morgan-stanley-bigwigs

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It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment.

So how did the government come to address a financial crisis caused by the collapse of a residential-mortgage bubble by giving the wives of a couple of Morgan Stanley bigwigs free money to make essentially risk-free investments in student loans and commercial real estate? The answer is: by degrees. The history of the bailout era reads like one of those awful stories about what happens when a long-dormant criminal compulsion goes unchecked. The Peeping Tom next door stares through a few bathroom windows, doesn't get caught, and decides to break in and steal a pair of panties. Next thing you know, he's upgraded to homemade dungeons, tri-state serial rampages and throwing cheerleaders into a panel truck.

The impetus for this sudden manic expansion of the bailouts was a masterful bluff by Wall Street executives. Once the money started flowing from the Federal Reserve, the executives began moaning to their buddies at the Fed, claiming that they were suddenly afraid of investing in anything — student loans, car notes, you name it — unless their profits were guaranteed by the state. "You ever watch soccer, where the guy rolls six times to get a yellow card?" says William Black, a former federal bank regulator who teaches economics and law at the University of Missouri. "That's what this is. If you have power and connections, they will give you a freebie deal — if you're good at whining."

What's the betting nothing is said about this. So basically these wives managed to leverage themselves roughly 15-1 and got to invest in something where they couldn't possible lose money.

The proles are just here to be leeched off.

And yet we could only ever buy a house with a maximum of 6 or 7 times mortgage, if only we understood high finance.

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Guest sillybear2

You can appreciate why the Fed fought all the way to the Supreme Court in order to try and cover things up, the state sanctioned looting and corruption over the past two years rivals the actions of the oligarchs in post-Soviet Russia. However, we live in nice liberal democracies so we don't like to make such direct comparisons or think such thoughts.

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You can appreciate why the Fed fought all the way to the Supreme Court in order to try and cover things up, the state sanctioned looting and corruption over the past two years rivals the actions of the oligarchs in post-Soviet Russia. However, we live in nice liberal democracies so we don't like to make such direct comparisons or think such thoughts.

The word you are looking for is: Kleptocracy.

(Not to diss your very good post: I just wanted to simplify it).

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I thought the point of the bailout program was to assist financial organisations in trouble.

In what respect was Waterfall TALF in trouble?

Maybe the wives where in financial trouble and couldn't afford the latest handbags etc... and didn't want to look out of place at the local clubs so they decided to become hard working investment bankers?

As I've always said it's time to sue the central bankers.

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This scam is mentioned by the Khan Academy at the time it was revealed.

the whole scheme meant that any financial "institution" could buy duff "assets" that had underperformed and were used as securities for emergency monies at the FED.

Not just these two women,

The scheme was publicy supposed to help the movement of new loans to industry, but in reality, it was a way to funnel cash to the banks.

clearly, some of the very clever, highly paid bankers who crafted the scheme, thought they could scrape even more out of it.

These two wives are just the tip of this iceberg.

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Maybe the wives where in financial trouble and couldn't afford the latest handbags etc... and didn't want to look out of place at the local clubs so they decided to become hard working investment bankers?

Yes, exactly.

Waterfall TALF was 'in trouble' because these two wives didn't have $100 million to spend.

Makes me as sick as the theiving/lying politicians, the lying/lazy estate agents. the fat cat public sector workers with their final salary protected pensions etc. etc.

Edited by SHERWICK

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The Fed Gave $220 Million In Bailout Money To The Wives Of Two Morgan Stanley "bigwigs"

:lol:

Genius!

What better way to ensure money is injected straight into the economy via the high street :D

.

Edited by libspero

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Guest sillybear2

:lol:

Genius!

What better way to ensure money is injected straight into the economy via the high street :D

Can't you just feel the wealth trickling down and dripping on your head, then slowly running down the back of your neck? <_<

It's amazing how congress argues into the night over comparatively piddling $38bn spending cuts through the official budgeting process, yet the Fed can print up hundreds of billions overnight at a whim in secret, with zero oversight, then they get all uppity when you ask them what it's being spent on.

Edited by sillybear2

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Matt is a great investigative journalist. He digs. And he is fearless. Many of you may have discovered him in the days of the old Moscow 'Exile', reporting on some fairly nasty mobsters who would hit him with a bit more than a bigwig's wife's handbag.

Irro places a fairly safe bet. Well, why do his exposes never get further than something like 'Rolling Stone'. The MSM becomes ever more controlled. These days it seems incredible that Seymour Hersh once got a Pullitzer prize for investigative journalism.

These days, all he'd get is an FBI file on his Twitter activity and blog comment history.

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Matt is a great investigative journalist. He digs. And he is fearless. Many of you may have discovered him in the days of the old Moscow 'Exile', reporting on some fairly nasty mobsters who would hit him with a bit more than a bigwig's wife's handbag.

Irro places a fairly safe bet. Well, why do his exposes never get further than something like 'Rolling Stone'. The MSM becomes ever more controlled. These days it seems incredible that Seymour Hersh once got a Pullitzer prize for investigative journalism.

These days, all he'd get is an FBI file on his Twitter activity and blog comment history.

Staggering stuff...

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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