Elliot Spitzer has an excellent article up at Slate about the $7.7 trillion secret loans that the Fed made to the nation’s biggest banks. He wants criminal and Congressional investigations, as you would expect.
What caught my eye though, was his analysis of the profits the banks made by receiving a virtually no interest loan and then lending the money out at a higher interest rate. He calls that profit a gift.
Second: Require the recipient banks to use this previously undisclosed gift—the profit they made by investing this almost interest-free money—to write down the value of mortgages of those who are underwater. The loans to the banks were meant to solve a short-term liquidity problem, not be a source of profits to fund bonuses. Take back the profits and put them to a public use.
I was thinking about that and realized that if the money had been flowing in the other direction, we might be calling it a bribe or at least wondering about money laundering. Imagine if a businessman or banker knew that a government official had an opportunity to loan money out at 5% and made a no interest loan to said government official of $1 million, would we not be VERY SUSPICIOUS of that $50K profit made by the government official?
Now, for a bribe you need a quid pro quo, and I haven’t a clue what might have been the return favor, but hell’s bells, don’t you think somebody ought to at least look into that?
Here’s some text from NYS law concerning false statements made in connection with securities. NY GBS § 339-a:
person, who, with intent to deceive, makes, issues or publishes, or
causes to be made, issued or published, any statement or advertisement
as to the value or as to facts affecting the value of the stocks, bonds
or other evidences of debt of a corporation, company or association, or
as to the financial condition or facts affecting the financial condition
of any corporation, company or association which has issued, is issuing
or is about to issue stocks, bonds or other evidences of debt, and who
knows, or has reasonable ground to believe that any material
representation, prediction or promise made in such statement or
advertisement is false, is guilty of a misdemeanor.
And then there is this excerpt from NY GBS §352-c
6. Any person, partnership, corporation, company, trust or
association, or any agent or employee thereof who intentionally engages
in fraud, deception, concealment, suppression, false pretense or
fictitious or pretended purchase or sale, or who makes any material
false representation or statement with intent to deceive or defraud,
while engaged in inducing or promoting the issuance, distribution,
exchange, sale, negotiation or purchase within or from this state of any
securities or commodities, as defined in this article, and thereby
wrongfully obtains property of a value in excess of two hundred fifty
dollars, shall be guilty of a class E felony.
An awful lot of the 1%ers got bonuses of more than $250 off the profits from the $7.7 trillion in secret loans that they lied to conceal, didn’t they? Hmmmmmm.
[photo: Oleg Golovnev/Shutterstock.com]