I’m drawing up new plans for a financial concern and need some input. Here’s what I’ve got so far:
1. Be too big to fail
2. Find someone expert at spinning the revolving door marked Wall Street/WashingtonDC
3. Use other people’s money
I was going to sending this list to CIT Group, but I think someone at Goldman Sachs must have tipped them off. Looks like the ailing asset-based lender might get a little relief from taxpayers. It’s pretty ridiculous.
As I wrote a couple of days ago, Washington has gotten into the business of picking winners and losers through its haphazard bailout binges. By agreeing to subsidize the debt of competitors like GE, GMAC the feds put CIT at a disadvantage.
And here’s where taxpayers should get pretty outraged: Treasury foolishly threw a couple of billion dollars last December at the asset-based lender and said “good luck!” raising more. Taking a torch to the money would have been much more efficient.
If you have a literary turn of mind, or just enjoy a good theme, then thank CIT for going to the brink the very same week that the Goldman Sachs machine printed its earnings of $3.4 billion. Goldman was a winner in the White House version of “who shall live and who shall die” and CIT came a cropper. The bankers and traders and Goldman shareholders should all be giving high-fives to their guardian angels in Washington. The Wall Street Journal opinion page has a few words about the subsidies to the golden moneymaker and its alter-egos — CIT and Fannie Mae:
Goldman will surely deny that its risk-taking is subsidized by the taxpayer — but then so did Fannie Mae and Freddie Mac, right up to the bitter end. An implicit government guarantee is only free until it’s not, and when the bill comes due it tends to be huge. So for the moment, Goldman Sachs — or should we say Goldie Mac? — enjoys the best of both worlds: outsize profits for its traders and shareholders and a taxpayer backstop should anything go wrong.
Sounds like a plan to me.
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