U.S. Banks Will Only Get Stronger

Once the major American banks survive this period of stagnation intact, they can and will rule the world once again.

The conventional wisdom these days is that American banks, on government life support, are destined to lose their dominant place in the global financial universe. Nothing could be further from the truth. In fact, many of these institutions are currently gaming the U.S. administration’s new “public-private partnership” program to buy and sell toxic assets to their own advantage. Citigroup, for example, has been one of the most active buyers of toxic assets such as Residential Mortgage-Backed Securities (RMBS). These products are probably marked at inflated levels of 80 cents on the dollar on Citigroup’s balance sheets, yet Citigroup can buy them at, say, 20 cents on the dollar in the secondary market. Thus, when it has to eventually sell them back to the government at, say, 60 cents on the dollar, it stands a chance to turn a nice profit at the expense of taxpayers.

(click here for the complete article)

By Ann Lee | Newsweek.
Originally published Apr 18, 2009 from the magazine issue dated Apr 27, 2009 and reproduced here with the author’s permission.

4 Responses to "U.S. Banks Will Only Get Stronger"

  1. Guest   April 20, 2009 at 10:04 pm

    This whole things sounds like yes another scheme or scam the banks pull which will come back to haunt them and cost the tax payers yet more money. And so the cycle of greed and corruption continues.

  2. paul94611   April 20, 2009 at 11:42 pm

    hahahahahahahahahahahahahahahahahahahahahahahahahhahaha.Oh Nooooooo… Not again!

  3. Guest   April 21, 2009 at 2:09 am

    Our government knows this activity is goin’ on?! Shameful that money needed for lending or strengthening reserves is being used for cost averagering existing failed securities. Just more speculation but this time with my money. Taxpaper. No wonder people are fed up, angry.