How Bankers Are Gaming the US to Get Richer Than God

They're getting taxpayer money on the cheap and loaning it back to us
By Kevin Spak,  Newser Staff
Posted May 13, 2010 12:54 PM CDT
How Bankers Are Gaming the US to Get Richer Than God
A protester holds a sign after marching from Goldman Sachs office to a rally in Federal Plaza demanding Wall Street reform, Wednesday, April 28, 2010, in Chicago.   (AP Photo/M. Spencer Green)

There wasn't a single day last quarter in which Wall Street's big banks—Goldman Sachs, JP Morgan, Bank of America and Citigroup—lost money trading. How is that possible? Isn't trading supposed to be risky? Not when Uncle Sam is guaranteeing it isn't, explains a steamed Henry Blodget of Business Insider. The government is lending these banks money at 0% interest, and they're lending it back to the government at 3% or more. That seems fair, right?

The Fed is lending banks this money for free so that they'll lend it to businesses in the “real economy.” But they're not doing that. "Private sector lending has fallen off a cliff." Why do that when you can get a guaranteed 3% spread lending to the taxpayers? "Doing this required no special genius," Blodget explains. "If you had the good fortune of working at a big bank, you would be making money every day, too." This is by far the government's biggest subsidy to the banks, and it's completely under the radar. (More Wall Street stories.)

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