Even knowing next to nothing of the dark world of finance, this part of Tim Geithner’s address jumped out at me:
Third, working jointly with the Federal Reserve, we are prepared to commit up to a trillion dollars to support a Consumer and Business Lending Initiative. This initiative will kickstart the secondary lending markets, to bring down borrowing costs, and to help get credit flowing again.
In our financial system, 40 percent of consumer lending has historically been available because people buy loans, put them together and sell them. Because this vital source of lending has frozen up, no financial recovery plan will be successful unless it helps restart securitization markets for sound loans made to consumers and businesses – large and small.
This lending program will be built on the Federal Reserve’s Term Asset Backed Securities Loan Facility, announced last November, with capital from the Treasury and financing from the Federal Reserve.(Bold Added)
When he says “historically” I guess he really means the approximately forty years that this sort of vehicle has been around.
Which is also around the time this whole Voodoo Economics insanity began.
That simply does not sound historic to me but rather seems more like a shifty, dishonest attempt to re-enforce a questionable meme that furthers an ideological agenda somewhere in the depths of his Financier’s soul.
So no sign of backing away from this style of financing from the Obama administration. Clearly, Obama and Geithner believe that Mortgage Backed Securities do not have to be the un-regulated, spin the wheel deal that has caused so much damage.
Again I say, I know little of this and indeed I apologize for voicing an opinion with such little knowledge, but having done the best I could to learn a bit about this so I could have some hope of following the news and understanding people like Paul Krugman, I just have to say that the entire concept of Securitization, unless regulated to the bone, looks as though it was designed with the express purpose of committing fraud.
I mean really, from this musicians point of view – even knowing that the majority of Securitized investments are relatively sound – this all looks like nothing more than an invitation to criminal behaviour.
Exactly as it has been used.
I guess I need to keep learning so someday I too can understand how to create money out of nothing.
Perhaps Obama sees that the move away from Lunatic Capitalism has to be done slowly.
One can hope.