Tags: banks | secure | Alexander | pay

Banks Use Cybersecurity to Plan TARP 2.0

By Wednesday, 16 July 2014 08:34 AM Current | Bio | Archive

Remember TARP? The 2008 "Troubled Asset Relief Program" let George W. Bush spend $700 billion of your money to "promote financial stability."

Bush's Treasury Secretary, ex-Goldman Sachs CEO Hank Paulson, quickly turned TARP into a Wall Street bailout.

The free money worked. In the space of one year, Paulson's industry went from the brink of collapse to record profitability.

(For the record, the banks still deny being "bailed out." They simply took money the government offered them at subsidized, below-market interest rates, used it to generate massive profits for themselves and then paid the money back with token interest. Call this whatever you wish. I call it a bailout.)

Fast forward almost six years and we find the same banks right now laying the groundwork for TARP 2.0. Instead of troubled mortgages, they will this time justify it with "cybersecurity."

As I reported last month, retired NSA Director Keith Alexander wants to "consult" for the Securities Industry and Financial Markets Association (SIFMA). I said the trade group would be insane to hire Alexander. He's the one who let Edward Snowden take the intelligence agency's crown jewels.

Now we learn that SIFMA and Alexander have a deeper plan. The financial services industry is very worried about hackers. They're right to worry. Their own government (helped by Alexander) apparently manipulates the financial system and their handpicked president won't stop it.

So what does SIFMA propose? They want a "partnership" with the government to help the industry protect the public from the dire hacking peril.

Let me translate. The banks want the taxpayers (that's you) to pay for protecting their systems from malicious hackers. This is necessary for the public good, the banks say — just as they did in 2008.

Do not buy their argument. Yes, cybersecurity is important and banks must defend their systems. Yes, doing it right is expensive — but that is not the taxpayer's problem. It is the banking industry's problem, and the industry can afford to pay its own overhead costs.

Wall Street wants you to believe it is a critical national asset, deserving of public protection. I call B.S. The banks have ample profit margins. If they can afford multimillion-dollar bonuses, they can afford to protect their networks without taxing the other 99 percent of us.

One excuse SIFMA offers is the danger of bank runs, but they don't mention that bank runs can occur only because fractional reserve banking is a fundamentally dishonest business. No one would need to worry about bank runs if the industry weren't running a giant pyramid scheme.

The partnership SIFMA wants will serve mainly to transfer money from taxpayers to banks and defense contractors, with Alexander, former Homeland Security Secretary Michael Chertoff and their private equity pals skimming millions off the top.

That's why SIFMA can pay Alexander so much. They're convinced he will save the industry far more money than he costs. They're right — and he will do it by sticking YOU with the bill.

Does this stink? You bet it does. Our top banks have the same "entitlement" mentality we see in some welfare recipients. They are "takers" who live off the dole and think they deserve it.

Will the well-dressed takers get away with TARP 2.0? Wall Street leaders think we have short memories. I think they are wrong.

America learned something in 2008. They won't fool us again.

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PatrickWatson
Remember TARP? The 2008 "Troubled Asset Relief Program" let George W. Bush spend $700 billion of your money to "promote financial stability."
banks, secure, Alexander, pay
562
2014-34-16
Wednesday, 16 July 2014 08:34 AM
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