Sheila Bair made sure that the banks wouldn’t be able to logroll the taxpayers, and by the same toxic assets they were selling through PPIP.
But look who gets to be a buyer…
CNBC: The program is likely to include as many as nine participants. CNBC has confirmed that two firms will be Wilbur Ross’s Distressed Real Estate/debt fund and a joint venture between GE (GE) Capital and private investor Angelo Gordon & Co. As many as seven other firms will likely participate.
Wait, doesn’t GE have its own toxic asset program to deal with? Well, sure, but they’re not a bank, they never took TARP and they didn’t have a stress test, so that’s never really been addressed.
Of course, it’s not like GE hasn’t received a massive, massive bailout from the government.
WaPo wrote yesterday all about the industrial giant’s use of the TLGP program, to raise FDIC-backed debt.
The article, a joint project between the paper and investigative journalism organisation ProPublica, focused on the “loophole” that allowed GE to get in on the program, namely its ownership of two Utah-based thrifts. That’s actually a double-dose of regulator shopping, as they picked a weird state and the famously bad regulator OTS.
But the loophole story kind of pales in comparison to the big story, which is that GE has now raised A LOT of money courtesy of the FDIC.
Check it out:
As a result, GE has joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates. Public records show that GE Capital, the company’s massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP.
A quarter of $340 billion. Why that’s $85 billion the company has raised in debt that for all intents and purposes is backstopped by you, the taxpayer (presumably, the Congress will never let the FDIC go bankrupt).
That’s a lot of money raised at risk-free rates for what’s arguably a gigantic hedge fund.
And they’re allowed to be a buyer in the PPIP?
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