The Fed Loves The Banks, Credit Card Holders Not So Much

Ever since Bear Stearns collapsed, the Fed has made the news more often than for the occasional interest rate change. Over the last year, they've helped bailout more companies than I can count. Billions and trillions have been doled out to banks to keep them afloat amidst the wreckage they've created for themselves. Almost every one of these financial service institutions have gotten the public money they've requested, so when the consumer comes calling for a little mercy from their credit card debts, the Fed is ready and willing to help, right?

Wrong:

WASHINGTON (Reuters) - The U.S. Federal Reserve rejected a request to force credit card companies to immediately halt retroactive interest-rate increases on existing balances, Democratic Senator Charles Schumer said Tuesday.

Schumer and Christopher Dodd, who chairs the Senate Banking Committee, asked the Fed last month to use its emergency powers for rescuing banks to also help credit card consumers being slapped with unexpected rate increases.

"The Federal Reserve's failure to protect consumers from these outrageous rate increases is unconscionable," Schumer said.

Why would the Fed be so cruel, so heartless, so dispassionate towards the millions upon millions of Americans that suffer from the deceptive practices of the credit card industry? Well, Bernanke has an answer:

In a letter to Schumer, Fed Chairman Ben Bernanke, who has called credit card practices "unfair and deceptive," said credit card issuers have been "encouraged" to comply with the Fed's final rules as soon as possible.

He also said shortening the implementation date of the Fed's rules could cause issuers to overreact by cutting the availability of credit and costing consumers more to use a credit card.

"We believe that issuers must be afforded sufficient time for implementation to allow for an orderly transition process that avoids unintended consequences, compliance difficulties and potential liabilities," Bernanke wrote in a May 4 letter.

Basically, credit card companies can cut people's credit down (and they have already, including my own) but as for helping consumers with the actual debt and service charge abuse....Bernanke wants us all to wait for the issuers to reform all on their own. As if credit card companies are eager to suddenly be nice to their debtors customers after screwing them in their pocketbooks for years on end. If Bernanke believes that, I've got a bridge over the East River to sell him.

Alan Greenspan Admits He Isn't God

For far too long, Alan Greenspan was considered a financial deity for leaders on both sides of the aisle. He was there for Bush Sr., Bill Clinton and until Bernake stumbled in, for the current failure-in-chief. As the head of the Federal Reserve Board, Greenspan helped direct and advocate for deregulation in the market. Unfortunately for the great majority of us, politicians happily followed his advice and were paid handsome rewards by the financial sector. Now that we are seeing the consequences of those policies reverberate through the economy everyone is looking for answers, even the man who had the wrong ones for all these years.

From The NY Times:

Although he defended the use of derivatives in general, Mr. Greenspan, who left office in 2006, told members of the House Committee of Government Oversight and Reform that he was “partially” wrong in not having tried to regulate the market for credit-default swaps.

But in a tense exchange with Representative Henry A. Waxman, the California Democrat who is chairman of the committee, Mr. Greenspan conceded a more serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy.

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Reading these words, I have to shake my head in disbelief. How can someone that is considered so smart not know that the greed of the rich will ultimately bring us all down in flames? Putting a value on debt that is worthless is absolutely ridiculous when the chance of it crumbling is greater than a house of cards exposed to the wind.

I honestly do not think Mr. Greenspan is such a fool, he should most certainly be aware of what his tenure has helped to "accomplish" in our country over the last twenty years. Greenspan must certainly have made quite a deal of wealth in his time with his policies that have made so many of us poor. Deregulation stripped away the protections in the market that were instituted to prevent the crisis of the Great Depression. They were put there for a good purpose Mr. Greenspan and the only reason to get rid of them is to re-enact the boom of the 1920s while recklessly disregarding the consequences in the 1930s.

Now it does not please me to see Greenspan's heavenly aura stripped away in such a manner that Waxman provided today. He certainly deserved it but the truth is that he should have never been given the throne that was given to him by either party.

The Fed Offers More Corporate Welfare To Fat Cat Bankers

Just as New York is gearing up to screw the middle class in these hard financial times, the Federal Government is making the rough patch much smoother for those in the upper class corporate world. The $30 billion dollars provided by the Fed to finance the JP Morgan-Bear Stearns deal outraged many this past week (even motivating hundreds to protest their offices), but imagine how much more ticked off average Americans will be when they hear that the $30 billion in corporate welfare was just the start of this financial insanity.

From RawStory:

The Federal Reserve announced Friday it will auction another $100 billion in April to cash-strapped banks as it continues to combat the effects of a credit crisis.

The central bank said it would make $50 billion available at each of two auctions, on April 7 and April 21.

Through the end of March, the Fed has provided $260 billion in short-term loans to commercial banks through the innovative auction process. It also has employed Depression-era provisions to provide money to investment banks.

Billions upon billions are being "loaned" from the government (meaning us, the taxpayers) to giant corporations with CEOs that make millions upon millions. How exactly is this fair? I'm sorry, the Reagan "trickle-down" theory is no longer viable in a reasoned debate, it has long since been discredited. This action is strictly meant to help the rich stay rich while the vast majority of us is kept down.

Never, ever, let a Republican tell you they aren't in favor of a welfare system, ever. They are lying through their teeth.