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Title: Big banks binge on Bush-Obama 'venture socialism'
Source:
The Washington Examiner
URL Source: http://campaign2012.washingtonexami ... e-bush-obama-venture-socialism
Published: Nov 14, 2011
Author: Timothy P. Carney
Post Date: 2011-11-14 06:55:33 by Happy Quanzaa
Keywords: Obama-doma-ding-dong, crony capitalism, Solargate
Views: 2293
Comments: 6
Largely out of the media spotlight, the federal government operates a network of financial subsidy programs that benefit big banks by putting taxpayer money at risk. And President Obama, that self-styled populist scourge of Wall Street, is increasing this racket of private profit and public risk that Sen. Jim DeMint (R-S.C.) aptly dubbed "venture socialism." In its latest act of venture socialism, the Obama administration has offered a novel taxpayer backstop to General Electric, the multinational industrial conglomerate that is famously close to this administration, and that spends more on federal lobbying than any other company. The government accessory in this instance is the Export-Import Bank of the United States, a federal agency that finances U.S. exports at taxpayer risk. Ex-Im exists to subsidize U.S. businesses, with most of the subsidy dollars facilitating Boeing sales. Other industrial titans like GE, Bechtel, and General Dynamics devour most of the rest of the Ex-Im subsidy pie. But manufacturers aren't the only beneficiaries of this little-known federal agency -- banks profit from it, too. For instance, when Ex-Im recently approved $1 billion in financing to subsidize Pemex, Mexico's government-owned oil company, 3M and other U.S. exporters of oil-field equipment benefited, but so did some big banks. Bank of America and JP Morgan financed these sales, and so if Pemex defaults, it's these megabanks the U.S. taxpayer will be bailing out. Now Obama has created a new Ex-Im subsidy for banks. The name is a mouthful: "The Supply-Chain Finance Guarantee Program." Here's how to understand what's going on: Imagine I'm a shoe exporter. I ship shoes to stores in Europe, and then I wait a few weeks to get paid by the stores. But what if more orders come in, and I need to restock the shoes right away, before I get paid for my last shipment? I could just borrow from a bank. But another option is that I can just sell my invoices, in effect, to the bank. If the shoe stores owe me $1,000, I might sell Citibank, for $950, the right to be paid by those shoe stores. That's called supply-chain finance, and it's a quintessential capitalist arrangement. But in the midst of this commerce among banks, exporters, and importers, Barack Obama has inserted the unwitting U.S. taxpayer. As part of his Export Initiative aimed at doubling U.S. exports in five years, the Supply-Chain Finance Guarantee Program to guarantees 90 percent of the banks' exposure. In our hypothetical example, if the European shoe stores welched, the U.S. taxpayers would cover 90 percent of Citibank's loss. Citi and JP Morgan were the first two banks admitted to this new subsidy program, and earlier this month, Ex-Im welcomed GE Finance. So GE, which already rakes in tens of billions of Ex-Im subsidies as an exporter (in September, for instance, Ex-Im approved a $425 million subsidy to help GE sell locomotive equipment to Kazakhstan), will now also pocket Ex-Im subsidies as a financier, too. Many aspects of the Obama-Bush industrial policy works this way. The green-energy loan guarantee programs that benefitted Solyndra are also bank subsidies. For instance, the Energy Department this fall guaranteed $1.4 billion loan for solar companies NRG Energy and Prologis to install solar panels. But it wasn't the solar companies applying for the subsidy -- it was Bank of America, through the Financial Institutions Partnership Program created by the stimulus bill, which asked -- and received -- this taxpayer-funded gift from the Obama administration. Taxpayers will repay B of A if this $1.4 billion solar investment doesn't pan out. But what are the odds of a stimulus-subsidized solar venture flopping, right? Failed and bailed-out housing finance giants Fannie Mae and Freddie Mac have a similar arrangement. Like Obama's Export Initiative, and the green-energy subsidies, politicians always have some grand justification. It saves the environment! It helps small business! It creates jobs! It makes the American Dream come true! But whenever politicians are moving around large chunks of money, you can bet the whole thing is being subtly guided by the businesses with the best lobbyists and the most access to power. Foremost among those businesses are the banks, and GE is always a guest at the proverbial table. If you ask the Wall Street Occupiers, it's capitalism and the free markets that drive banks' booming profits. If you look more closely, it's venture socialism.
Treasury Secretary Timothy Geithner arrives to address the Export-Import Bank of the United States during their annual
conference in Washington, Friday, March 12, 2010. (AP Photo/J. Scott Applewhite) The Obama administration "has created a new
Ex-Im subsidy for banks. The name is a mouthful: 'The Supply-Chain Finance Guarantee Program,'" writes Examiner columnist
Timothy P. Carney.
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#1. To: Happy Quanzaa, *Crime and Corruption*, *The Two Parties ARE the Same*, *Hypocrisy and Hypocrites* (#0)
I wish it were possible to explain things like this to most people without having their eyes glaze over in boredom as they tell you they just don't care.
"It is impossible to talk reason with those who can only parrot Party Slogans." sneakypete Sept 2011 Stay Hungry...Stay Foolish --Steve Jobs Steve Jobs,life-long Dim,and major Barry Soetoro supporter.
Nothing harder than convincing people paid not to understand. But no one goes anywhere until History is learned. And thus the masses will be in the Middle of their very own Stalingrad before they wonder just how in hell they got there. 8D
Cops in riot gear now marching on Occupy Oakland. Three foot billy clubs in hand. Looking Ominous. Live feed. www.ustream.tv/occupyoakland#utm_campaign Matt Taibbi has it right. All this police time and resource spend on crushing a legal public demonstration/movement. And zilch investigation of who is responsible for the collapse of the world financial system.
Uh-oh.
since 9/11 we've been saying the USSA is a police state. You only think you had rights because they hadn't been exercised. DoD Gates: "Public Opinion doesn't matter." And the MSM is tired of the Occupy Movement. LOL 8D
Note the Silence of the Tea Party Movement when real change happens..... zzzzzzzzzzzzzzzzzzz....and the Great Religions of Amerika.... " Then there is the merge-ramp between religion and football. Was I the only person revolted by video of the phony "prayer" session held in the Penn State stadium just before Saturday's "big game" with the University of Nebraska? Players from both teams led by Jesus-shouting cheerleaders affected to "pray" for Jerry Sandusky's rape victims, an exercise that was joined and legitimized by the crowd with all the passion of a Nuremberg rally."-Kunstler History will not be kind.
#2. To: sneakypete (#1)
I wish it were possible to explain things like this to most people without having their eyes glaze over in boredom as they tell you they just don't care.
#3. To: All (#2)
#4. To: mcgowanjm (#3)
Cops in riot gear now marching on Occupy Oakland. Three foot billy clubs in hand. Looking Ominous.
#5. To: Fred Mertz (#4)
#6. To: All (#5)
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