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Bankers Profits Are Pure Theft

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By now everyone knows what “Too Big to Fail” means. But few people know the TBTF banner has become a bargaining chip that the largest US banks are using to steal money from taxpayers.

See, some of these banks, through open and ongoing threats to Congress and the American people, have positioned their risk of failure as such a danger to the US economy that they’ve been able to exhort from their creditors additional discounts on interest rates that other banks and industries don’t enjoy.

Why? Because their creditors know the US government will bail out the bank if it gets in trouble and can’t repay the creditor.

In other words, these banks are receiving loans they would not otherwise qualify for – at a discount – based on threats and bailouts.

So, how much is this discount?

According to Bloomberg, it adds up to about $83 billion dollars a year. And why is that number important? Three reasons.

One, that number is roughly equal to the amount of “profit” these banks report each year. In other words America’s biggest banks can only claim this profit by stealing the money from the US taxpayer. Adding insult to injury, it’s not even needed to save their hides; without the money they wouldn’t go out of business, they would just break even. Of course if the best they could do was break even, they sure wouldn’t be paying their CEOs $11 million stock bonuses and awarding them 64% salary increases as BofA just did.

Speaking of BofA, maybe they DO need bailouts to keep from going down in flames. So says the Observer: “The Charlotte-based bank’s earnings lately haven’t been stellar. In the last two quarters, Bank of America largely broke even as legal settlements all but wiped out its profits.”

So that bubble-headed ginger, Moynihan, gets a bonus that’s 200 times the amount of the average US annual salary and a raise from breaking even ONLY because of bailouts? Are you kidding me???? Without the bailout discount BofA would have LOST money over the last two quarters. How many times have I have told you a) these people are evil, b) they are broke and incapable of making a profit on their own, and c) if only one of them goes down then the entire economy goes with it? Thinking I’m right yet? Maybe just a tad?

The second reason you should be paying attention here is that $64 billion of the $83 billion is pocketed by just five banks – JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – that combined have over $9 trillion (with a T) in assets. $9 trillion is more than half the US GDP. What happens if they REALLY need a bailout – does the US government have $9 trillion laying around? Not with $16 trillion in debt.

The third and most important reason you should care about the $83 billion PER YEAR these banks are stealing from you is this: The automatic spending cuts (sequester) that are going to cause a complete disaster in the economy next Friday (if we believe Obama’s recent bleating, even though it was his idea), only total about $120 billion PER YEAR.  In other words, 70% of the cuts that everyone is screaming about could be COMPLETELY avoided WITHOUT raising taxes, WITHOUT raising the debt ceiling, and WITHOUT borrowing or spending a single dime simply by telling these banks to go to hell.

But hey, if you bank with any of these guys, you deserve whatever you get.

H/T Denninger

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