FDIC To Guarantee All Derivatives Bets With US Taxpayer Dollars

Apparently the trillions of dollars in bailouts and stimulus went over so well with the American public that Congress found it necessary to further expand the government’s role in backstopping defunct, mismanaged and insolvent businesses. The Covered Bond Act of 2011, as explained by Patrick.net, “is designed to allow bundling of any kind of debt including derivatives, into marketable securities guaranteed at full face value by the FDIC.”

In The fleecing of America: The United States Covered Bond Act of 2011 Marti Oakley writes:

With the country still seething from what was perceived as two near mortal wounds, and with the added insult of not seeing even one of the criminals charged with a crime, prosecuted or jailed for criminal activity, the wound is still raw and festering.  Wanting to avoid another national discourse on why the citizens of the US should be made responsible for the massive financial corruption, essentially paying the bills for the crimes committed by these ever so special friends of government, Kay Hagan D(NC) and Bob Corker R(TN) have come up with a wonderful plan.  They have decided it would be best to allow the bundling of these toxic instruments and to insure them in the FDIC.

Patrick.net fine tunes this for us:

“Asset classes eligible to be rolled into Covered Bonds are shown below including “H” which leaves the door open for anything left over, What would qualify would be the decision of one unelected official, the treasury secretary/Goldman Sachs representative.

(A)  a residential mortgage asset class;
(B) a commercial mortgage asset class;
(C) a public sector asset class;
(D) an auto asset class;
(E) a student loan asset class;
(F) a credit or charge card asset class;
(G) a small business asset class; and
(H) any other eligible asset class designated by the Secretary, by rule
and in consultation with the covered bond regulators 

This should make your eyes explode from your head

Full Article at the PPJ Gazette