Crony Capitalism V2

Wall Street has been shaping Geithner/Summers's financial rescue policies. This much is well-known. But the brazenness with which they do so and the docileness with which Geithner et al allow the Wall Street chieftains to walk all over Washington is getting a little obscene.

Here is the latest chapter on how Wall Street is effectively playing with public money in full view, buying up each other's toxic assets after getting bailout $$ to bid up prices of such assets which they couldn't sell to unconnected parties at unrigged market prices. Read this from NYU Professor Nouriel Roubini's famous website:

"In order to persuade the private sector to participate in the PPIP, the government is engineering solutions that sidestep the strings attached to direct government aid, in particular executive pay restrictions. Moreover, reports show that banks are planning to bid on each other's assets to drive up the price and take advantage of the subsidies, while the FDIC is mulling to let banks share in any upside if they participate in the program as Treasury wants to keep participation voluntary. Increasingly, questions arise about the legality of this approach starting with AIG's full bailout of counterparties with taxpayer money. Given the limited TARP buffer left ($150 billion after PPIP) and likely Congressional opposition to new TARP money, the administration is under pressure to restore the banking system with the help of private capital if it wants to avoid anything resembling nationalization. This puts Wall Street in a position to dictate the terms..."