Federal regulators have
informed Bank of America and Citigroup that they have not passed their government imposed stress tests and that they have six months to raise more capital before the government intervenes in full.
It begs the question: Why wait? With today's news that the economy shrank by a whopping 6.1%, inaction by the government could be devastating.
Charles Hugh Smith thinks President Obama is simply playing this from a political vantage point while giving these two behemoths enough rope to hang themselves:
Imagine the uproar had Obama sought to send the bankers straight into deserved bankruptcy and eliminated their looting; he would have been thwarted and second-guessed at every turn by politcos, pundits and the ultra-wealthy Aristocracy whose perks and privileges were threatened, not to mention a Republican Party spoiling to be spoilers.
What better way to discredit the bankers than to give them plenty of rope to complete their tarnished, fraudulent "plan to save Capitalism from itself"?
...If Obama had refused to support the bailout, the screams that he was "destroying the foundation of the U.S. economy and our way of life" would have been ceaseless and deafening, for a stunned and stupefied public had failed to process what was actually happening beneath the MSM propaganda about "saving the banking system to save the nation."
Obama can now say, "I did everything you wanted." Is it a carefully craft Secret Plan or merely the fumbling results of a status quo politico? Either way, it's brilliant because it's the only possible pathway to a future not dominated by trickery, fraud, collusion, obscurity, propaganda and the looting of what's left of the U.S. Treasury and economy.
I would be more inclined to support Smith's argument if it weren't for the fact that the President's key advisers on such matters are Tim Geithner and Larry Summers.
