Big Bank Bailout Continues

Dean Baker at Beat the Press is doing a great job of tearing apart the media for its analysis of the Fed's bailout moves yesterday.

He writes: "Can’t the media find any economists who don’t think that handing hundreds of billions of taxpayer dollars to the big banks and the incredibly rich people who own and manage them is a good idea?"

Not from what I can tell. It can be extremely frustrating to read pages like this one that offer the opinions of a range of economists stretching from cheerleader to baton squad captain.

The "genius" of the Fed's various moves is that they amount to a gigantic bailout of the banks, with taxpayers' money, that few reporters, economists, or taxpayers recognize as such.

The Fed is essentially making huge loans to banks like Citigroup and letting them pledge mortgage securities that no one wants as collateral. The threat of bankruptcy would be much greater for Citigroup, Merrill, & co. if they weren't getting these loans.

Rather than hold negligent executives like Robert Rubin accountable for mis-managing Citigroup to the point where it is on the verge of the biggest bankruptcy ever, the government is helping them save face.

Rubin is still a respected figure in Washington, which is pretty hard to understand, given his role in this thing. On Friday, he will offer welcoming remarks at a Brookings Institution forum on "Addressing the Foreclosure Crisis."

As recently as January, a New York Times article failed to identify him as an executive at Citigroup, even as he was addressing a conference of US mayors that was grappling with the effects of the foreclosure crisis that his bank helped cause:

Speaking to the group, Robert E. Rubin, a former Treasury secretary, urged the mayors to be more aggressive in pressuring Washington for strong federal action, particularly in reviving the housing market.

The gall! Maybe it's time to get more aggressive in foreclosing on the House of Rubin.