Do Not Use U.S. Taxpayer Money To Bail Out Kabul Bank
Today’s financial headline: Shut down banks if they threaten system—
Bernanke, made my day.
The Federal Reserve Chairman made that statement while giving his testimony to the panel investigating the financial crisis. Where was he, I thought, when Bush pushed through (and Obama approved) nearly a Trillion dollar of TARP bill? Or, is he wiser after the fact?
On Thursday, Bernanke said to the Financial Crisis Inquiry Commission, “If the crisis has a single lesson, it is that the too-big-to-fail problem must be solved,” He also said that it was impossible for the Fed to rescue Lehman Brothers from bankruptcy in 2008 because the Wall Street firm lacked sufficient collateral to secure a loan.
The Fed chief now thinks that bailing out underwater financial institutions is not a healthy solution and he expects great improvement to come from the new financial overhaul law. According to him, “Too-big-to-fail financial institutions were both a source of the crisis and among the primary impediments to policymakers’ efforts to contain it.”
Why is he saying this after the public fund was already used to save those financial institutions? Those very institutions are now gambling with that money to swindle the very people who saved them! A substantial part of that money went to foreign banks and investors as well.
This morning, Mahmoud Karzai, the Afghan President’s older brother stated that he wants the U.S. to guarantee deposits at Afghanistan’s largest bank to prevent it from failure.
Mahmoud Karzai is the third-biggest shareholder of Kabul bank with his 7 percent holding. He spends most of his time in Dubai, where he owns a waterfront villa bought by money swindled from the Kabul Bank. There were major misappropriations of funds from the bank by the Karzai family and other ruling elites of Afghanistan. Two top executives of the banks have already resigned amid allegations of mismanagement and other shoddy real estate loans.
I do hope and wish that the U.S. taxpayer’s money will not be used to bail out Kabul Bank in Afghanistan.