Bailout solution? Soros-promoted bank takeover

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WND Exclusive FROM JEROME CORSI'S RED ALERT
Bailout solution? Soros-promoted bank takeover
Plan calls for nationalization as end to TARP subsidies
Posted: February 23, 2009
11:25 am Eastern

© 2009 WorldNetDaily

Editor's Note: The following report is excerpted from Jerome Corsi's Red Alert, the premium online newsletter published by the current No. 1 best-selling author, WND staff writer and columnist. Subscriptions are $99 a year or $9.95 per month for credit card users. Annual subscribers will receive a free autographed copy of "The Obama Nation," the blueprint for Obama's first term in office.

The Obama administration, with the support of some top Republican senators, appears to be moving toward nationalizing U.S. banks, in a strategy known as the "Swedish Plan," Jerome Corsi's Red Alert reports. The strategy was heavily championed by George Soros at the Economic World Forum held in Davos, Switzerland, earlier this year.

In the early 1990s, Sweden nationalized banks, but only after the banks had taken the losses writing down their own troubled losses.

(Story continues below)




Economists Christopher Wood argued in a Financial Times column that the U.S. Troubled Assets Relief Program, or TARP, has failed to follow the Swedish model. He wrote that the U.S. government has poured $700 billion of bailouts to banks and brokerage firms without requiring the institutions to first to write down their bad assets and without the government taking majority control.

"Should the Obama administration choose to implement the Swedish plan as a solution to the bank meltdown over toxic assets, the change in direction would effectively limit the continuance of the Troubled Asset Relief Program, or TARP," Corsi wrote.

TARP was predicated on the idea that the government could bail out banks by issuing loans to provide liquidity so they would continue extending credit. Under TARP, the banks were expected to write down, sell or otherwise work out toxic assets that were based on mortgages or other forms of securities derived from debt products, including student loans or credit cards.

"The decision to move from a TARP bailout to a bank nationalization approach largely reflects a growing government realization that troubled bank assets may well amount to trillions of dollars, instead of the more limited $700 billion Congress had provided in the two tranches of TARP bailout funds," Corsi wrote.

As Red Alert previously reported, George Soros told CNBC from the Davos conference that the world economic system entered meltdown when the U.S. government refused to bailout Lehman Brothers in the closing months of 2008.

"When Lehman was allowed to go into bankruptcy, we experienced a game-changing event," Soros said. "The system broke down and had to be put on global life support."

Soros strongly recommended the Obama administration follow the Swedish model by nationalizing troubled U.S. banks as quickly as possible so toxic assets in mortgage-backed securities and other troubled bonds could be absorbed by the taxpayer, positioning the banks to begin aggressive lending once again, only now with clean balance sheets and new government bureaucrat managers.

Appearing to be an insider, Soros suggested to CNBC that the Obama administration plans to "save up" $100 billion from the TARP, with a plan to "leverage these funds up" by utilizing Federal Reserve assets to reach a total of a new $1 trillion to rescue banks, without going to Congress with a request for a new $1 trillion in TARP funds.

Soros suggested this new $1 trillion "will help relieve the situation," but he doubted even this additional $1 trillion would be "enough to turn the situation around."

"In the end, we will have to nationalize the banks, if we want the banks to start lending again," Soros finally admitted to CNBC toward the end of his interview.

Prominent Republican senators such as John McCain, R-Ariz., and Lindsay Graham, R-N.C., known for their support of expanding U.S. free-trade agreements, have joined the bandwagon urging President Obama to nationalize banks under the Swedish model.

"You should not get caught up on a word [nationalization]" Graham told the Financial Times. "I would argue that we cannot be ideologically a little bit pregnant. It doesn't matter what you call it, but we can't keep on funding these zombie banks [without gaining public control]. That's what the Japanese did."

As evidence President Obama was moving toward the Swedish model, the Financial Times cited a comment he made over the Presidents Day weekend.

"They [the Japanese] sort of papered things over," Obama said. "They never really bit the bullet … and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time."

Now, Red Alert's author, whose books "The Obama Nation" and "Unfit for Command" have topped the New York Times best-sellers list, reports that the massive deficit-funding social welfare program the Obama administration pushed through Congress as "economic stimulus" may be followed by plan to turn troubled banks into government banks.

Corsi received his Ph.D. from Harvard University in political science in 1972. For nearly 25 years, beginning in 1981, he worked with banks throughout the U.S. and around the world to develop financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. In this career, Corsi developed three different third-party financial services marketing firms that reached gross sales levels of $1 billion in annuities and equal volume in mutual funds. In 1999, he began developing Internet-based financial marketing firms, also adapted to work in conjunction with banks.

In his 25-year financial services career, Corsi has been a noted financial services speaker and writer, publishing three books and numerous articles in professional financial services journals and magazines.

For more information on U.S. bank nationalization and for financial guidance during difficult times, read Jerome Corsi's Red Alert, the premium, online intelligence news source by the WND staff writer, columnist and author of the New York Times No. 1 best-seller, "The Obama Nation."

For the complete report and full immediate access to Jerome Corsi's Red Alert, subscribe now.

Subscribe to Jerome Corsi's new weekly economic newsletter, Red Alert, for one year and, for a limited time get "The Obama Nation" free. (This offer applies only to annual subscriptions for $99.) Bookmark and Share




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