You Can't Make This Stuff Up: Dead Banks Start a Bailout Fund
Lyndon LaRouche
September 15, 2008 (LPAC)--At the urging of the Plunge Protection Team, a group of ten global banks has agreed to create a $70 billion pool of funds, so that they can borrow money from the pool in times of crisis. The banks also asserted a "mutual commitment" to keep trading with each other, and to work together to help work out the derivatives exposures of Lehman Brothers and its derivatives counterparties.
The ten banks agreed to pony up $7 billion each for the pool, after which any of the ten can borrow up to a third of the fund, and said they might increase the size of the pool should other banks want to buy in. The banks behind this laughable plan--Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, Morgan Stanley and UBS--include some of the most bankrupt banks on the planet, and the ten have collectively already taken over $235 billion in losses on their securities portfolios since last year.
We suspect that this is actually a derivatives clearing arrangement, in which the zombies all pledge to treat each other as if they were solvent, and dip into the pool as necessary as they work out their toxic mountains of derivatives deals. Still, any way you cut it, it's a circle of drunks—or corpses--leaning on each other to try to keep from falling down.