- Published on Friday, 10 August 2012 14:14
- Written by Sara Nunnally, Editor, Inside Investing Daily
- Hits: 546
The official figure is $2.4 trillion.
But if they've hidden this much, they could be hiding a lot more.
During the Great Financial Crisis -- indeed, from when Lehman Brothers declared bankruptcy to Sept. 18, 2009 -- the U.S. Treasury used taxpayer money to bail out money-market funds... without telling the public and without congressional authority.
In all, more than $2.4 trillion worth of assets were backed by this secret program. That amounts to nearly 99% of all money-market mutual fund assets from hundreds of funds.
I know that everyone was in panic mode then... no one knew if our financial system would have a heartbeat the next day.
And I know that it's sometimes more common to ask forgiveness than permission.
But these guys aren't even apologizing. It took an assistant professor of finance from the University of Louisiana at Lafayette and the Freedom of Information Act to get the U.S. Treasury to release the names of the funds that received these back-alley deals.
Here are just a few of the names on the list:
- BNY Mellon
- T. Rowe Price
- Legg Mason
- JPMorgan Chase
- Goldman Sachs
- Morgan Stanley
- Wells Fargo.
We have been seeing some of these names pop up over the past four years in less-than-savory circumstances... Is it any surprise that they took part in this shady program?
Not to us.
Sandy Franks and I have written extensively about some of these banks gaming the system in our book Barbarians of Wealth.
From Chapter 11: The Scourge of Wall Street:
In 2007 Goldman Sachs made roughly $4 billion in profits, betting on the collapse of subprime mortgage-backed securities that ultimately brought down the entire U.S. economy. But this is also what qualifies Goldman Sachs as a modern-day barbarian.
You see, what few people realize is that although the company was betting against the sustainability of the subprime market, it was one of the major firms not only creating subprime mortgage-backed securities, but also selling them up and down and all over Wall Street.
Goldman Sachs claimed that these were triple-A investments. They were also insured by AIG. But that didn't stop the company from taking $10 billion in TARP money in 2008, and it certainly didn't stop Goldman from participating in the secret Treasury program.
According to John Carney from CNBC, the funds and banks participating in the program paid next to nothing for the $2.4 trillion in guarantees. He says that the government should have collected somewhere in the neighborhood of $8 billion in fees for this program and has collected only about $1.2 billion.
I guess this is the New America, folks... where taxpayer giveaways are about as frequent as winning a car on The Price Is Right.
For investors, the terrain is anything but simple.
Don't count on surviving on your 401(k). It's going to take a lot more than that to live comfortably.
And how you get that security is going to be radically different from traditional investing. It starts with not trusting the banks and funds that are forcing bland mutual funds down your throat... those same folks who took trillions in taxpayer guarantees and trillions in bailout funds.
Because if you trust these funds, you're in for lower returns for the next decade.
If you're like me, you're worried...
At least, you're worried about everyone who's not starting to think outside the box.
We've been studying the craft of unconventional investing and wealth building for more than 20 years. And we understand the huge shifts happening in the markets today.
But more importantly, we can help you navigate these rough financial spots.
This is not something any self-respecting person would keep to themselves. That's why we've dedicated our entire annual conference to giving you a roadmap for this New America.
I can tell you from personal experience, the speakers you'll hear and get to meet are some of the best and brightest in the world. They know all of the ins and out of investing in today's new normal. In fact, some of them have been making money in unconventional markets for decades.
That's why this Roadmap of the New America conference is so important to attend.
You may have been lucky enough to have already received one of our exclusive invitations. If you're still holding onto it and haven't signed up yet, I have four words for you:
Not everyone will be able to attend this conference, but the ones who do will be uniquely equipped to deal with the investment scene of the New America.
Editor's Note: Cloaked in congressional secrecy for 36 years... this little-known law is about to turn America upside down. One esteemed business professor warns it could send stock prices plunging by a whopping 50%. But there are some simple moves you could make right now to protect your savings and actually make money. Discover the details here.
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