Wall Street Gets the Gold; Main Street Gets the Shaft!
We all suspected this, and now it is public. More than 1,000 community banks suffered severe damage as a result of their GSE preferred stock being wiped out following the nationalization of Fannie Mae and Freddie Mac. Now, in the latest Bloomberg investigation of the financial crisis, we find out that then-Treasury Secretary Henry Paulson tipped off his Wall Street buddies on the plan. And anyone who thinks that Wall Street did not act on that information is smoking some powerful dope.
Meanwhile, Paulson was making public statements that Fannie and Freddie were “stable” and that their capital was “adequate.” Why didn’t he tip off the more than 1,000 community bank CEOs whose holdings were about to be wiped out?
At the time, we had our suspicions, but no proof. Well, it looks like we community bankers were right all along. I guess it’s hard not to know when you’re getting screwed.
Of course, while this inequity is outrageous, it’s far from the first time community banks have gotten the shaft. Any wonder we want our own voice in Washington? Any wonder why we are fighting for fair treatment for Main Street when Wall Street gets a break after wreaking financial havoc?
Once again Wall Street gets the gold and Main Street gets the shaft. Crony capitalism is alive and well.