Puerto Rico Relief Efforts Pale to that for Just One Wall Street Bank

by Pam Martens and Russ Martens, Wall St On Parade:

With 3.4 million fellow American citizens undergoing an epic humanitarian crisis in Puerto Rico, a United States territory, as critically-needed food and water remain undistributed for lack of manpower and proper logistical coordination by the Trump administration, there is no better time than the present to assess how corporate welfare trumps the rights of individual citizens of the United States.

President Trump, the man who ran on a so-called populist agenda, has Tweeted the following regarding the situation in Puerto Rico (italic emphasis added below):

September 25: It’s old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities – and doing well.

September 29: The fact is that Puerto Rico has been destroyed by two hurricanes. Big decisions will have to be made as to the cost of its rebuilding!

September 30: Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help. They want everything to be done for them when it should be a community effort. 10,000 Federal workers now on Island doing a fantastic job.

When Donald Trump made these Tweets, the situation was as follows in Puerto Rico as the result of Hurricane Maria making a direct hit on the island: most of these U.S. citizens have no electric power, no air conditioning in sweltering heat, no working refrigerators or running water because of the lack of electricity, with tens of thousands of homes missing their roofs and/or walls.

Instead of focusing on the simple reality that citizens in the midst of an epic humanitarian disaster of this magnitude must be forgiven for wanting assistance, Trump portrayed Puerto Ricans as welfare slackers, wanting “everything to be done for them.” This Tweet was reminiscent of another super rich, out-of-touch Republican who wanted to run the country on behalf of people like himself. In 2012, Mitt Romney was captured on tape during a campaign fundraising event making the following remarks:

“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…And so my job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives.”

But when the President invoked the “billions of dollars owed to Wall Street and the banks which, sadly, must be dealt with” in the earliest days of this humanitarian disaster, he topped even Romney for his callous disregard for American citizens who were not born with a silver spoon in their mouth.

The U.S. government’s treatment of debt-riddled Puerto Rico today and the serially-charged, debt-riddled Wall Street banks before, during and after the 2008 financial crash of their own making, says all we need to know about the fragility of democracy in the U.S. today.

In 2007, long before most Americans realized how financially distressed Wall Street had become, the Federal Reserve (the central bank of the U.S.) secretly began funneling money under the table to some of the biggest financial firms in the world at almost zero percent interest. After the media filed Freedom of Information Act lawsuits to find out the extent of this handout to Wall Street and Senator Bernie Sanders added an amendment to the Dodd-Frank financial reform legislation, the bipartisan watchdog for Congress, the Government Accountability Office (GAO), finally revealed in 2011 that the Fed has sluiced $16 trillion in secret cumulative loans to Wall Street banks and their foreign counterparties between 2007 and 2010.

Just four banks, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America received $7.8 trillion, almost half of the total $16 trillion. (See chart below from the GAO report.) Senator Bernie Sanders poignantly said about the bailout: “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

The serially-charged, now felony-bank Citigroup, received a bailout that makes the financial needs of Puerto Rico to rebuild seem like chicken feed. The U.S. Treasury infused $45 billion in capital into Citigroup to prevent its total collapse; the government guaranteed over $300 billion of Citigroup’s assets; the Federal Deposit Insurance Corporation (FDIC) guaranteed $5.75 billion of its senior unsecured debt and $26 billion of its commercial paper and interbank deposits; and the Fed secretly sluiced $2.5 trillion in almost zero-interest, cumulative loans to Citigroup. All of this largess was given despite Citigroup’s scurrilous history of ripping off American citizens.

Trump’s lack of compassion for fellow Americans struggling to survive in a corporate-owned “democracy” reminded us of what Neil Barofsky had revealed in his book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall StreetBarofsky was the Special Inspector General of the Troubled Asset Relief Program during the financial crisis.

Barofsky revealed in his book that the former New York Fed President, Tim Geithner, whom President Obama elevated to be his Treasury Secretary, had confided that the hidden purpose of a Federal program ostensibly to help struggling homeowners avoid foreclosure was actually a spurious maneuver to help Wall Street banks. Barofsky wrote:

“For a good chunk of our allotted meeting time, Elizabeth Warren grilled Geithner about HAMP, barraging him with questions about how the program was going to start helping home owners.  In defense of the program, Geithner finally blurted out, ‘We estimate that they can handle ten million foreclosures, over time,’ referring to the banks. ‘This program will help foam the runway for them.’

“A lightbulb went on for me.  Elizabeth had been challenging Geithner on how the program was going to help home owners, and he had responded by citing how it would help the banks. Geithner apparently looked at HAMP as an aid to the banks, keeping the full flush of foreclosures from hitting the financial system all at the same time. Though they could handle up to ‘10 million foreclosures’ over time, any more than that, or if the foreclosures were too concentrated, and the losses that the banks might suffer on their first and second mortgages could push them into insolvency, requiring yet another round of TARP bailouts.  So HAMP would ‘foam the runway’ by stretching out the foreclosures, giving the banks more time to absorb losses while the other parts of the bailouts juiced bank profits that could then fill the capital holes created by housing losses.”

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