Corrupt Banks at it Again

Here is a Wall Street Journal article noting that the banks want to "game the system" that Obama's financial team (Geithner, Larry Summers, et. al.) has set up to get rid of the "toxic assets" (now called "legacy assets" as part of putting lipstick on a pig). When this PPIP program was set up, lots of people pointed out that it opened the door wide to corruption. Well, the WSJ is saying that the Wall Street bankers now want to play the corrupt game with PPIP:

Banks Aiming to Play Both Sides of Coin

Industry Lobbies FDIC to Let Some Buy Toxic Assets With Taxpayer Aid From Own Loan Books

Some banks are prodding the government to let them use public money to help buy troubled assets from the banks themselves.

Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program.

PPIP was hatched by the Obama administration as a way for banks to sell hard-to-value loans and securities to private investors, who would get financial aid as an enticement to help them unclog bank balance sheets. ...

The lobbying push is aimed at the Legacy Loans Program, which will use about half of the government's overall PPIP infusion to facilitate the sale of whole loans such as residential and commercial mortgages.

Federal officials haven't specified whether banks will be allowed to both buy and sell loans ...

Some critics see the proposal as an example of banks trying to profit through financial engineering at taxpayer expense, because the government would subsidize the asset purchases. ...

"The notion of banks doing this is incongruent with the original purpose of the PPIP and wrought with major conflicts," said Thomas Priore, president of ICP Capital, a New York fixed-income investment firm overseeing about $16 billion in assets.