Want a Piece of Bailout Money? Become a Bank! (Or a car company)

Seriously. Learn to follow the money. You may have heard of many of our investment ban king firms re-organizing themselves as bank-holding institutions. Want to know why?



Well, investment banks, unlike the commercial bank you visit each week to deposit checks and/or withdraw money, are not secured by the US Government. Investment banks insure their money privately. Commercial banks get FDIC insurance, which means you can get most of your money back if the banks "fail." Up until this year, the insurance limit was $100,000. Now it is up to $250,000. Many private firms were under private insurance, but by spinning themselves into commercial banks, they now can get a piece of the $700 Billion bailout plan. Goldman Sachs, Morgan Stanley, American Express, and even General Motor's lending firm, GMAC have magically turned themselves into commercial banks so that they can get in the government-bailout line.



And while we're here, let me also take a moment to formally take a stand AGAINST the bailout for the car companies. Continued pleas from the CEOs plead that if the Big Three don't get billions of dollars from the American taxpayers, their companies will fail. I don't see it. Companies go into and out of bankruptcy all the time. Injecting cash into companies does not provide an incentive to really get their acts together. Giving the companies $25 billion now won't assure us that they won't need another $25 billion next quarter. See what's going on with AIG.



*Note: I've also been against the bailout for the banks as well—I don't have anything against GM in general. They make great cars now.