That 2005 Bankruptcy Bill (for those with a sense of humor, it is noted in the comments the full name of the bill was The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005), ostensibly to “reform” the system and something I have bitched about forever, just keeps getting better and better:
But it turns out that one of the features of the 2005 Bankruptcy bill was to put derivative counter parties at the front of the line ahead of other creditors in bankruptcy proceedings. Actually, from what I can tell, they don’t just go to the head of the line. They got to skip the line entirely. As the Financial Times noted last fall, “the 2005 changes made clear that certain derivatives and financial transactions were exempt from provisions in the bankruptcy code that freeze a failed company’s assets until a court decides how to apportion them among creditors.” As the article notes, ironically, this provision which Wall Street pushed for and got to protect investment banks actually ended up hastening the collapse of Lehman and Bear Stearns last year.
I’m going to get an ulcer if I keep reading about the current financial meltdown. Meanwhile, Geithner still keeps coming up with new ways to keep the Wall Street boys out of harms way. Apparently the newest plan involves asking the folks who got us into this mess to take a bunchy of risky bets that… involve no risk for the betters. Only this time it will work.
And if you aren’t completely convinced we are totally screwed, then read this.
At this point, I have absolutely no confidence in Geithner. None. I have yet to see one person give any evidence that he has any idea what to do, or any willingness to do what needs to be done. All I have seen is ass-covering and bad ideas. Admitted, I am no financial wizard and never came up with my own clever scheme to bilk millions out of their savings through a series of risky financial choices that would make me rich no matter what (also, I’m not a sociopath, so I am not cut out for high finance), so maybe I am just no seeing the genius in all of this, but so far, it just looks like the looting is continuing under the cover of chaos.