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  2. JPMorgan Exploits Taxpayers

JPMorgan Exploits Taxpayers

By j7uy5 on March 7, 2008.

This is interesting.  Banks think they have found a way to
make money no matter what happens.  


href="http://www.bloomberg.com/apps/news?pid=20601010&sid=axksyBiC6q78&refer=news">As
Houston Auctions Fail, JPMorgan Exploits Taxpayers

By Darrell Preston



March 6 (Bloomberg) -- The collapse of the auction-rate bond market may
cost borrowers from New York to California at least $1 billion in fees,
enriching JPMorgan Chase & Co., Goldman Sachs Group Inc. and
the rest of Wall Street that let the market fall apart.



The firms that pulled their support of the market where states,
counties, hospitals and universities raised $166 billion are offering
to convert the securities for a price...



When the market is working, they make money; when it fails, they make
money.  


"Investment banks created the securities,'' said
Peter Morici, professor at the University of Maryland School of
Business in College Park. "Now that the market has exploded they're
going to force losses on their clients.''



Hard to know what to say about that.  I guess the best way to
make money is to pretend you already have money.


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No, the very best way to make money is to set the rules by which the game is played.

What? How can anybody "let" a market fall apart? The whole point of auction-rate bonds is that they pay low rates when money is plentiful, which purchasers are only willing to accept because of the potential higher rates in times when money is scarce. The bond issuers who set the maximum rate at a ruinously high level have only themselves to blame: promising to pay 20% annualized was their own stupid exuberance.