Web Letters: Bankers' Paradise

I sincerely appreciate the work of Christopher Hayes and other Nation contributors who are calling our attention to the biggest scam in our nation's history. The problem is, it doesn't seem to make any difference. I've written to my Congressman and senators when the TARP was contemplated, calling attention to its lack of a plan, goals or any real analysis to support a $750 billion demand. Their response was basically, "There, there, don't worry your tiny little brain about such things--we know what we're doing." I've written them repeatedly every time I learned another outrageous detail of this larceny. I only get canned responses, thanking me for my comments (that I have little doubt are not even read).

I have become very disillusioned. Everything I learned in elementary school about how this nation is supposed to work was proven wrong during the past eight years. The people have nobody to blame but themselves because of their apathy, ignorance and inaction. I wish there was more I could do, but I don't even know where to begin.

We need a leader that is going to bring us together to challenge our corrupt system and break the stranglehold corporations and moneyed interests have on the people. I thought Obama was going to be that leader, but when he handed Larry Summers and Tim Geithner the keys to the Treasury, I realized we had been conned once again. I guess "pragmatic" is a euphemism for "sellout." So what now?

Charles Dudek

Belfair, WA

Good article about the banks lobbying on mark to market. I am very much waiting for some articles on how the big banks reported big first-quarter profits, and how much those profit figures were created by changes in mark to market, the TARP subsidies and the fact that AIG paid them 100 cents on the dollar for their derivatives. Take away the twelve or thirteen billion Goldman Sachs got from AIG, take away the changes in mark to market and the TARP subsidies, then tell us what those profits would have been.

We need auditors to go into these banks and do a thorough job, because there is a lot of evidence they are cooking the books again. They want to pay their TARP money back so they can get out from under the government restrictions on pay, and they are using phony numbers to justify it.

Randy Miller

Ida Grove, IO

"But whatever drawbacks there might be with mark to market, the alternative--allowing banks to decide what their securities are worth--is certainly worse." Here are the drawbacks of mark-to-market or "fair value" accounting that Hayes apparently don't understand. When the security is marked down, the equivalent charge is applied to the bank's capital (that's why it's called double-entry accounting). And, since "regulations" stipulate specific loan-to-capital ratios, the bank in question must either start calling loans (most of which legally can't be called) or raise more capital.

In an environment of fear in which no one knows which securities are sound and which are not, few are willing to contribute capital. The choices then are to bail out the bank or let it fail.

If the market says a mortgage-backed security is worth only $0.50 on the dollar, is it really worth that if 95 percent of the underlying mortgages are current on their payments?

Mark-to-market accounting never anticipated such wild fluctuations in the value of available-for-sale assets. Furthermore, it was suspended by FDR and, somehow, I'm certain he is one of Hayes's heroes. He has a lot to learn.

Robert Faulkner

Sparta, NJ

Anytime you relax regulations on business, it is a given that they will eventually screw up. Remembering the names of the members of Congress who relaxed regulations might be a good idea.

Pervis James Casey

Riverside, CA