WTF?! Obama Administration To Subsididze Hedge Fund Industry While People Are Waiting In Food Lines?

Orwellian_Ghost

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Fri Feb-20-09 09:04 PM
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WTF?! Obama Administration To Subsididze Hedge Fund Industry While People Are Waiting In Food Lines?

U.S. Tries a Trillion-Dollar Key for Locked Lending
By VIKAS BAJAJ
Published: February 19, 2009

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Most banks no longer hold the loans they make, content to collect interest until the debt comes due. Instead, the loans are bundled into securities that are sold to investors, a process known as securitization.

But the securitization markets broke down last summer after investors suffered steep losses on these investments. So banks and other finance companies can no longer shift loans off their books easily, throttling their ability to lend.

The result has been a drastic contraction of the amount of credit available throughout the economy. By one estimate, as much as $1.9 trillion of lending capacity � the rough equivalent of half of all the money borrowed by businesses and consumers in 2007, before the recession struck � has been sucked out of the system.

Banking chiefs, who have come under sharp criticism for not making more loans even as they have accepted billions of taxpayer dollars to prop themselves up, say it is the markets, not the banks, that are squeezing American borrowers.

The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.

http://www.nytimes.com/2009/02/20/business/20lend.html?_r=1&hp

Newly Poor Swell Lines at Food Banks

by Julie Bosman

MORRISTOWN, N.J. - Once a crutch for the most needy, food pantries have responded to the deepening recession by opening their doors to what Rosemary Gilmartin, who runs the Interfaith Food Pantry here, described as "the next layer of people" - a rapidly expanding roster of child-care workers, nurse's aides, real estate agents and secretaries facing a financial crisis for the first time.

Cindy Dreeszen and her husband Alex Orejuela and their son Matthew at the Interfaith Food Pantry in Morristown, N.J. (James Estrin/The New York Times)

Demand at food banks across the country increased by 30 percent in 2008 from the previous year, according to a survey by Feeding America, which distributes more than two billion pounds of food every year. And instead of their usual drop in customers after the holidays, many pantries in upscale suburbs this year are seeing the opposite.

Here in Morris County, one of the wealthiest counties in the country, the Interfaith pantry opened for an extra night last week to accommodate the growing crowds. Among the first-time visitors were Cindy Dreeszen and her husband, who both have steady jobs - his at a movie theater and hers at a government office - with a combined annual income of about $55,000.

But with a 17-month-old son, another baby on the way, and, as Ms. Dreeszen put it, "the cost of everything going up and up," the couple showed up in search of free groceries.

"I didn't think we'd even be allowed to come here," said Ms. Dreeszen, 41, glancing around at the shelves of fruit, whole-wheat pasta and baby food. "This is totally something that I never expected to happen, to have to resort to this."

Olga Eufracio at a Napa, Calif., food bank; she and her husband have struggled to get work lately.

http://www.nytimes.com/2009/02/20/nyregion/20food.html?_r=1&ref=us