As Foreclosure Crisis Worsens Banks Take Bigger Risks

September 17th, 2009 by Reed Allmand

According to an article in the Star-Telegram, despite the growing foreclosure crisis, the nation’s largest banks such as Goldman Sachs and JPMorgan Chase have not changed their reckless behavior.  Many of the banks who have received tens of billions of dollars in federal bailout money are still up to their old tricks and risky investments.

The article said:

“That Wall Street is making money again in essentially the same ways that thrust the banking system into chaos last fall is reason for concern on several levels, financial analysts and government officials say… And they still make bets that, in the aggregate, are worth far more than the capital they have on hand to cover against potential losses.”

Taxpayers have sunk billions of dollars into these nearly bankrupt banking institutions while they have refused to pull themselves out of the high-risk behavior that put them into financial hot water in the first place.  Many of these banks were a major factor in creating the foreclosure crisis and have failed to slow the tide of foreclosures even after the bailouts, yet they can afford to make more risky investments.  This is a slap in the face to all Americans who had an expectation that the banks had learned their lesson and would invest in preventing another crisis as opposed to laying the groundwork for more troubles. The government spent large amounts of money saving these institutions while homeowners lost their homes to foreclosure; it’s time for them to implement serious consequences for bankers who abuse the 2^nd chance the bailouts gave them.

(source: Star-Telegram.com)