The thing about it is the same folks that are full of ideas right now on how to "fix" the US Governments policies are people that were helping the banks leach out value from any investment the government was putting in to try and stabilize the economy.
The US Tax payer pumped in at least 2 Trillion dollars to correct the housing mess. The Banks whose mistakes we were(and still are) paying for were busy trying to use corporations to sop up this money, proving there is no limit to corporate greed. Every time we thought we were over a hump they would come up with yet a new set of bad loans, bad investments they had made that they also expected the taxpayer to bail them out on. There are things we haven't even heard off that will come up soon including the possibility that the banks were coordinating disclosures to allow the government only a limited view of their exposure. This may be illegal and actionable civilly when they do it to their investors but doing it to the US government (which became part owner of the different banks) it would be criminal. In light of recent revelations no wonder they wanted to jettison the US taxpayer as an owner.
Unsecured bank-to-bank loans are at non-existent right now. Banks frankly know too much about each other to gamble with money, though that's what they have managed to have the rest of us do(though the bailouts etc). We have yet to hear about off balance-sheet vehicles, gray Market vehicles. These are whats known as externalities(unknowns) and until the paradigm has expanded enough to parameterize(create variables) these unknowns and calculate the Bank's "real" value there won't be a presumption of securitzation(presumption that any value given the bank really reflects all the risks associated with its investments).
I don't like vilifying anyone, including bank officials who gambled and made a mistake, it dehumanizes them and it cheats the rest of us of learning valuable lessons. But continuing to try and leach out value, including using bailout money to pay off penalties for the Bank's malfeasance suggests that this industry absolutely needs the scrutiny of the federal government not just now but for its future conduct. There seems a necessity that banks who paid a lot of money to remove government regulation be required to depend on themselves when their lack of prescience results in their insolvency. Threatening to take down the US economy(and some of the global economy) by their sheer size(too big to fail) with them can only work once and in fact they probably even banked on the fact that the Government would be obliged to rescue them rather than risk its economy get destroyed .
It would be fair to say they have resold all the bad mortgages they or others had invested on. Why they sought to indulge in illegal practices such as robo-signing(and robo-calling) to deprive the same tax payers that bailed them out is beyond me. Now we know they were indulging in some illegal activities, we have to wonder what else they have been up to. Could they they have been selling and reselling packages and what level of control the US government has exercised during payout for TARP funds ? While these funds were labelled "assistance to homeowners" all that has happened is that Fannie and Freddie Mac, FHA and the banks while receiving the funds don't seem to have fulfilled the requirement that they refrain from further illegal activities. I think in coming months and years we may find more about these and other questions. In any effort such as the bank bailout there is an implied agreement that the Bank's are telling us everything. With these things(I can't even begin to quantify them since the field of Economics has to yet create models the taxonomy and model to understand them) as they are now emerging.
