Weekly Newspaper and Travel Guide
for Pecos Country
of West Texas
Friday, July 18, 2008
By Smokey Briggs
The First Oilfield
Bank of Barstow
Folks, we are on the wrong end of the game, but I’m getting smart. I’m tired of holding the short end of the stick.
This time I am grabbing the long end – and the First Oilfield Investment Bank of Barstow is how I am going to do it.
I’m sure most of you read this week how you and I and all our neighbors have been given the opportunity to become big-time investors in Fannie Mae and Freddie Mac right?
After making about a zillion really bad loans to people that you would not loan your pen to, much less $20, these bloated, kind-of-private institutions are stinking like week-old dead coyotes in the ditch – and the American taxpayer is being invited to invest and clean up the mess.
Invited, that is, if you count Jesse James holding a pistol to your head while reaching into your wallet as an invitation to invest in the J. James IRA Fund.
What the Federal Reserve announced Monday was that it was going to extend a bigger line of credit to these “lending institutions,” to prevent them from going belly up.
But hang on a minute; just what is a Freddie Mac, or a Fannie Mae.
Unfortunately, they are nothing to do with hamburgers or good chocolate.
Fannie Mae and Freddie Mac are Government Sponsored Enterprises. Originally created by President Franklin Roosevelt in 1938, the things were government agencies with the ability to borrow money from the U. S. Treasury through loans from the Federal Reserve.
Or, more correctly, the ability to borrow your money for next to nothing.
Over time, enterprising individuals with plenty of bought-and-paid-for-politicians to help, figured out that there was gold in those hills and the institutions were privatized – sort of.
They are now companies in which private investors can buy stock – but they still have a government charter to borrow money double-cheap from the Federal Reserve.
They get to borrow your tax money at rates lower than most banks, and then loan it back to you. All the while, so-called private investors collect the interest.
I wish I could get a gig like that.
Unfortunately for you, bad investments were made — lots of bad investments. And, of course, the private investors do not want to lose their own money all though they have made a killing in the mean time.
Now, to protect those investors’ investments, the United States Treasury is going to loan Freddie and Fannie a whole lot more money – your money – our invitation to invest.
So, when there is profit to be made, private investors take it home.
But when the wolf is at the door, suddenly the investors go home and Joe Taxpayer is expected to foot the bill.
What is wrong with this picture?
According to Treasury Secretary Henry Paulson, nothing.
These institutions are just too big to fail. Failure would be bad for all of us.
What I think he meant to say was that failure would be bad for his buddies with a whole lot of money wrapped up in crummy debt owned by Freddie and Fannie – and they would rather let you and I take the hickey than take it themselves. Maybe something got lost in translation. He is a Yankee, you know.
Some how I feel okay with somebody else taking the hickey – like the guys who have been taking home the profits the past few decades.
But, Congress, always looking out for you and I, has sided with Paulson – and for our own good, we are going to pay for this mess.
That is the short end of the stick.
I’m looking for the long end.
That is where the First Oilfield Investment Bank of Barstow comes in.
I am founding it. Banks don’t really use cash anymore so I figure some slick entries in the computer will do for start-up cash.
But the real key is to loan a lot of money fast. The FOIBB needs to be so big that it will be “to big to fail.” So, I’m going to loan money at zero interest – and make no loans smaller than one billion dollars.
Best yet, everybody qualifies.
And if that won’t work, I’ll offer borrowers interest back on their loans. That’s right, at the FOIBB we will pay you to borrow money. How cool is that?
I figure I need to loan out about a Trillion dollars in a month, so get ready to spend some money, okay? And don’t worry, we have really, really long payment plans.
Actually, I don’t even expect you to pay the money back. Apparently that is okay – just look at Freddie and Fannie.
While I’m loaning out the money I’ll be charging really big “handling fees” and paying myself about one Billion a month while I sell this debt to Fannie and Freddie and the Federal Reserve. I figure they will buy since I’ll be offering them a cut under the table.
From what we have seen, that is how these boys operate anyway.
In a month or two, the regulators will come in and take over, but by then I’ll be rich, you will all have lots of cool stuff, and the FOIBB will be “too big to fail.”
I can hear the phone conversation now:
“Hey Mr. Paulson, this is Smokey down at the FOIBB. You have a problem buddy. We’re going under and the whole oilfield has borrowed about 56 tons of money from us. If we go down, so does the oilfield, and that would be bad for everybody right?
“That’s what I thought. Here’s the account number. Just wire the money there and everything will be fine.
“Oh by-the-way, say hello to my buds Fannie and Freddie will ya? Tell them I’ve got an investment opportunity for them.”
Return to top
York M. "Smokey" Briggs, Publisher
324 S. Cedar St., Pecos, TX 79772
Phone 432-445-5475, FAX 432-445-4321
Associated Press text, photo, graphic, audio and/or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium.
Copyright 2003-04 by Pecos Enterprise