Right before banks fail you usually see them go to the central bank or the government as their "lender of last resort". And then they fail anyway. Just look at the Northern Rock mess in the UK for the perfect example, a failed bank which will now be nationalized (and the taxpayers of course get screwed).
Countrywide Toxic Mortgage, a corrupt institution which will fail in the end, has been looting the Federal Home Loan Bank, using it as its "personal ATM", potentially robbing taxpayers of over $50,000,000,000 so far and counting.
Taxpayers!? How could that be? Well, because when the FHLB fails, who do you think will fund their bailout? You got it. Us.
So how is Angelo Mozilo and his gang of thieves doing this? Simple. They've conned the FHLB into giving them all those billions by putting up mortgages as collateral.
Yes, if it wasn't so funny it'd be sad. They're putting up their toxic mortgages as collateral, and the FHLB is taking them.
The FHLB is either too corrupt or too stupid to know that there's a housing crash underway in the US, and that the crap that Countrywide has on their books is nowhere near worth what Angelo says its worth.
It's one big house of cards HP'ers. And when it all caves in, and the media is all a-twitter, asking "how did this happen"? and "nobody saw this coming", well, once again, it was all just so obvious (for HP'ers).
What stops this madness? When someone in DC finally realizes that the FHLB is being had, tells them that taxpayers will NOT bail them out, and they finally cut Countrywide and Mozilo off.
And then things will get interesting.
Sen. Charles Schumer, a New York Democrat and member of the Senate Banking Committee, accused Countrywide on Monday of treating the FHLB system "like its personal ATM," having borrowed $51.1 billion as of Sept 30.
He said that, as Countrywide's mortgage portfolio deteriorates, the FHLB exposure "poses an unreasonable risk."
Yet Bigelow said "we are very familiar with FHLB collateral requirements, and we are in full compliance ... The FHLB has some experience in risk management, and they probably have some idea what they're doing in terms of their lending activities."