Wednesday, January 28, 2009

Using bailout funds to eliminate jobs

This is literally what is going on, as banks who received bailout funds are financing corporate takeovers that result in people being laid off.

Drug company Pfizer, you might have heard, is in a deal to acquire rival pharma firm Wyeth.

The deal is expected to result in the elimination of 8,000 jobs. The deal is being financed by four banks that received TARP bailout funds intended to revitalize the credit market, strengthen the economy, and put people back to work.

It's probably not what the architects of the federal bank bailout intended.

Most of the banks that agreed to finance $22 billion of Pfizer Inc.'s proposed $68 billion acquisition of Wyeth received funds from the federal government under its Troubled Asset Relief Program, or TARP.


Bloomberg reported that the banks financing the deal - Morgan Stanley and Evercore Partners Inc. for Wyeth, and Bank of America, Goldman Sachs, JPMorgan Chase & Co., Barclays P.L.C. and Citigroup Inc. for Pfizer - would reap $207 million in fees for arranging the takeover.


The Treasury Department said last week that so far it has invested about $194 billion to prop up the banking industry through its TARP. Its goal is to stimulate bank lending and, in turn, the economy. Layoffs detract from that goal.
Rep. Dennis Kucinich calls "foul" on the whole disgusting mess.

[Via FirstDraft]

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