Bank of America Posts Loss as It Gets New Aid

On January 17, 2009 the New York Times reported that "Bank of America Posts Loss as It Gets New Aid" in an article by LOUISE STORY, ERIC DASH and ANDREW ROSS SORKIN.

The new bailout includes "a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets."

"The second lifeline brings the government’s total stake in Bank of America to $45 billion and makes it the bank’s largest shareholder, with a stake of about 6 percent."

Thus one financial organization has received a commitment from the US federal government for $45 billion in direct cash and $92 billion in indirect support, or a total of $143 billion.

This represents 20% of the amount that is being proposed to help put the millions of people who are now out of work back to work. In real terms, it shows that the current capitalist system has a much greater commitment to maintaining its own structures than to addressing the needs of the people.

While many voices across the political spectrum talk about the need to help working families, they at the same time talk about being careful about debt. The sense of a total commitment to helping working families such as that expressed for protecting banking institutions is lacking.

As quoted in the article:

“The U.S. government will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks,” regulators said.

With losses mounting in the financial industry, other banks may eventually feel compelled to turn to the government for assistance, and the program could to used for other big banks. Taxpayers could end up guaranteeing hundreds of billions of dollars of banks’ toxic assets.

“The financial services sector still needs more equity,” said Frederick Cannon, the managing director at Keefe, Bruyette & Woods. “TARP was announced in mid-September and most of the initial decisions were based on the state of the economy then. The economy has gotten a heck of a lot worse.”

The question remains, why is this total commitment lacking when it comes to industry and to working families. This highlights a fundamental problem with the capitalist system; the prioritization of profits over people.

While we struggle as a society to find funding for the human needs of the vast majority of the people, needs like health care, housing, education, and addressing hunger, the coffers have no bottom when it comes to bailing out the rich and their institutions.

Socialism realigns the social priorities toward meeting the needs of the majority of the people and limits exploitation for private profit. Fundamental change is needed today. We in the United States can move forward together to figure out how to meet our needs and dump those who exist to exploit and legally rob off our backs.