JPMorgan-created Fed continues paying big dividends
When JPMorgan partners met in secret with Senator Nelson Aldrich on Jekyll Island to hash out the details of what would become the Federal Reserve, they sought to create a centralized system that would not reign in their firm's power (as was ostensibily offered as the motivation behind the legislation), but rather secure and expand it. Money creation powers were ceded to the feds in exchange for a permanent seat in the new cartel.
In creating the Fed, JPMorgan et. al. sought to curtail the growing influence of western banks, recapture the industrial loan market, reverse the trend of private capital formation, force all banks to implement preferred loan-to-deposit ratios, and implement a bailout mechanism that shifts losses from bank owners to taxpayers and consumers. (G. Edward Griffin provides a fascinating account of the motivations behind the secret meeting in the first few chapters of his book, The Creature from Jekyll Island.)
Last month the Fed continued paying JPMorgan big dividends, agreeing to finance a sweetheart deal in which Morgan would acquire Bear Stearns for $2 per share (later revised to $10) plus guarantees of nearly $30B of Bear's "least liquid" assets.
Bear's building lease alone is estimated to be worth at least twice the original purchase price.
In 2007, Bear Stearns said the maximum residual value of the option to purchase was approximately $570 million.
As usual, the major players justified the inside deal as being necessary to stave off predicted systemic market disturbances that would have ensued had Bear been allowed to go bankrupt.
