Dishonest Money: CHAPTER 3 The Bailout by Joseph Plummer
CHAPTER 3
The Bailout
Enough with the set up, let’s take a look at the Federal Reserve System in action. Limiting our focus to a period of roughly 20 years (1970 through 1990), we’ll pick out some of the more interesting and well-documented bailouts.
While reading, keep in mind that there are “bigger and better” bailouts in the works right now. As long as it’s profitable for the financial elite to make these kinds of “mistakes,” the stories that follow will never end.
Penn Central Railroad
In 1970, Penn Central was America’s largest railroad. It employed 96,000 people, had a weekly payroll of $20 million, and was on the verge of bankruptcy. If ever there was a candidate for a “protect the public” bailout, this was it. One thing to keep in mind as we proceed, many of the large banks that had loaned Penn Central into inescapable debt also had bank officers on Penn Central’s board of directors. In other words, Penn Central was “mismanaged into insolvency” by the very banks it owed money to. They helped dig the giant hole from which the company (and the bankers) would eventually be rescued.
The House Banking and Currency Committee Chairman, Wright Patman, conducted an investigation in 1972 and found: