The Big Loser in Geithner's Plan? You!

Did anyone really not see this happening? Welcome to the unintended consequences of government intervention in the financial markets - big (and possibly insolvent) banks aggressively buying securities that the taxpayer is going to subsidize hedge funds and private investors to buy in a few months. And all of this is made possible by Treasury Secretary Tim Geithner's public-private partnership program. According to Friday's New York Post, Citi and Bank of America have been aggressively buying up Alt-A and ARM mortgage backed securities, sometimes paying more than the going rate of around 30 cents on the dollar.

See, these banks were given TARP funds to stimulate the economy by making new loans to safe borrowers. Instead, Bank of America and Citi are spending money to buy up the old, bad loans. Why? Because they know that the Geithner plan will create renewed demand for mortgage-backed securities. Actually, they are betting on it ... with your money. We have created a moral hazard here where the taxpayer will bear all of the risk (and the burden), and big banks really won't quite have learned any lessons. Remember, that the purpose of TARP was to help big banks rid themselves of these assets. Instead, they are aggressively buying them back up in the secondary market.

One Wall Street trader told The Post that what's been most puzzling about the purchases is how aggressively both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay. Totally unintended, yet thoroughly expected -- it's government meddling at its imprecise, unwieldly best.