An article in today's New York Times entitled "Bailout Is a Windfall to Banks, if Not to Borrowers" begins with this precious little bit:
At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.
“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”
You have to love this. As though it wasn't the business models and credit policies of banks that got us into this whole mess. This guy acts like the banking system has been a model of prudence, and maybe his bank was. But I doubt it. I have a friend who works at a small bank, as a lender, who did act responsibly before this whole fallout and he and his bank have gotten fucked from the business models and credit policies of other banks. And his bank hasn't seen a dime of TARP I.
For this John C. Hope III (It's like a name from a movie about a Depression) to act shocked that people would expect him and his bank to do with the money it received from the government what it was supposed to do (i.e. lend) is enough to make someone sick. I can't stand the hypocrisy in all of this.
Now, to amend what I just said. I used the word "supposed," but that probably isn't quite right, is it? Because, just as it did leading up to the Iraq invasion, Congress completely panicked on this one and didn't set up any checks and balances for how the money was to be used. Check out this precious bit from this story:
"Individually, banks that received some of the first $350 billion from the Treasury’s Troubled Asset Relief Program, or TARP, have offered few public details about how they plan to spend the money, and they are not required to disclose what they do with it."
Why the hell aren't they required to do so! Why would you write a check to any institution whose business model and credit policies had sent a whole financial system into a free fall without putting in place the means to track how that check was being spent? I mean this is dumb getting dumber.
Because of Congress' lack of foresight we end up with this:
"A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future."
I would be one to argue for a market-driven system, a survivor of the fittest kind of living, if the "fittest" weren't only that because of the support they are given. If banks and other financial institutions could actually keep their houses in order and everyone on Main Street were flailing about in their own financial crisis, then I'd say, we got ourselves into this, we have to get ourselves out. But, for the banks to be in such a bad way, receive loans (even though they themselves wouldn't have lent money to themselves, given that it would be such a bad investment), and then solely use it as though it is theirs to invest...and then to act as though they had some sort of inalienable right to it, as though it's a given that they should receive money while everyone else suffers, well, it's almost too much for one person to take.
For a more thorough analysis (and maybe less pissed off, or at least he doesn't swear in his analysis) of the financial crisis, follow Robert Reich's thoughts on Guernica, where three days before this story in the Times he already told us all of this when he wrote "But the easier and probably more correct argument is that American taxpayers wasted $350 billion. No one knows exactly where it went -- at least two recent reports reveal that the Treasury had no idea -- but we do know the money did not go to small businesses, struggling homeowners, students, or anyone else needing credit, which was the major public justification for the bailout."