Posted on 01/26/2009 6:56:41 AM PST by marshmallow
As the economy continues to sink, the Wall Street Journal today documents an increasingly obvious fact: Most of the big banks that got a total of $148 billion in taxpayer money didn’t use it to make loans. Instead, lending activity at 10 of the 13 banks that received funds under the Troubled Assets Relief Program actually declined by 1.4 percent in the last quarter, the Journal reports.
So much for money well spent. The story also points out, using an analysis of the banks’ financial reports, what most people have come to conclude about TARP: It doesn’t work. From the Journal:
“It has failed,” said Campbell Harvey, a finance professor at Duke University’s business school. “Basically we have dropped a huge amount of money … and we have nothing to show for what we actually wanted to happen.”
But there’s more. The government’s decision to hand over the TARP money with no conditions also added to the decreased lending, the Journal said:
"The fact that loan portfolios are shrinking at many of the largest TARP recipients underscores how few strings Treasury Department officials attached to the infusions. That has made it hard to prevent banks from using the money to pay dividends, make acquisitions and fund bonuses for top executives."
President Obama has pledged to overhaul TARP. There’s a lot on the administration’s plate already, but fixing TARP is going to have to be a high priority. One lesson here is that handing money over to banks and trusting they’ll lend it out is misguided. The government acted like an irresponsible parent in failing to spell out its expectations for the money.
(Excerpt) Read more at washingtonindependent.com ...
How about just eliminating corporate taxes and capital gains taxes? Eliminate. For two years.
There's your stimulation.
Oh, but I keep forgetting! The Stimulus package isn't about stimulating the economy! It's about buying future votes through picking economic winners and losers. How silly of me! Carry on.
The government's being played for a fool by a nasty teenagers - with OUR money.
Paulsen knew what he was doing. He bailed out his buddies and made sure Goldman Sachs survived intact.
They’re in more trouble than the amount of money given...
Not only aren’t they lending - they’ve laid off their loan officers and underwriters. So, while some banks still talk like they want to lend (but aren’t when the underwriting process takes over), others aren’t even pretending. They’ve gotten rid of the people that make the loans happen.
Now, whether the tighter lending standards are such a bad idea is a different question. You’d think that given what they now know (that the govt is going to bail them out) they wouldn’t be overly concerned about making only the very best loans.
I rule of government. Find a problem, spend boatloads, and make it worse. Actually, TARP was a response to previous government made problems, where were the result of even more previous government made problems, which..and on...and on...and on. Suckers. We. Are. Such. Suckers. We got their patoons, banging away at our ripped up heinnies, every day, year in year out and they tell us it feels good for them and we should be so happy. I don't blame these thieves, idiots, perverts, liars, grifters one bit. They are just thriving on a dumb, weak, cowardly citizenry. That's why we are called Sheeple.
Know a guy went to get a new jeep. Good job, nice downpayment, dealer offered him 12.3 percent. Chrysler got billions at zero, and are trying to get 13 percent.
He said no.
Yup. They have bigger problems than they've revealed.
Just Plane Despicable: ‘Rescued’ Citi Buying $50m Jet
NY Post | 01/26/09 | Jennifer Keil & Chuck Bennett
Posted on 01/26/2009 5:52:33 AM PST by TigerLikesRooster
Edited on 01/26/2009 6:27:25 AM PST by Admin Moderator. [history]
http://www.freerepublic.com/focus/f-news/2171875/posts
Indeed.
The word "zombie" comes to mind. They're the walking dead.
Not to defend the banks, but not enough info is given here to make a sound judgment on these banks lending policies.
If no Tarp funds were given how much would lending have been?
I think we can safely conclude not more lending.
If the reserves of banks fell as enormously as we have been led to believe isn‘t a fall of 1.4% relatively small? We were told many of these banks might fail (ie make no loans) or be drastically affected (again a decrease in lending )
If our GDP has fallen by 5 % (some say this will happen) is a decrease in lending of 1.4% actually more robust then it might have been?
Also one must now consider risk. Where it was deemphasized before (risky loans were made) it is now king. With companies in decline and caps down, companies are now riskier to lenders.
Does on want risky loans to be made as before? Have we learned anything?
Now back to TARP
Necessary? That is another topic. It is a reality , However.
It's always fun to know hard earned tax dollars are going to support incompetent multimillionaires...
Put all those C E Os in J A I L.
Then get your money out of the banks.
Run on the banks before they run away with your money.
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