WASHINGTON – An impatient White House served notice Tuesday on banks and other financial companies receiving billions of dollars in federal help to quit hoarding the money and start making more loans.
“What we’re trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money,” White House press secretary Dana Perino said.
Banks exist to make money, Ms. Perino. That whole capitalism thing, y’know. Maybe you’ve heard of it.
Anyway, in case you haven’t been paying attention for the last month, the AP sums it all up rather nicely:
Under the authority of the $700 billion financial bailout plan approved by Congress and signed by President Bush earlier this month, [there are] plans to dole out $250 billion to banks in return for partial ownership.
The Treasury Department, which is overseeing the massive capital injection program along with the rest of the bailout, will pour $125 billion into nine of the country’s largest banks this week. Another $125 billion will go to other banks.
Treasury Secretary Henry Paulson has said the money was aimed at rebuilding banks’ reserves so that they would resume more normal lending practices. But reports then surfaced that bankers might instead use the money to buy other banks. Indeed, the government approved PNC Financial Services Group Inc. to receive $7.7 billion in return for company stock and, at the same time, PNC said it was acquiring National City Corp. for $5.58 billion.
Officials have said that there are few strings attached to the capital-infusion program because too many rules would discourage financial institutions from participating.
… Because the government cutting massive checks with no strings attached (e.g. Halliburton) always works so well. On the plus side,
at least banks have decided to start doing things in their self-interest, as opposed to writing mortgages that borrowers could never repay. On the other hand, taxpayers have just given out $700 billion for M&A financing, which is way less stimulative than providing seed capital — which wasn’t the original plan (buying up mortgage-backed securities) that we were repeatedly convinced was fundamentally necessary to preservation of the financial system.
*sigh* Spectacular. Imagine that — government thoroughly fucked something up. Again. And yet, somehow, the solution will be more government action. How hard is it to draw the line from A to B?
