Quelle Surprise! Big Banks Who Got TARP Funds Reduced Lending

Quelle Surprise! Big Banks Who Got TARP Funds Reduced Lending
http://www.nakedcapitalism.com/2009/01/quelle-surprise-big-banks-who-got-tarp.html

Before we get to the particulars of tonight's Wall Street Journal story, we need to step back a second.

Just like the war in Iraq, which had a ton of justifications served up by the Bush Administration, none of which added up (and the most obvious one, that the Bushies wanted to control the second biggest oil reserves on the planet, somehow never gets mentioned in polite company in the US), we've also had too many rationales offered for the TARP in its very short life.

The one that has stuck with Congress and in the public's mind is that it was meant to get banks lending again. And the Journal tells us that measured against that benchmark, it hasn't worked.

Like the war in Iraq, it's a given that the stated rationales for the TARP were not the real one. Cynics see it as a plutocratic transfer, son of the grossly inflated outsourcing contracts to Halliburton and friends in the Middle East, a last opportunistic looting of the Treasury (literally, in this case).

But this may instead have been the a recycling of Paulson's bazooka notion. Remember when he asked for and secured authority to increase Fannie's and Freddie's credit lines with the Treasury and buy equity:

"If you've got a squirt gun in your pocket, you probably will have to take it out. If you have a bazooka in your pocket and people know it, you probably won't have to take it out."

That, as we now know, proved to be patently untrue, as the markets called the Treasury Secretary's bluff. But Paulson is a very stubborn man and also seems to have remarkably few ideas (his initial plan for the TARP funding was a rejiggered version of his failed "rescue the SIVs" MLEC plan of the previous fall).

(snip)

From the Wall Street Journal:

- raised interested rates and bogus fees
- lowered or cut-off lines of credit

In short, they've taken our money and continued to treat us like so much unwanted rubbish; and further, this attitude has been tolerated from our leadership, which is infuriating.

I just got my statement last week and haven't had the stomach to read more than a few lines at a time.

There was nothing in the legislation that actually said banks would need to start lending again if they took the money. This seems to be a rather OBVIOUS oversight to me, or perhaps it was intentional.

As with all things, our Congress seems stuck in that big business mentality, where corporations must be protected, and the American people can go stuff it. Now they're seeing that without the American people, there is no big business...just big business going out of business.

Get a clue, Congress. The money needs to come from the bottom up, trickle down DOES NOT WORK! Haven't you figured that out yet?

Oh, and while we're at it: TAX CUTS DURING WAR DON'T WORK EITHER. If they did, we'd have a booming economy right now: we've had tax cuts for 8 years under Bush. Where are all the new jobs those tax cuts were going to create? Where's that robust economy those tax cuts were going to provide?

"This seems to be a rather OBVIOUS oversight to me, or perhaps it was intentional."

Of course it was intentional. All the talk about 'lending' was just for public consumption. The money given to the banks is to soak up enough of the financial poison so that the banks don't collapse all at once.

No responsible bank should be increasing lending in this environment, anyway. Too much debt is the problem. Creating more of it is not a path to a solution.

mine are all due. I may just close my accounts and take my money to the credit union at least they are loaning money.

I was shopping for a CD over the weekend and decided against it. I'm still mostly in yen right now.

I have a Fair/Isaac score of above 750 and Chase would not increase my line of credit 25K in December 2008, although my total debt still would not amount to a quarter of the present value of my very desirable property in Sonoma County, CA.

A year ago they were marketing me constantly to borrow more against my home/farm. Now I just get a form letter denying my application without explanation. I knew then that they were lying about how they were continuing to lend to "credit-worthy" borrowers. Fortunately I didn't really need the funds that would have been available if I had been approved.

I'm scandalized.