Monday, November 10, 2008

Treasury Covering for Banks' Failure to Lend

Did you get mad when you learned that the banks admitted they wouldn't use your bailout money to make new loans?

How about when you found out that the banks are using your money to pay executive bonuses, distribute dividends to shareholders, and - with the government's assistance - to buy out their competitors?

Well, the head of Treasury's bailout program is making excuses for the banks' failure to lend. As CNBC writes:

Capital markets must regain some stability before banks receiving government rescue funds will begin making loans again, the Treasury Department official managing the rescue said on Monday.

"Although progress has been made in the last month, our capital markets remain fragile and confidence is still shaky," said Neel Kashkari, Treasury interim assistant secretary for financial stability, in prepared remarks to the Securities Industry and Financial Markets Association.

***

"As confidence returns to our institutions and our markets, we believe banks will put this capital to use by extending loans to creditworthy businesses and consumers," he said.
Do you get it? The banks won't begin to loan to the people who desperately need it until the economic crisis is over . . . when people and small businesses won't need loans so much anymore.

Rather than pressuring banks to lend, Treasury is covering for them and making excuses for them.

Are you mad yet?
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