Saturday, October 25, 2008

Where Are the Loans

Once again we find out that a Bush Administration official lied to us.

In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.

(He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.)

“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

Maybe the Democrats in Congress can send them a strongly worded letter and tell them how naughty they've been. Why do they continue to buy into ANYTHING a Bush Administration official tells them. They are all lying weasels. All of them. Anyone appointed by Bush is suspect in my book. Anyone. They will have to proves their innocence after the the Eight Year Reign of Error.

I find it very disturbing that the net result of this crisis may be cause for additional bank consolidation. The centralization of the banking system, with its economy of scale, may be tantalizingly efficient, but it does make it more susceptible to the very problems we have today. We have players in the banking system now "too big to fail" because of the devastation it could cause in our financial system.

(via Memeorandum)

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