There is more on the use of bailout funds in today's AP press. Banks are apparently using the capital investment funds to purchase other banks. At least a partial purpose for these acquisitons was mentioned to ease the possible need for Federal takover of weaker banks and to strenghten the overall banking system.
This may be a good policy goal, although it looks more like government is now in the business of determining which banks will win out and which banks will lose.
To me it just seems like more indication that the bailout lacks direction and its effectiveness may very well be lessened as a result.
It may be that the markets are not responding well and quickly in part because the bailout is not restoring markets, it is not helping stabilize housing, assisting struggling home owners, reducing foreclosure trends, rewriting high interest rate adjustable loans, buying back defaulted mortgage, or even making new loans.
None of the intended use of the funds that I read said anything about helping big banks get bigger.
I would love to hear your comments.
I saw something that the banks are now bidding for how much money they are to get. Again that doesnt show a clear direction. How is this possibly going to be fair? I just dont see it.
I'm not surprised that the bailout money is being used differently than we were told. If they had told us that large portions of the bailout money would be given to banks in order to help them acquire other banks chances are the American people would have disagreed with the bailout more.
Richard,
Thanks for the post. I had read that the government approved of the acquisition of other financial institutions and that the bailout funds could be used for that purpose. However, I would agree that the long term goal is far from being achieved. Consumer confidence isn't where it is needed because the economy isn't where it is needed and the bailout bill seems incapable of moving us in the direction where we need to go.
Richard, my opinion is that no one really knows what to do. This is an unprecendented time in our history and the policymakers are stuck on what is going to work. It ialso underscores how bg the problem is. When you can't figure out what to do with 700+ billion dollars, that can not be a good sign.
Bo
Bo,
You are more trusting of their motivations than I am becoming. Given that the door to this crisis was opened by legislation in the late 90's, the door was held open by the flow of lobby money, and apparently now the door is going to be enlarged by money originally designed to purchase bad mortgages.
I think the motivation is more lobby money and job offers after the new administration takes over.
The events of this past year have led me to mistrust every one in these elevated positions.
Richard
William,
the bailout bill may have been able to move us forward. They just are not using the funds for the bailout.
At least not in my opinion.
Richard
Justin,
My question is whether we were intentionally misled about the planned use of these funds.
Richard
I think your question is right on target Richard. I am of the opinion that the Feds would rather not be too upfront in using the money to bail out banks. Apparently we can't handle the truth as one old wise man said.
There does not seem to be fairness in determining which banks will be rescued. How can it possibly be fair though, with only $700B?
Richard.. I'm still taking notes on all of this... I have mixed feelings here.
Richard, simply amazing how some can take advantage of a bad situation in an effort to pad their pockets (or so it would appear). Time will tell.