Banks Are Likely to Hold Tight to Bailout Money

[MannyGoldstein]

Source: The NY Times

Even as the government moves to plug holes in the nation’s banks, new gaps keep appearing.

Since mid-2007, when the credit crisis erupted, the country’s nine largest banks have written down the value of their troubled assets by a combined $323 billion. With a recession looming, the pain is unlikely to end there. The problems that began with home mortgages, analysts say, are migrating to auto, credit card and commercial real estate loans.

The deepening red ink underscores a crucial question about the government’s plan: Will lenders deploy their new-found capital quickly, as the Treasury hopes, and unlock the flow of credit through the economy? Or will they hoard the money to protect themselves?

John A. Thain, the chief executive of Merrill Lynch, said on Thursday that banks were unlikely to act swiftly. Executives at other banks privately expressed a similar view. “We will have the opportunity to redeploy that,” Mr. Thain said of the new capital on a telephone call with analysts. “But at least for the next quarter, it’s just going to be a cushion."



Read more: http://www.nytimes.com/2008/10/17/business/17bank.html?_r=1&oref=slogin

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No shit, d-u-u-u-u-u-h. That's why we should have purchased VOTING shares, like they did in Sweden - you know, the plan that actually worked! We could force the goddamn banks to use *our* money for *our* own good.

Instead, my family just gave $10k or so to bankers so they can buy another Ferrari.

Fucking Paulson knew this was just a goodbye kiss to his friends. Dear God, how can the Congressional Democrats be so stupid and/or corrupt to allow this?