TARP Cash Isn't Moving Forward (despite the bailout promises, banks are still lending less)

[girl gone mad]

TARP Cash Isn't Moving Forward
http://online.wsj.com/article/SB123981607918021761.html#mod=testMod">Wall Street Journal

The largest bank recipients of U.S. government aid are offering less credit to businesses and consumers, the Treasury Department said Wednesday, reflecting and exacerbating the tenuous state of the current economic environment.

In a monthly snapshot of lending by the 21 largest banks receiving Troubled Asset Relief Program funds, the Treasury said credit being offered fell 2.2% across all commercial-lending and consumer-lending categories in February, compared with the prior month.


Particularly problematic: continued deterioration in commercial real estate and general business lending, as well as the credit being made available for student and auto loans.

The lone bright spot remained home loans, with consumers eager to take advantage of record-low interest rates to refinance their mortgages. (Please see related article.)

The Treasury said 16 of the 18 banks surveyed increased mortgage originations in February, resulting in a 35% increase in mortgage lending from January levels.

The February decline in lending adds to pressure on the Obama administration's efforts to restart the still-fragile credit markets.

The Treasury has committed $95 billion in TARP funds for new programs to boost consumer and business lending, though they are either just getting started or are still in the development phase.

The report suggests that jawboning by federal officials for banks to use TARP funds to boost lending is having a limited effect.

http://online.wsj.com/article/SB123981607918021761.html#mod=testMod">More...

[dkf]

1. The banks are looking to pay TARP funds back, not loan it out.

They really don't want to be told what to do. Is anyone surprised?

[w4rma]

2. Fire Giethner and Summers. Hire Brooksley Born or someone like her.

http://www.stanfordalumni.org/news/magazine/2009/marapr/features/born.html
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5397942

[marketcrazy1]

3. you cant FORCE banks to lend!

Loose lending standards and "easy credit" got us into this mess...... job losses continue to rise, wages are falling, home equity is all but gone in most cases. so who will they lend too?? used car sales are up ( along with wholesale prices ) new car sales are in the toilet. why spend 25 or 30 grand on a new car when you can get a nice used car for 10/15 grand.... my friend owns a dealership and he says he has lots of customers walking away from their new cars. ( voluntary repo ) just giving them back so they can get a used car or truck at less than HALF the payment..they are taking the hit to their credit scores to save money...... this is just the beginning..

[w4rma]

4. Then no money should be given to the banks. It should be used to help debtors, instead. (nt)

[JohnWxy]

8. they should have set up a People's Bank, a public private partnership, which would have started

making loans to all credit worthy individuals and businesses needing them for houses, cars, inventory, pay-rolls. We could have used one of the large failed banks to provide the assets and personnel to get the bank going. It would provide basic bank services. This way those who need the loans could get them and we would leave Wall Street to sort out it's problems it created.

Stock would be issued in the People's Bank so private investors could participate in the People's Bank. Eventually, perhaps seven to ten yrs out, the bank could be broken up into several smaller banks and gradually returned to total private ownership.


http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x55498

But this idea is too revolutionary.

[LeftHandPath]

5. Its the DEMAND for debt that has collapsed...

When you're already up to your neck it debt, you dont need more.

Debt is death, and they want you to have more of it.

[CoffeeCat]

6. Then how can these banks announce "record profits"????

Both Wells and Citi have recently announced billion-dollar "record profits".

You'd think we were in the middle of a banking boom--not a severe recession.

Bank of America also announced a profitable January with impressive numbers.

How in the hell are they really doing this????

Like you just said, banks aren't lending (the demand side). Well, consumers and businesses are hunkering
down. They aren't taking on more debt (the supply side).

In this locked up, terrible recession, how is it possible that these flailing banks---who needed to be bailed out--
are making billion-dollar "record profits"??????

I would love to see that question answered.

[notesdev]

7. Two methods

The more straightforward method is that they are outright stealing from you and me at the invitation of Bernanke, Geithner et al.

The other method is that they are profiting wildly on interest rate spreads. They're getting money from the Fed at a nearly zero interest rate... but consumer credit rates have gone as high as 35%(!) and even municipalities are getting stuck with numbers like 15% interest.

That spread, minus their operating costs, is their profit. Their operating costs haven't increased at all, and the spread has gone through the roof. Hence, outrageous profits.

But they are so far in the hole it really doesn't matter how much they make in profits. The profit numbers are dwarfed by the bad debts they hold.

[CoffeeCat]

9. So then we have another question...

If these banks are so far gone (insolvent, in horrendous debt), then their profits really mean diddly.

Furthermore, these profits are being touted as the comeback of the century that will repair the financial
industry and the entire economy. These "profits" are being used to farcically position our economy as
"coming out of the recession" or "improving".

So, why are we being purposely and hugely bamboozled?

[notesdev]

11. their greed knows no bounds

They can and will steal every dollar from you and I until we put a stop to it.

Let's face it - there just aren't that many people out there with the integrity not to steal a million, billion, or more if they can get away with it. And after so many years of doing just that, it has become habit and reflex.

They will stop ONLY when they are stopped by an outside force. The adults in the room need to stand up and say "no more!" And we also need to claw back all the ill gotten gains of the bubble years as well as prosecuting in full all those whose fraudulent actions contributed to this mess.


Edit to add some more detail:

While the bailout banks themselves are zombie institutions, the living dead, with no future, as long as they can keep operating, those who run them can continue to use them as a means of self-enrichment, as well as being able to continue to cover up the criminal actions that would be revealed in a receivership/liquidation scenario. This money is then re-invested in bribing politicians, who in turn take our money to give to the crooks, and round and round and round again. It's a very profitable situation, and they will not willingly give it up.

[girl gone mad]

10. The 4 month quarters don't hurt, either.

[notesdev]

12. Too true

outright baldfaced lying is certainly a tool they have much practice with.