banks that function like, errm, banks respond to bailout
And tell the Feds to go and get f**ked.
Community banking executives around the country responded with anger yesterday to the Bush administration’s strategy of investing $250 billion in financial firms, saying they don’t need the money, resent the intrusion and feel it’s unfair to rescue companies from their own mistakes.
Intrusion? Really?
Why wouldn’t they want a bunch of Treasury hacks (who wouldn’t know a good loan if they saw it) coming into town with wads of taxpayer money, to, errrrm, save the day that doesn’t need to be saved?
Peter Fitzgerald, chairman of Chain Bridge Bank in McLean, said he was “much chagrined that we will be punished for behaving prudently by now having to face reckless competitors who all of a sudden are subsidized by the federal government.”
Chagrined? I’ll bet he’s fucking livid. This whole thing absolutely turns my stomach.
But wait…..it gets…..better!!!
Federal regulators said they did expect some banks to volunteer, though none stepped forward yesterday. But they added that they would not rely on volunteers. Treasury will set standards for deciding which banks can be helped, and the regulatory agencies will triage the banks they oversee: The institutions faring best and worst will not receive investments. The institutions in the middle, whose fortunes could be improved by putting a little more money in the bank, will be pushed to accept the money from the government.
Did you get that? Bankers who KNOW how to run a bank, are to be forced to sell part of themselves to the Federal Government (who don’t know how to run shit) against their wishes? Are you writing this down? Does anybody want to try their hand at fitting this into, say, a Constitutional framework?
Separately, the FDIC is creating an insurance program to encourage investment in banks by guaranteeing that investors won’t lose money. Participating banks will pay the FDIC a fee of 75 cents on each $100 in debt that they sell to investors. The FDIC will guarantee through June 2012 the debt issued by participating banks before the end of June 2009. If the bank goes bankrupt, or defaults on its debt, the FDIC will pay the investors.
Oh now THAT sounds like a plan - guaranteeing investments in private sector entities, using MY FUCKING MONEY? Is nobody even slightly bothered by this nitwittery?
Luckily they’re alive to the risk that they’re creating (on top of all the others they’ve already created).
To prevent banks from running up massive debts on the government’s tab, the program limits banks to a 25 percent increase from their current level of borrowing. The FDIC estimates that the maximum amount of debt that banks could issue under the program is about $1.4 trillion.
Yes, that’s right folks. They can lend 25% MORE than they are lending now, in a down real estate market with zero momentum. Staggering.
But hey! At least they’ve capped our risk at $1.4 trillion!!
Noah David Simon says:
great post Beth. I don’t know what the solution is… I’m probably wrong about a lot of things. I do know that my family had stock in a bank that acted appropriately and we made about $3000 dollars of of the fiasco from the stock. I’m not claiming to be an expert, so I’m not going to say I know best…, but it would seem that there are rewards for good behavior here for smaller banks. again… I’m not arguing with you and giving any lip… but the fact is that responsible financial institutions were rewarded this week at least. What you are telling me is in the future they will lose control though… so I guess that kind of makes my opinion moot. hope the stock doesn’t depreciate now that you made this post public.