I read or heard about the recent disclosure from one of the bank CEOs who was summoned to the now famous come to Jesus meeting in D.C. where the flock was threatened by Sec. Paulson in no uncertain terms to take the TARP money and to keep their mouth shut about it. With the full knowledge and considerable support of Congress, these men were told that they had flexibility with the money in order to stave the collapse of the industry, but its primary purpose was not for lending, but to take over weaker, smaller institutions that couldn't survive on their own. Apparently the problem is/was so big that the FDIC's reserves weren't anywhere close to being able to cover the losses.
When TARP failed, the same duplicitous politicians are today lying through their teeth to the American people, posturing that these bad men are not lending the money as they had intended, when that was never the intention to begin with. Are you all looking forward to TARP2?
I am not on Wall Street nor do I have first hand knowldege about the amount of loan demand there is out there. I don't doubt that there are many homeowners and commercial property investors who owe more on their properties than they are worth. Short of them putting up more equity to at least cover the amount of the deficit, can any amount of liquidity in the credit markets make their plight any better? Do we really want the government to take scarce resources to lend to people who have demonstrated the inability or unwillingness to do as they promised? The percentage of defaults on restructured loans is staggering, something over 50%.
Mr. Kennedy's position regarding the 450 laid-off workers is the standard from his side of the aisle and it does appear caring and compassionate on the surface. It is so magnanimous for them to suggest what some corporation or employer can afford to do and how it should spend its money. The steelworker's union and the UAW certainly felt it could exploit its government granted anti-trust status to force such preferences on employers and I wonder just how happy their members are with the results. I know, a GCAer has previously instructed me that the raison d'etre of corporations is derived from some social contract to provide jobs for the benefit of the collective and nothing to do with maximizing a return to its owners.
No one wants to see people lose their jobs, particularly if it is a family member or someone close. What is never considered is the loss of even more jobs if the organization's performance continues to deteriorate and becomes uncompetitive. It also doesn't take into account the fact that most people who lose their job eventually find one, often a better one.
The concept that we should always plan for the rainy day- like having nine to 12 months of living expenses in savings before undertaking more financial obligations like buying a bigger house or a new car- is something that has been replaced by a consumption upon demand/gratify me now mentality. But Lou, most Americans can't afford to save. BS. Why is it that many of my cash strapped friends drive expensive cars, have big homes, play with the latest golf equipment, wear $100+ sunglasses, and think nothing about riding a golf cart at high-end golf courses? They may sneak by juggling bills and paying the minimum balance on their credit cards, but when the boss gives them the bad news they're in deep stuff. Doesn't it really come down to making choices and taking responsibility for them?
I spent a half an hour in line at the post office Friday to pick up a package. As the "customers" were becoming boistrous and not-so-quitely irate, I thought, do we really want these people- the government- running our life? Do we want, really want them to take a majority of our money so they can recycle a much smaller amount back in the form of services that most of us don't need or desire? Why do we think these guys are so damned smart? Most of them have never run a successful business or met a payroll. Many have been government employees most of their working lives. For Pete's sake, have we lost our minds?