It’s not a chorus.
If you’ve been watching the “debate” over how best to con American voters into giving troubled banks $700 billion for bad loans, you might think it’s a chorus in the financial industry, especially from bank presidents.
You might assume they’re all shouting: GIVE US THE BAILOUT MONEY! NOW!
Not so. At least one banker dissents. John Allison, president of BB&T — with $136 billion in assets and 1500 branches — sent an open letter to Congress protesting the bad economics behind the bailout. He notes that his own company, though affected by the downturn, is in a much stronger position than many of BB&T’s competitors.
Why? Well, his bank did not join the orgy of bad lending, despite the enticement of the Federal Reserve’s easy credit policies and government pressure to give loans to bad-risk borrowers.
So why should the government reward the bad economic conduct of institutions that played along with the bad government policies? Why make it harder for the economy to recover by punishing sound and productive economic conduct with burdensome new government taxes?
Allison thinks the debate has suffered from domination, as he says, by those “financial institutions [that] made very poor decisions.”
Perhaps it’s because politicians have a whole lot more in common with foolish decision-makers than wise ones.…
This is Common Sense. I’m Paul Jacob.
3 replies on “Don’t Bank On It”
its just another step in their plan to bend all of us over a table.
the banksters did this all on purpose.
people get angry then riot then georgia W. will never have to leave office.
Free competition may seem cruel to the 2 Presidential candidates and the constituents but if my business played it conservatively regarding mortgage investments and kept its own credit clean, then I should be able to utilize my preferred position to bury my spendthrift competiton under the current economic conditions. The converse had there neem no real estate meltdown would have been that my competitors would have provided greater returns on investments to its investors while my investors would look at me as too fearful. My investors would have pulled their money from my company and my stock value would have gone down. Risk is sometimes rewarded and sometimes penalized. That should be allowed to continue.
Bank of America also is unhappy with the bailout. Like BB&T, B of A avoided the risky (subprime) mortgages, the remortgages, and the mortgage derivatives. That’s why they were in good enough shape to buy Merrill Lynch and two smaller investment companies that “chose unwisely” and poisoned themselves. (The analogy is from Raiders of the Lost Ark and the selection of the Holy Grail.)
Unfortunately, no one listens to the wise bankers or the sane economists. They’d rather listen to Chicken Little Paulson and his cronies and stooges. I believe many people are excited by the drama of the economic collapse, and people who pander to the desire for drama are heeded.