What some are saying about the $250 billion infusion of cash into America’s banks



Some thoughts by various writers (and one cartoonist) about the United States Treasury’s $250 billion plan to prop up the biggest banks in America:

     Andy Kessler in The Wall Street Journal:” Is this the right thing to do?  Probably not.  Despite some limits on compensation, bad management stays in charge.  Government investment in financial institutions will raise a gazillion temptations and conflicts of interest.  Politicians won’t be able to help themselves and will inevitably meddle. . . . But it’s the only thing to do at this stage.  Next stop is full nationalization and no one wants that.”

     Robert Weissman in Counterpunch: “But the Treasury proposal specifies that the government shares in the banks shall be non-voting.  And there appear to only the most minimal requirements imposed on participating banks.  So, the government may be obtaining a modest ownership stake in the banks, but no control over their operations.”

     Nicholas Von Hoffman in The Nation: “The terms of the deal are generous to the banks and good for Wall Street.  How good they are for everybody else is debatable, but at this point the government has now committed to in actual expenditures or guarantees $2.25 trillion to save these men, their firms, and by extension, it is to be hoped, the rest of the nation.”

     Chris Isidore in CNNMoney.com: “Still, not all critics of the bailout are satisfied with the new plan for direct investment in banks.  Some economists argue the move only encourages more risky behavior down the road and that the free markets should be allowed to work: i.e. more banks should be left to fail and credit should be tight.”

     Editorial in The Washington Post: “The program needs firmer assurances that the government’s cash will not be diverted to shareholders.  At a minimum, for the duration of the program, participating banks should not be permitted to increase dividends, with or without Treasury approval.”

     David Lindorff in Counterpunch: “To avoid this government investment in the U.S. banking industry being labeled ‘socialist,’ Paulson and his fellow conspirator, Fed Chairman Ben Bernanke, are only buying non-voting shares of the banks.  Get it?  They’re giving hundreds of billions of our dollars to bankers in the form of ownership shares of these companies, but they aren’t asking for any say in the banks’ policies in return.”

     Editorial in the Los Angeles Times: “Still, the plan seems to have been thrown together just as hastily as previous efforts, leaving gaping loopholes.  There are no safeguards against banks frittering away the cash provided by the Treasury to pay dividends to shareholders (including, in many cases, their own executives).  The government is rushing to make the investments before it knows the true health of these institutions, meaning it may be throwing good money after bad and encouraging desperate executives to make unacceptably risky bets.”

     News article in Economist.com:“The plan is undoubtedly bold: it marks perhaps the largest foray by the American government into ownership of private enterprise since the second world war.  But it would have looked much bolder a month ago. . . . To a great extent, Hank Paulson, the treasury secretary, and Ben Bernanke, the Federal Reserve chairman, are making up for what were, in retrospect, miscalculations in their earlier efforts.”

Art Credit:

[Hurwitt from www.blackcommentator.com]bankstertheftscartoon


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