That Money Isn_t Leaving the Vault

Banks took advantage of a taypayer-funded bailout. The belief was that banks would use the bailout funds for consumer and small-business lending. It was a great idea in theory. Not so much in practice. We shouldn’t be surprised, says the New York Times. From the story:At the time, the Federal Reserve Board and three bank regulatory agencies said: “The agencies expect all banking organizations to fulfill their fundamental role in the economy as intermediaries of credit to businesses, consumers, and other creditworthy borrowers.”Alas, that admonition wasn’t accompanied by any real requirements to lend. When the Treasury gave taxpayer billions to the banks, it attached no strings. So is it any surprise that lending is tight?Reports from institutional and individual borrowers across the country indicate this. Nervous lenders are demanding that even healthy loans be paid back. Banks and other financial institutions, meanwhile, are reducing exposures to borrowers and doing whatever they can to discourage the assumption of further debt. It’s no wonder taxpayers are frustrated by the situation. They didn’t get what they bargained for. “The banks that have taken the taxpayer’s money ought to be part of the solution, but they are acting like war profiteers,” Mr. Rowe told the New York Times. “If I were in charge, I would haul them all down to Gitmo, put them in a room and say, ‘You have used the taxpayer’s money to pervert our objectives. It is morally wrong and we are not going to stand for it.’” You can read the rest of the story here (link).Related Articles:U.S. Government Agrees to Citigroup Bailout