Thursday, December 17, 2009

Banks getting out from under the federal thumb

All 9 of the major banks that took money from the federal government under the initial TARP under Bush and Paulsen -- have now either paid the money back or announced plans to do so over the next couple of months. The media have focused on the issue of CEO pay, which the government has vowed to reduce, as a main reason, but that's far from the only reason the banks (some of which never wanted to take the money but were pressured into it by Paulsen) wanted to get out from under direct federal investment and part-ownership. (It's probably unconstitutional as well, but who pays attento to that old scrap opf paper these days?) There was pesky micromanagement and the attitude on the part of government overseers that they could dictate policy in all kinds of areas.

This makes it all the more absurd -- or grandstanding -- that Obama summoned the heads of major financial intitutions Monday and urged them to get busy lending more money. Since the payback the government has little or no leverage over the banks, and bankers are by and large a fairly arrogant bunch. Besides, lending money, especiallynmortgages, to people who were'nt really qualified (under pressure from govt., of course) was one of the major causes of the financial fiasco. Government never learsn, and almost always has a short-range vision, wanting to fix every problem -- or pretend to have taken steps, however unlikely to work -- right now.

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