NY Times
"Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase," he began. "What we do think it will
help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would
not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some
great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending
on whether recession turns into depression or what happens in the future, you know, we have that as a backstop."
The above is the response by an unnamed executive at JP Morgan Chase bank when asked on a conference call what JPM is going to do with the $25 billion
they were
"forced" to accept.
Remember, we're giving at least $250B of taxpayer money to banks to try and "rescue frozen credit markets."
What's happening instead?
Those who are being blessed with the bailout bucks intend to use it to buy banks that were not so blessed. Not only that, but the government is
cherrypicking which banks survive.
Case in point would be Friday's sale of National City Bank to PNC. As we can see in
this report:
They shifted gears after PNC Financial Services Group Inc. announced Treasury was investing $7.7 billion in its bank as part of the deal to
acquire National City Corp. National City was denied government assistance and was forced into a sale.
NCC was denied government assistance. Denied. Forced into a sale. NCC was deemed "unworthy" by whichever committee oversees the doling out of our
tax money.
What is most disconcerting to me is that the Treasury is deciding which banks will remain standing for now, and they're using our tax money to allow
- encourage, even - these banks to gobble up smaller regional banks.
This measure can be seen leading to a world where the only banks we can bank at are the ones partially owned by the government. In order to receive
the bailout bucks, banks such as PNC, JPM, now even Capitol One (!!!!! credit card bank? WHAT??) trade shares of
preferred stock for gov't money.
This isn't an off-the-cuff decision. Per the NY Times article at the top of the page (pg 2 of the story):
First it says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week,
it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s
reaction, he didn’t tell the Hill about his change of heart.
And what do those who voted for this travesty of a bailout have to say for themselves?
Senator Dodd, again from the same article, says:
"If it turns out that they are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money
is going to line their pockets instead of doing the right thing. There will be hell to pay."
Are banks hoarding the bailout bucks?
You be the judge.
So, is it time for a revolution yet?
