NYT reporter hears JP Morgan executive state the bailout money will be used to acquire other banks,

How the reporter heard:

It was Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked that question. It came toward the end of an employee-only conference call that had been largely devoted to meshing certain divisions of JPMorgan with its new acquisition, Washington Mutual.

What he heard:

In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.

(He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.)

“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.”

Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: at another point in the conference call, the same executive (who I’m not naming because he didn’t know I would be listening in) explained that “loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot.

New York Times article

What a surprise... who wouldn't have guessed they would use the blank bailout checks for their own gains? Who wouldn't have guessed banks would value short term profit over long term survivability? Apparently people like Paulson and Greenspan. All of this is just a slap in the face. They aren't that stupid, they know what people do with money. They're friends with the businessmen in charge, it's not like they aren't privy to the plans of Goldman Sachs or JP Morgan. I don't think anything at all will change after the election, no matter who gets elected. Not a chance that any president, be it Obama, Paul, or Kennedy ever successfully goes against the Federal Reserve, the lobbyists who fund their campaigns, or their fellow businessmen.

Even though this information was supposed to be 'secret' we would have known eventually when we saw where they spent the money. It's all right in front of us, and there's nothing we can do.

[edit on 27-10-2008 by Parabol]

This is not even a little bit surprising. Paulson made sure there was no requirement for the Banks to lend that money out, it was always planned that way and it was made clear to the Banks they didn't have to lend the money out. There's a great photo floating around somewhere of two bank execs leaving the Federal reserve after Paulson 'forced' them to take money. They are laughing their heads off.

I'll try to find it...

Originally posted by mythatsabigprobe
There's a great photo floating around somewhere of two bank execs leaving the Federal reserve after Paulson 'forced' them to take money. They are laughing their heads off.

They were not laughing, they were pleading Hank to "please, please, please not throw them in the brier patch."