President Obama reiterated his call last month for the nation’s banks to increase lending, saying that he was getting too many letters from small businesses unable to borrow money proclaiming,
” America ‘s banks received extraordinary assistance” from the government, Obama said at a press conference following a meeting with the heads of the largest banks.”Now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild our economy.”
And,
“The president and his advisers have responded in recent days with a burst of heated rhetoric, arguing that the government rescued the banking industry and that banks now are failing to show proper gratitude. The amount of money on loan from banks fell by almost $600 billion, or 7.2 percent, from September 2008 to September 2009, according to the Federal Deposit Insurance Corp. Lending to businesses, excluding construction loans, fell 15 percent.” (here)
But are the bankers simply “hoarding” both TARP funds and their own capital depriving a suffering economy from the credit it needs to expand and employ those who are unemployed?
Six months ago, in April, 2009, The Independent stated, “Banks on both sides of the Atlantic are being warned by regulators that they must hoard additional capital to weather the recession and future economic storms, in another series of steps designed to limit the risk taking…”
And in September, the New York Times reported (here),
“World leaders at the Group of 20 meeting this week should force banks to build up their reserves substantially to avoid another acute financial crisis, a leading association of regulatory experts said Monday, The New York Times’s Carter Dougherty reported.”
And Mr. President, your latest tax proposal from Investor’s Business Daily is just another reason why the banks don’t or won’t lend, “Financial Firms Face New Taxes”
“The Obama administration is considering imposing a fee on banks to help recover some of the taxpayer cost of bailing banks out from the financial crisis, according to multiple reports. The White House says it wants to ensure that taxpayers are paid in full. Specifics may not be revealed until Obama unveils his budget next month.” (Here)
“Bank fees are a terrible idea for trying to spur lending,” said Jeff Miron, an economist at Harvard University . “It just takes cash away from the bank. That means they have less cash on hand that they can lend out. I think it’s a mistake to think there’s anything policy can do to spur lending at this point. Banks have plenty of cash available.” (Here)
Mr. President, what is it you want the banks to do, lend or allocate funds to additional government imposed expenses including building greater reserves and paying greater taxes? Make up your mind, Mr. President.
Why would any bank or business take on risk in an environment with such uncertainty and outright Administration ignorance of and animosity toward business?
**UPDATE: I’m confused, Pete. Starting at l:54 he says we’ve recovered the marjority of the $$. It sounds like the government is well on its way to getting its money back. But then the President says “that’s not good enough.” What the heck is this REALLY about?
**UPDATE: I’m confused, Pete. Starting at l:54 he says we’ve recovered the marjority of the $$. It sounds like the government is well on its way to getting its money back. But then the President says “that’s not good enough.” What the heck is this REALLY about?
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