Remember way back when the U.S. Treasury said it would no longer keep buying toxic assets, but instead would give TARP money directly to the banks to stimulate lending? The Treasury gave 550 banks $200 billion with the understanding that they would use the money to increase their lending.
Forget about it. Banks are not doing what they were directed to do with the TARP money. The U.S. Treasury reported that lending by the 21 largest banks actually fell by 2.2% across all consumer lending categories in February compared with the prior month. Declines were seen in commercial real estate, general business lending, as well as credit cards and student loans. The only bright spot was mortgage refinancing. With the low interest rates now available, refinancing was up 35% in February.
Bankers are stubborn people. Demands from federal official for banks to use TARP money for lending is having very little effect.
Diminished lending by banks is forcing businesses and consumers to curb their spending, which is prolonging the recession.
Banks are also getting real greedy when it comes to credit cards and are raising card rates to double digits even though consumers are making their payments on time.
I guess the one lesson to be learned here is: Don't give money to banks because they are not doing the right thing.
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Reader Comments (Page 1 of 1)
4-17-2009 @ 10:53AM
Jason said...
Bankers should not be lending more to consumers. That is part of the problem.
4-17-2009 @ 11:30AM
Iridium said...
This is why the banks should have been allowed to fail. They are criminal institutions and are showing exactly why they should be forced out of business.
The banks are all too happy to refinance mortgages because they are making a killing. People need to refinance to save money and the banks are charging through the nose for that privilege.
The banks are making a wider spread on interest right now writing loans at 4.8% then they were writing a 6.5% a few years ago.
Our leaders should be held for treason in the role of bailing out these banks. The aided an enemy both foreign and domestic which has caused extreme harm to the people of the United States.
I can't help but think that this was done on purpose. The banks get a bailout and the politicians who voted for it will get a whole lot of backroom contributions. The game is beyond dirty. It could even give the Devil's playground a run for its money.
4-19-2009 @ 9:42AM
cabo79 said...
We missed a real good chance to set up the SBA similar to Farm Credit to loan money to small businesses, but the bank lobby payed off (political contributions) our leaders to water down the legislation that could have supplied a reliable line of credit. The only way to end this BS is to go to term limits. You cannot have a Free Society without rules, laws, a police force to catch the bad guys and prisons to put them in. The same goes for a Free Market capitalist society, you have to have rules, regulations, a police force and prisons to put the bad guys in. Our government is not maintaining a Free Market. Too many political contributions (pay-offs), it is obvious laws are bought and sold. Folks we need to correct this, it happens over and over. Our government is paralyzed by the need for pay-offs (political contributions). We need a major change to end this professional politician form of government. We need TERM LIMITS and real campaign finance reform. How about three 4 year terms for Congressmen, two 6 year terms for Senators, and keep the current two 4 year terms for President. The most you can serve in the Senate and Congress combined is 14 years. We need an end to the professional politician form of government.
4-20-2009 @ 7:31AM
Dan Barnett said...
Wow, the Republicans are once again stumping for term limits, after completely ignoring the issue since 1994.
So who wants to start the pool on when they ressurect the "Balanced Budget Amendment"?
On the topic, as Pete Cohan pointed out, ther banks were leveraged about 32-1. Using TARP funds to decrease leverage and increase solvency is an equally valid use of the funds.