Nationalize this!

Well, it looks like our country will soon be following the lead of the other developed nations – we’ll be providing an equity infusion to our leading banks. That is, we will be providing them with the cash they need – the cash that they aren’t able to convince anyone else to provide for them. So now the U.S.Treasury has become the lender of last resort!

Today, Assistant Secretary of the Treasury, Neel Kashkari announced that, “The equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions.”

Why is it that the provision of taxpayers money has to be on “attractive terms”? Is this a crisis, or what? Are the banks on their last legs, or not? How smart are these bankers, anyway, if they got us into the mess in the first place? Is it really in the country’s best interests to be giving them money, when no-one else is?

I hope that Kashkari can, indeed, attract a lot of interest from banks for our assistance. I hope that he can get the broadest array of financial institutions possible. I hope he can attract stable, well performing banks (that just happen to be undercapitalized in the current credit market). I hope he can attract more than just ailing banks.

I hope he leaves no bank behind. Because, those financial institutions that are left out will be far worse off. I can forsee other banks not wanting to lend money to an outfit that didn’t ‘qualify’ for government assistance. Those that miss out will suffer a huge image problem, not just from other banks but more importantly from customers.

I can forsee a huge rush to withdraw money from local financial institutions, particularly if it is only the nine largest banks that get to play. (“The program is expected to be expanded to many others. Among the initial banks participating will be all of the country’s largest institutions, including Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co, Bank of America Corp. and Morgan Stanley, said one official.)”

How this helps the underlying cause of the financial crisis – that I cannot forsee. I hope that helps with the housing bubble. And, I hope that it helps the rush of foreclosures. And, I hope that encourages financial institutions to renegotiate loans directly with the over-stretched holders of ballooning mortgages.

Why then do I get the feeling that we, the taxpayers, are once again about to take it in the shorts? Maybe it’s because we probably won’t get any voting power in the companies that we are investing in. Or, possibly it’s because we won’t see much monetary return on our money.

But, I think most likely it is because the Wall Street bankers (and their buddies in the Bush administration, like multi-millionaires Hank Paulson and Neel Kashkari) are so out-of-touch with the anger in our country that they think they can get away with it. I sure hope not, because I’m not sure I can stomach much more stress. Unless they want to nationalize that, too!


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