Monday, December 14, 2009
claiming that Wall Street has an obligation to increase lending because they were rescued by taxpayers, I thought the Wall Street bailout was done BY taxpayers FOR taxpayers.
The bailout was sold as something that needed to be done, not to protect the banks themselves, but to protect us from the consequences of a tidal wave of bank failures. The bailout was sold to us on the basis that doing so preserved our jobs, retirement accounts and home values, all of which would have collapsed if AIG or Citigroup or Bank of America or Fannie Mae and Freddie Mac weren't propped up with billions upon billions of taxpayer funds
Yes, the management and shareholders of those firms benefited, in that they kept their jobs and what remained of their capital investment, but preserving their positions wasn't supposed to be the driving factor in the big bailouts (note: the same rationale was used to justify bailing out GM and Chrysler, it wasn't so much that the taxpayer was bailing out those two companies, we were inoculating ourselves against the supposed terrible consequences to the economy as a whole if those companies were allowed to fail).
So, having sold America on the bailout on the grounds that it was in OUR interest to do so, Obama comes along and tells Wall Street they have an obligation to repay us for something we did for our own benefit and only incidentally theirs.
And in demanding banks increase their lending beyond the level they think prudent, Obama is showing a remarkable lack of ability to learn from history. The problems were largely caused by banks loaning money to people with less than stellar ability to pay it back. So unless Obama thinks there are firms with a stellar ability to pay back borrowed money who aren't getting to borrow money, then he is pushing banks to repeat the mistakes of the not-so-distant past.