Bailouts Have Failed: Banks Are Still Hoarding Cash → Washingtons Blog
Bailouts Have Failed: Banks Are Still Hoarding Cash - Washingtons Blog

Thursday, October 16, 2008

Bailouts Have Failed: Banks Are Still Hoarding Cash

Despite spending trillions of dollars on the bailout plans, banks are still hoarding cash.

Why?

Because:

  • They have huge derivatives liability (especially on credit default swaps), and they are trying to build up enough of a nest egg to be able to pay off their derivatives debts
  • Some are even using the money to buy up rivals

The feds handed out all of the dough without keeping any control whatsoever to make sure the banks used the money to lend out to Main Street.

The feds' hope that the banks would use the money to lend out to Main Street is about as smart as handing over your wallet to a robber based upon the hope that he'll pay your bills with it.


No comments:

Post a Comment

→ Thank you for contributing to the conversation by commenting. We try to read all of the comments (but don't always have the time).

→ If you write a long comment, please use paragraph breaks. Otherwise, no one will read it. Many people still won't read it, so shorter is usually better (but it's your choice).

→ The following types of comments will be deleted if we happen to see them:

-- Comments that criticize any class of people as a whole, especially when based on an attribute they don't have control over

-- Comments that explicitly call for violence

→ Because we do not read all of the comments, I am not responsible for any unlawful or distasteful comments.