More proof that the Wall Street bailout was ill-conceived

Remember how urgent it was for Congress to approve the Wall Street bailout last fall to free up credit? Not surprisingly, things didn’t work out that way:

A new report out of the Treasury Department Tuesday confirmed what many lawmakers, housing advocates, small businesses and individual consumers have known all along: That despite hundreds of billions of dollars flowing from Washington to the finance industry, bank lending among recipients of the Troubled Asset Relief Program fell in the last three months of 2008.

Among the 20 largest TARP recipients, median mortgage and business lending both fell by 1 percent over that span, Treasury found, while median credit card lending rose 2 percent, “reflecting greater reliance on existing credit lines by consumers.”

The findings were based on a survey of the 20 banks receiving the most federal help under the TARP, and marks the first in what will be a series of monthly reports analyzing the lending trends among bailed-out banks.

It would be nice to know what the banks are doing with the bailout money, but they don’t want to tell anyone.

How disappointing that Barack Obama’s Treasury Secretary Timothy Geithner wants to continue the misguided effort begun by George Bush’s Treasury Secretary, Henry Paulson.

Here are some more links on why Geithner’s plan “fails on almost every level.” Excerpt:

Robert Kuttner offers a strong analysis of Geithner’s strategy to salvage the banking industry in The American Prospect, noting that Geithner is explicitly avoiding the simplest and cheapest solution in favor of propping up the current Wall Street regime. The current plan is designed to support a financial architecture that has proven completely ineffective in maintaining the nation’s basic economic functions.

Someone who works for a non-profit organization told me last week that he has filled out a detailed six-page application for a $1,000 federal grant, while Geithner wants to get $350 billion on the basis of a vague two-page proposal.

Josh Marshall notes that “a lot of key political appointments at the Treasury haven’t been made yet, let alone been confirmed.” He takes a stab at explaining why:

one of the big issues is that it’s actually hard to find people with the requisite knowledge of banks and the capital markets who aren’t also compromised — either in policy or business terms — by the housing bubble and the rest of the financial collapse. And that raises again as a question: why have none of the people who were financial orthodoxy dissidents and saw what was coming been brought in to the administration. I know I’m hardly the first one to bring this up. And we know that the big appointees — Summers and Geithner — were part of the mix. But there aren’t even any of them further down into the appointment structure. They’re all still on the outside.

Disturbing.

  • Nationalize, Nationalize, Nationalize

    Oh, and did I mention, NATIONALIZE

    If there is no accountability for funds received, what the hell? We pretty much paid for ’em already anyway.

  • What does Alan Greenspan recommend?

  • Geithner is a Tool of the Bankers

    Nothing will happen – no progress will be made, or recovery felt – until the bankers who caused this crisis are ejected from Washington.  Brzezinski is right, there will probably be riots if the government does not get in line with mainstream thinking; they need to solve the problems, and that first of all means getting rid of the bankers.

  • Overthrow the BANKERS!

    That is the only solution to this mess.  We’ll just be right back in this again if we don’t overthrow the banking interest group in Washington.  The bankers caused this mess, they are evil, and they should pay by losing their jobs and helping pay back the country.  It should be their money that goes to recapitalizing the banks – not mine.  This is prime-time rape of the entire country and they should not be allowed to get away with it.

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