Wednesday, October 15, 2008

Forget the feeding frenzy, many bankers spurn the trough

We know the federal government -- under the firm and guiding talons of politicians from both major political parties -- is dead-set on disbursing the hard-earned money of American taxpayers to the less successful participants in the banking industry. Surprisingly, though, it turns out that not all bankers are swarming the buffet.

The Washington Post reports:
Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes.
But, get this, our fearless leaders aren't having any of that! The article continues, "But regulators said some banks will be pressed to take the taxpayer dollars anyway."

How widespread is the resistance?

The opposition suggested that the government may have to continue to press banks to participate in the plan. The first $125 billion will be divided among nine of the largest U.S. banks, which were forced to accept the investment to help destigmatize the program in the eyes of other institutions.

In rolling out the program, Treasury said it would make the rest of the money available to banks that requested it. Officials said they expected thousands of banks to participate.

But both the American Bankers Association and the Independent Community Bankers of America said that they knew of few banks that planned to participate.

In fact, reports CNBC, even some of the larger banks were arm-twisted into taking unwanted cash, so as to avoid leaving the feds with egg on their faces.

And the bankers refusing the money aren't thrilled about those few of their colleagues who are taking the cash. Peter Fitzgerald, chairman of Chain Bridge Bank in McLean, is quoted describing himself as "much chagrined that we will be punished for behaving prudently by now having to face reckless competitors who all of a sudden are subsidized by the federal government."

In the absence of the federal lifelines tossed to floundering but politically connected firms, many of the thriving banks see an opportunity to out-compete businesses that have demonstrated a certain ... lack of competence.

But we can't have the market correcting its own mistakes, can we?



Anonymous Anonymous said...

Next time I feel the need to open a bank account, I will make an effort to find a bank that is not accepting bailout money (if I can).

October 15, 2008 8:36 PM  

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