From today’s NY Times.
In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.
(He didnít mean to, of course, but I obtained the call-in number and listened to a recording.)
”Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. ”What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”
Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: at another point in the conference call, the same executive (who Iím not naming because he didn’t know I would be listening in) explained that “loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot.
That’s right folks. All that money you’re lending to the banks at the behest of the Bush Administration isn’t going to help consumers at all. The Democrats who supported this plan certainly didn't envision such naughiness by these corporations, but when they get in power, there's going to a price that these greedy banks are going to pay if they don’t open up the spigots soon.
Even if there is a depression, as the executive so glibly notes. No new loans, no money put on the street, all these guys wanted that money for was to “make acquisitions’. Hoover’s Reconstruction Finance Corporation worked the same way. Your only hope is to push Obama to become the next FDR and put a stop to these vile, evil banking executives who as usual, are looking to line their own pockets rather than save the economy or help consumers. Read Chris Dodd’s comment at the end of the article too. Unless his committee can cattle prod the bankers into acting rationally when they meet with them after the election, in his word’s “there will be hell to pay’s.
Get ready for the next great depression. It’s coming. Unless Obama can act quickly when he gets in to make these greedy banker bastards turn on the lending spigots.