BailOutBucks

It is tough to compete with the taxpayers, but that is what banks that refused aid from the Troubled Asset Relief Program are doing. In saner times when banks went belly-up, fortunately a rare occurrence, other banks would buy them at bargain prices thus bringing their value back to reality and would then proceed to fix the things that were wrong with them in the first place. Or sell them off piece by piece. Usually a little bit of both.

Now however, using taxpayer dollars and a whole boatload of them at that, these banks are being kept alive in spite of their disastrous investment and lending decisions, usually with the same command structure at the helm. Perhaps minus a well compensated CEO, but hey! We’ve plugged up that leak, right? Don’t get me started…

It is rather like absolution without contrition. The worst offenders didn’t even have to admit they did anything wrong. They were “forced” to take the money, although I don’t recall any lawsuits being filed by them to stay DC’s order. Hmmm. And rather than offering prayers and dropping a ten-spot in the poor box, they are instead handed a big basket of cash and told to go out and sin no more. One major bank has been to the anti-confessional twice so far and it has only been six months since this all started.

While all this is going on, other better managed banks and credit unions are trying to compete in a tight market, only now we have the added burden of doing so against huge institutions that are very well funded with what will end up being almost unlimited taxpayer dollars. This was sold to us with the “To big to fail” tagline. Watch that morph into the “We’ve invested too much to stop now” mantra.

The biggest humbug of all is that so far it hasn’t even worked. Three of the biggest recipients are way down, one nearly eighty percent. This could be blamed on the economy, but when compared to the banks that didn’t take the BailOutBucks, we find that the economy seems to be hitting TARP-Takers much harder.

Things will take a while to play out, and who knows, maybe the geniuses in DC will be right in the end, but I doubt it. The biggest problem the Distinguished Ladies and Gentlemen create whenever they get involved in any kind of enterprise is they turn it into a social experiment. I’m already hearing them say things like there being more important things than making profits for the shareholders. That is true in social settings, but not in for-profit businesses.

I’m beginning to think Fidel Castro actually died already and has been reincarnated in Washington.