"There is very little evidence to suggest that the (bailouts) led small banks to increase lending," the report says. Indeed they can’t find many commercial property borrowers who don’t already have loans that are under water by 50% or more.
“But the bailouts’ costs are troubling because of small banks’ crucial role in lending to small businesses and supporting economic recovery“, said Elizabeth Warren, who chairs the panel. She doesn’t quite get it, that without a demand in the market for goods and services there isn’t any need for bank loans and existing loans will fail, but trickle down has been the law for thirty years now so who can blame her.
The report concludes that the biggest banks will get even bigger, a large number of bailed-out banks could collapse or consolidate because they can't afford their obligations to taxpayers. That would leave the handful of biggest banks with an even larger share of the banking system. In fact the FDIC seizes banks every week and most are sold in sweet heart deals to larger banks. This will of course make the ‘too big to fail’ banks grow even bigger.
The small banks in Gulf states were only starting to recover from hurricane losses and now face huge potential losses from the BP disaster as the cascade of business failures sets in. Normally disaster areas boom after a couple of years as Federal money stimulates the local economy in classic Keynesian fashion, this didn‘t happen after Katrina.
Conservatives say that locals will pull themselves up by their own boot straps if the Feds would just leave them alone. Bush did leave them alone by diverting most of the relief money to his rich cronies and the local economy paid the price (no boots, no bootstraps). The 20 billion dollar fund that Obama has secured for the BP disaster could have a real effect if distributed fast enough. The master of the fund says he will give everybody who can prove a loss six months worth of relief up front and if the rules are liberal enough this could work. The corporate media is now circulating the claim that if you take the money that you can’t sue, which is completely false.
But if the money falls short of what is needed it will just slow the death spiral of the economy for a short time and as the other stimulus money runs out things will start to collapse faster again. Tomorrow will bring some new jobs numbers and they aren’t likely to be good. www.prairie2.com
1 comments:
Excellent. It's always excellent! Good thing Malloy reads your stuff--I never would have heard of it. Am sharing on Twitter--hope you don't mind.
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