Did somebody say ‘banks’?
Run a Google search for recent articles on the ‘bailout’ and what will you get? A whole bunch of stories about the bailout of the auto industry. Does anyone remember the deal with the banks?
The ultimatum that Congress gave the Big 3 automakers is the subject of untold hundreds of postings and stories, but the original mission of the ‘bailout’ cannot be forgotten.
It’s been a month or so since the government gave $125 billion to nine major banks with the stipend that the funds be used for loans to ‘businesses, consumers and other creditworthy borrowers.’ Contrary to this noble purpose, the banks in question have been stingy with their lending, holding onto as much of the funds as the can. There was no mandate included with the monies the banks collected, so they have been under no particular pressure to cough up extra lending.
The rates on commercial mortgages have jumped also since the government shifted strategies and decided not to buy toxic mortgages with its TARP program. This has hurt commercial property owners. The effect on bank stocks has been another by-product. Thus far, the bailout has achieved a lot of things, but few of them have been positive.
Congress isn’t allowed to bail anyone out
One blog I was reading suggested that the bailout is illegal in the first place citing Article 1 Section 8 of the U.S. Constitution. The writer suggests that Congress has no business bailing out companies who make bad business decisions.
Don’t waste anymore of our money- let them sink or swim
There seems to be a chorus of experts who feel that Chapter 11 would be the preferred route for the automakers. The companies could reorganize and fix what’s wrong with their current business model instead of putting the taxpayer on the hook for those mistakes. The Motley Fool goes so far as to list ten reasons why bailing out the Detroit automakers is a bad idea. (here)
Yes; I couldn’t avoid the auto bailout.
