Bailouts Not Such A Good Deal After All

Can we say, 'I told you so...':

U.S. financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must lower dividends, cancel employee training and morale-boosting exercises, and withdraw job offers to foreign citizens.

As public outrage swells over the rapidly growing cost of bailing out financial institutions, the administration of President Barack Obama and lawmakers are attaching more and more strings to rescue funds. Some experts say the conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to give the bailout money back. The list includes small banks like TCF Financial of Wayzata, Minnesota, and Iberiabank of Lafayette, Louisiana, as well as giants like Goldman Sachs, Wells Fargo and U.S. Bank in San Francisco. They say they plan to return the money as quickly as possible, or as soon as regulators set up a process to accept the repayments.

Other institutions like Johnson Bank of Racine, Wisconsin, initially expressed interest in seeking bailout funds but have now changed their minds. One of the biggest concerns of the banks is that the program enables Congress and the administration to add new conditions at any time.

A growing chorus of industry experts is warning that asking weak banks to carry out the government's economic and social policies could increase the drain on the public purse. These experts say that the financial assistance, while helpful in the short run, could require weak banks to engage in lending practices that will lose them even more money, and that the government inevitably will become more heavily involved in dictating how banks do their business.

Hm.  How about that.  Bailout money = government control = bad news.  Many more details at the link above.

When government stays out of things, weaker banks -- that have made bad or risky decisions -- fold and get bought out by stronger banks -- that have made good decisions -- and everyone benefits in the long run because the system rewards the good decisions and solid institutions.  What we see happening here, though, is that government is sticking its nose into things, propping up the weak banks.  Not only does that save those weak banks from folding (which should happen), it also prevents the strong banks from growing through acquisitions, which further the good decision-making throughout the industry.

The government is picking the winners and losers based on what they think is fair rather allowing the natural forces of business principles and free markets to dictate winners and losers.  If you look at the article above, you'll find that the same things that initially brought this crisis into being are the very same things that the government is forcing onto the weak banks accepting bailout money.

They're forcing the banks who've already screwed up to continue doing the same screwed up things, and expecting them to suddenly become profitable and clean?  Puh-lease!  How does that make any sense at all?

Liberals and Obots who have now figured out that government control sucks: we told you so.

There's my two cents.