There’s less activity but is it really necessary?
Here’s the latest of the bank bail out news. According to Christopher Rugaber of the Associated Press, 20 large banks have done little to increase their loans to the public. The report states, “The Treasury Department said the banks reduced their mortgage and business loans by a median of 1 percent each, while credit card lending rose by a median of 2 percent. The median is the point halfway between the banks that lent the most and those that lent the least. The department’s report is the latest sign that the bailout has done little to increase bank lending. A quarterly survey by the Federal Reserve earlier this month found that nearly 60 percent of banks said they had tightened lending standards on credit card and other consumer loans in the previous three months.”
This has been a subject of debate since the government started injecting funds to these troubled institutions. The need to rehabilitate the ailing mortgage industry today has come under fire after the much delayed program was instituted. The worse problem came when these banks have opted to keep mum about the usage of the received amount (even the folks at AP and Businessweek weren’t granted with their persistent requests). What’s inexplicable is that the Treasury is exerting to correct the market but no short-term results are happening so far.
What’s the reason behind the non-disclosure? Banks have been obviously short of reserve fund and the large ones have taken advantage of the situation where the small players have succumbed to the crisis. Acquisitions have increased and there’s no denying that these have occurred after bailout funds were delivered. Another could be the depleted reserves that serve as buffer funds. These recipients are using taxpayers’ money for private gains by holding the funds in their vaults.
The Treasury Department must probe banks to reveal where the money was channeled. The country is in need of an answer on who’s accountable for the appropriation mess. The big banks’ top men need to stay true to their assurance to cap their perks in light of the recession. And those in management and supervisory positions should be included too. So please, park those company jets and reduce your sponsorships.
Banks should also disclose the financial status of their borrowers so that the government can track the future of each borrower. The mortgage modification process involves a property’s depreciation but there’s little data to analyze that the media knows about.
If banks continue to be hard, then we’re looking forward to the tighter restrictions that will be set by Treasury Secretary Geithner and his team.