Wednesday, January 14, 2009

Banks groveling for more bailout money, and they really need it

Steven Pearlstein has an interesting column in the Business Section of the Wednesday Jan 14 2009 Washington Post, “Unfairly rewarding greedy bankers, and why it works,” link here. He also has a Q&A column on the bailout in the Post today.

Pearstein argues that the credit crunch or freeze (as Ali Velshi on CNN and Suze Orman on Oprah call it) results from a loss in the “shadow banking system” which still needs to be able to securitize loans. The banks simply have to have more capital with “fungible” money.

Last night (Tuesday), Suze Orman told viewers on ABC Nightline that one should never take money out of a secured asset (home equity) to pay unsecured debts (credit cards).

And today the New York Times has a front page story by Edmund L. Andrews and Eric Dash, “Deeper Hole for Bankers: Need Keeps Growing for Funds in Bailout,” link here.

Barack Obama wanted most of the remaining $350 billion in TARP bailout to be redirected to help homeowners. But so had John McCain. But it looks like the banks will get it before Obama is in office.

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