The administration wants to assure us these banks are not in dire straits and that these additional funds will enable the banks to weather unforeseen storms ahead. Perhaps this is the case, but some people feel that the worst-case scenario posed by the government was a bit too rosy.
Nonetheless, when it comes to the banks, bailouts and continued lousy performance, who is at the top of the list needing $34 billion? Bank of America. BoA is followed by five other banks needing to fill their capital offers: Wells Fargo, GMAC, Citigroup, Morgan Stanley, Regions Financial and State Street Bank. It seems that several of these banks have already earned their notoriety for being in the eye of the government bailout storm before.
Tens of billions of taxpayer money has already been pumped into these institutions. Does this scenario sound familiar? It should. How much money was pumped into the Big Three automakers to stave off bankruptcy — only to see the auto giants succumb to the inevitable or teeter on the same fate? Remember, the Big Three were deemed too big to fail. Is history destined to repeat itself with the banks?
While the banks that failed the stress tests have identified ways to raise the capital they need without necessarily accessing additional TARP funds, let’s not forget that they already have been propped up with taxpayer dollars.
Only time will tell how this drama will play out, but we should let nature takes its course. Otherwise, it is an expensive effort to keep these businesses on life support where their vital signs are extraordinarily weak. How can the American public continue to give Congress and this administration a blank check to further drive our nation into the economic abyss?
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