Burned out looking for bailouts

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What's that old saying? Fools rush in? Perhaps we can be glad that the Canadian banking system was better off than many systems in other countries, and that, with the political upheaval that nearly toppled Prime Minister Stephen Harper's government, Ottawa didn't get around to crafting a huge economic bailout.
Countries that have provided the biggest bailouts are discovering that the supposedly desperate banks aren't exactly playing fair.
Monday, Britain announced a second bailout of its banks, in order to boost the rate at which banks will lend. It's supposed to free up credit, so companies needing loans can find them.
This time, Britain wants contracts from the banks availing of the bailout that would require the banks to actually lend money.
There have been bailouts practically worldwide, but while billions upon billions of dollars have flowed to the banks to free up credit, not a heck of a lot of credit has actually been freed up.
Just look at the American $700-billion bank bailout. Last week, U.S. legislators agreed to release the second half of the Troubled Asset Relief Plan, even though the first half hasn't gone according to plan.
Why hasn't it? Because banks aren't legislators.
While the fund may have been earmarked to free up credit, legislators didn't put many strings on the funds. U.S. newspapers are pointing out that many of the banks receiving the money see it as a sort of windfall. The New York Times, for example, listened in on two dozen conference calls between banks and their shareholders, and discovered that most of the banks planned to use the money to pay down debt, buy other businesses, or just make investments.
In the end, you have to ask if the first knee-jerk bailouts, with little insight and fewer rules, didn't merely reward banks for their mistakes and give them the means to continue to operate in the manner they already were.
Business as usual shouldn't really be an option; after all, business as usual got the financial markets in the mess they're in now.
You can make the argument that tighter lending markets is a reasonable result of the end of the lending boom; faced with the last readjustment, banks are probably leery of pumping money into just anything.
It's harder to defend the need for emergency banking bailouts, though, when the first thing being protected is the bottom lines of the banks themselves.

Organizations: New York Times

Geographic location: Britain, U.S., Ottawa

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