Do you think the government will start to take over some of these failing banks this year?
Best Answer
192 points
seyobnats answered 10 months ago …
If the big banks don't start lending at afordable rates they don't deserve to avoid a governmwnt takeover and that includes the biggest and most mis-managed of all, Citibank. They have raised credit card rates unmercifully so that no one can afford to buy on time from them as they now demand as much as 25 percent on outstanding balances. This high an interst rate about 20 years ago was called USURY and lenders went to jail for charging so much. It is even more scandalous when you realize they are using the government's money (ours) and only paying the fed 0-1 per cent.
Paulson took care of his Wall Steet buddies by giving them billions without any strings attached. This money the big boys used to buy up weaker competitiors and are still not lending to even credit-worthy commercial accounts. As a result department stores and manufacturers can"t finance next season's inventory. Massive layofffs have resulted as business can no longer get their necessary credit lines honored and their payrolls financed.
It would be best if Treasury took over Citi and BofA and set up a mechanism to buy up all those scandalous sub-prime mortgages and gave the mortgagees interest terms they could afford and cancelled the usurious deals they represent. This is what TARP was passed to do but Paulson got away with aborting the bill's intent. He's gone now. I hope the new man can do better but don't hold your breath. He was head of th New york Stock Exchange wasn't he and all that sub-prime mortgage investment was allowed on his watch! Somebody should have to disgorge those ill-gotten billions and like the Enron thieves, be put in jail for their misdeeds.
Answers
2222 points
readytoretire answered 10 months ago …
The government has been taking over/transferring assets to another bank all last year. Think IndyMac. They do this whenever the bank assets/debt falls below a certain percentage. If what you mean is the big propped up ones like BOA or Citi, then I think the government will put in place a plan to take the assets that the banks want rid of. That was the original purpose of TARP, before Paulson listened to overseas and decided to buy into the banks. Which gave them money, but left them with the garbage. And as the economy has gone south, the garbage has gone even more south. So the banks are back where they were in regards to the capital ratio and so they don't lend.
The big issue on the garbage is what is it worth.
