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Have you heard about the possible bailouts that government is doing to help financial banks and markets to recover? I bet you did, but how can you get that loan you need.
In short, you can’t. But wait, didn’t banks receive $25 billion? Yep, they did, but not to lend! Christmas came early for some banks with government infusion. What banks are doing is to buy out smaller banks. It is easier to use government money right now to use that money for something else that loan which cannot be resold to Wall Street.
With approaching global recession banks are staying away from lending. They are simply sitting on the $25 billion loans and doing nothing.
The Treasury wants banks to acquire each other as they want not to only stabilize the industry, but to reshape it as well. If banks are buying each other, where are the money to make loans? Treasury is adding more and more money to further encourage banks to buy each other and it put tax breaks, worth billions, to banking industry with one purpose, to encourage bank mergers.
To evidence this, PNC announced purchase of National City, while JP Morgan got Washington Mutual.
With government infusion banks just received money, but there are no guidelines as what percentage can be used to make new loans. Government is hoping that banks will start to lend again. And they are not doing anything.
Banks did not fix what they supposed to. Treasury is using bailout money to turn banking system into profit for the Treasury. Not American people so they can get loans. Those banks that were given $25 billion loans were selected by Treasury and encouraged to buy our smaller banks. Apparently those big banks, such as Citigroup, J.P. Morgan and others.
Big banks never needed that $25 billion bailout money. Those banks were sitting on a pile of cash, just not lending.
With money companies struggling and need of capital, which is not available, banks rather put their money elsewhere. Someone was not looking to help consumers, but rather to enrich themselves.
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