Banks Just Don't Get It

Hi Everyone:

I know that I have written about big banks before, but until they get it, I will continue to revisit the issue of their total lack of any common sense what-so-ever!

So these are the facts as I know them:

1) Bank of America lost $5 billion in the fourth quarter.

2) Citibank lost $7.8 billion in the fourth quarter.

Yet despite those losses, both of those companies plan to pay out billions in bonuses again, as usual. They accepted TARP money to help them from going under. The money was supposed to help them cover the huge amount of defaults and also give them additional capital to make more loan money available. This is what they did instead: some of the TARP money was used to help them cover their losses, but then they held onto the rest of the money and didn't loan it out? Why? I think there is a simple answer. They obviously got badly burned by selling those sub-prime mortgages that they invented, so they closed up credit and invested that extra TARP money in whatever could make them the most money. But that was tax payers dollars they used to earn the profits that they now plan to reward the employees for with outrageous bonuses. And they are going to pay out those bonuses even with those huge losses. To them it is full steam ahead and damn the torpedos.

My first question then is how can they afford to pay out these billions of bonus pay when 1) they had huge losses during the last quarter and 2) only a year ago they needed tax payers help to keep them from going under; due to their greedy and irresponsible ways? Is TARP money being used to help fund those bonuses? And my last question is when will they open up the credit market to people and businesses with good credit at reasonable rates?

It is quite apparent to me that these companies have not learned their lesson. The American public is hurting by their current policies. If this country is going to have a sustainable recovery from this recession, including the creation of new jobs, credit must be opened up, not dried up! Credit for homes, cars and businesses is essential and the big banks hold all the cards. I don't like that one bit. Do you? As I said before, people should cancel their big bank accounts and switch to the local banks in their neighborhoods.

Ok I just thought of another question. How did this get so far out of hand? Maybe banks got to big by buying up smaller banks. All I know is that we should not be beholden to them.

Enough said!

Common sense rules and greed still drools.

Til next week.