Wednesday, December 24, 2008

How The Congressional Crackdown On Bank-Bailout Money Will Kick Start Lending Again

Taxpayers are getting angry, yet again.

And why shouldn't they?

First, it was lavish spa parties thrown by AIG executives whilst blood ran cold on Main Street. Then it was the auto Big Dogs from Ford (F), General Motors (GM) and Chrysler (DCX), cups-in-hand, flying to D.C. in their private jets.

Now, in what promises to be the "next big thing" on that ever-enlightening and continuing reality-television program, "Top Execs Go To Washington To Explain Embarrassing Moments," let's all get the popcorn and beer ready for the next episode.

Subtitle: "We Banks Didn't Reveal Specifics Of How We Spent The Bailout Money Because You Didn't Say We Had To, Daddy!"

Next month, as Senators' Dianne Feinstein, D-California, and Olympia Snowe, R-Maine, roll out legislation compelling companies that received money from the $700 billion bailout fund to report exactly how they have spent it, simple logic dictates that this will also lead to a parade of major bank executives onto the "boob tube" in front of the entire nation, as was similar to what happened with those "wild 'n crazy guys" at AIG and Auto Land.

Maybe, Vik Pandit, former-studly star of "If I had To Do It All Over Again, I Swear I Would Have Listened To Charlie Gasparino" - and now producing the hit day-time soap, "Citigroup 10043"(C), will be there. How about, Ritchie Kovacevich and Johnny Stumpf from Wells Fargo (WFC) -whose weekend-rock band recently released the nearly-self-titled, "Ritchie and Johnny Rock Live From The Haight." And, of course, JP Morgan's (JPM) Jamie Dimon, who was recently heard asking one of his employees, "Hey, can you run a check and see if we ever gave any money to that crazy Bernie guy?" could also make an appearance.

So, why are they destined to appear on the TV?

Because Congressional representatives like to get on the TV. All the time. Just like actors do. This, is a given. And bank executives, who probably won't want to be embarrassed on TV in front of a bailout nation of taxpayers, know their date on D.C. reality television is inevitable. This, in my prediction, because banks will, at first, resist having to disclose any dirty bailout laundry. And, this, in turn, will cause Congress to turn up the heat to do exactly that.

But, the banks will use their "resistance" as a delay-tactic in order to buy themselves time to actually, finally, get their lending programs in gear- so that, by the time Congressional pressure boils over, the banks' top executives can roll into Washington with a bunch of "Well, look- see? We've already begun to do this. And we already did that. So whatever we haven't yet done, sorry, but, you never said we had an actual time-table to get things going."

Therefore, it is my belief, now that the story of a Congressional witch hunt has broken, lead bank executives are, as we speak, scrambling to "tidy their rooms and make their beds" before Daddy gets home. You know: do everything they were supposed to be doing these last few months. All those things that will immediately kick-start the mortgage, "re-fi," consumer loan and commercial loan sectors- and turbo-charge overall market liquidity.

This couldn't have come at a better time, either. The markets are confused and sad. Taxpayers are extremely nervous. We haven't yet gone completely over the cliff. But, the slowness of banks to get their acts in gear, with impunity, if you will, has made Wall Street players and Main Street folks angry- and everyone wants, nay, demands results.


Why the government gave the banks all that money in the first place without also insisting on the very disclosures they're seeking now, and why no meaningful oversight over these banks was ever set up from the "git-go," is a whole other story. One that constituents should be demanding of their representatives- en masse.

But, in real-time, this is now. And we'll take what we can get.

And what we're finally gonna get are results. Because "shame" and "world-wide television audiences" don't mix well with corporate executives- especially now that they've all seen the same reality TV show that all we little people have been watching, too.

So, listen up all you good-American spending-wannabees out there (and you know who you are). Santa Claus just came to town, and he just gave us all the biggest, best, baddest and most practical gift he could fit on his sled.

Ssshh, I'll give you a hint (but, don't open it 'til Christmas).
Okay, it has something to do with liquidity.

That's spelled:

"l" for "loans are what banks can really do when they are forced to"

"i" for "i can't believe we gave banks all that money and they haven't used it the way they were supposed to"

"q" for "quit messin' around with my wallet. Else, my wife's gonna leave me."

"u" for "under a moonlit sky, I thought I saw Elvis riding shotgun with Santa."

"i" for "i know bank executives are rich, but, what am I?"

"d" for "does this mean we also get iPods for Chanukah this year?"

"i" for "i think 2009 is going to be a Good Year after all, just like Kudlow said."

"t" for "trade in your Prius for a brand new Ford Fusion, and show Michael Moore he was all wrong about Michigan."

"y" for "you'd better not be snoopin' under that darn X-Mas tree before we're all gathered to open our presents!"

Ho, ho, ho!

Merry Christmas to you all.
Happy Chanukah...And, have a wonderful Happy New Year!

GT McDuffy

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