Everyone from the editorial board of the New York Times to House GOP leader John Boehner is up in arms that banks are using the bailout bucks to make acquisitions rather than lending to support the economy. But the banks don’t care. They’re still spending whatever is left over after bonuses on acquisitions.
Take a look at some recent criticism of the transformation of the bailout fund into a buyout fund.
Here’s Boehner in a letter to Hank Paulson. “Mr. Secretary, funds made available under the economic rescue package should not be used to pay for bank acquisitions, raises, and executive bonuses,” Boehner said in the letter. “These are not the types of expenditures you described during your many discussions on Capitol Hill earlier this fall, and these certainly are not the types of expenditures Members of Congress envisioned when the plan was sent to the President earlier this month.”
Here’s the New York Times. “An even bigger problem is that the bailout was sold as a way to spur loans. If that never was – or no longer is – the primary aim, Congress and the public need to know that. Lawmakers should not release the second instalment – $350 billion – until they have answers and guarantees that the bailout money will be spent in ways that put the public interest first.”
How are the banks responding? Well, Morgan Stanley released a press release today explaining that “it would continue to expand its offering of traditional banking products and would explore both organic and acquisition opportunities to continue developing banking capabilities to better serve its clients.”
In short: “To Hell with your rules. We’ve got the money and we’ll spend it however we want.”