How banks are spinning the rescue…
Now that the Treasury Department has decided to let banks announce when the agency has decided to pony up money, banks are falling over themselves to issue press releases announcing the news.
The funny thing — depending on your sense of humor — is that most of the press releases sound as if they were written by the same exact person, because many of them sound as if they were doing Treasury, and by extension, the American public, a favor by taking the money. Take this one from SunTrust (STI), which announced yesterday morning that it had received preliminary approval to sell $3.5 billion in preferred stock to Treasury.
“Our participation in the Capital Purchase Program enhances SunTrust’s already solid capital position and will permit us to further expand our business and take advantage of growth opportunities,” said James M. Wells III, Chairman, President and CEO. “In addition, we are pleased to support the Treasury in its ongoing effort to address dislocations in financial markets and spur the market stabilization that is in the public interest.”
But we don’t mean to pick on SunTrust. NorthernTrust (NTRI) put out a press release yesterday to announce its $1.5 billion infusion because it “fully supports the U.S. government’s efforts to strengthen our nation’s financial system.” There’s also this one from Valley National (VLY): “Although Valley is a well-capitalized organization, we believe such a program provides an excellent opportunity for healthy strong banks like Valley to participate in and support the recovery of the U.S. economy”. Even relatively small banks seem to be on message, like First Niagara (FNFG) which said in its press release yesterday, “We are supportive of the Treasury Department’s efforts and remain strongly committed to supporting the economy in Upstate New York.”
How patriotic of these banks! How selfless! It almost makes you want to burst into the Star Spangled Banner or go out and buy Liberty Bonds or something.
UPDATE: Looks like both Treasury and the White House is jumping into the fray today and encouraging banks to be even more patriotic and start lending.
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Posted in Tags: 8Ks, TARP |
 8 Comments » |
October 28th, 2008 at 12:54 pm
I think this gushing support for the bailout plan may be a condition of receiving the money. Even BB&T’s John Allison supports the plan:
“‘We support the Treasury’s efforts to stabilize the credit markets and restore confidence in the financial system,’ said BB&T Chairman and CEO John A. Allison. ‘Fortunately, our own strong capital position has allowed us to meet the lending needs of our clients, even during this economic downturn. For us, the additional capital will not only extend and strengthen our lending capacity, but provide other strategic options as well.’”
His support of the Treasury’s efforts isn’t so clear in a quote from an article titled “BB&T chief exec slams bailout plan:”
“The U.S. Treasury, he says, is ‘totally dominated by Wall Street investment bankers,’ and ‘cannot be relied on to objectively assess all the implications of government policy on all financial intermediaries.’”
October 28th, 2008 at 1:05 pm
Interesting, Dan. Do you have a link to that article so that I can add it to your comments?
October 28th, 2008 at 2:45 pm
Here is a link to the BB&T press release:
http://bbt.mediaroom.com/index.php?s=43&item=717
And here is a link to the article, “BB&T chief exec slams bailout plan:”
http://triangle.bizjournals.com/louisville/stories/2008/09/22/daily53.html
October 28th, 2008 at 10:33 pm
Aren’t the banks just taking their cue from Eric Dash, NYTimes, who wrote a couple of weeks ago that JPMorgan Chase did the FDIC a favor by taking WaMu off Sheila Bair’s hands? As if JPM did not do itself a multi-year favor by obtaining — for a meagre $1.9Bill — the deposits of the nation’s largest thrift together with enough tax write-offs to avoid paying taxes long into the future. And, btw, this little favor made JPM the largest bankster in our late-stage monopoly capitalism economy. Main Stream Media has certainly assumed a spread-leg policy regarding
the hand-in-glove relationship between government and the financial industry. Don’t look for Pulitzer Prizes from
our current crop of cheerleading scribes.
October 29th, 2008 at 2:05 am
The first injection came to Oregon today — to a strong bank that says it doesn’t need the money but
assumes Treasury is encouraging it to use the cash to buy up “weaker” banks:
http://www.oregonlive.com/business/index.ssf/2008/10/feds_aim_214m_in_bank_bailout.html
In addition to the patriotic blather from Treasury and recipient banks, we have state-subsidized
economic Darwinism. Red in tooth and claw with the gore of slaughtered common shareholders, the select
few banks will lead us…into yet another round of consolidation.
October 29th, 2008 at 1:32 pm
Subjest Line of the October 27, 2008, (Crain’s) Chicago Business Today email with Lisa Leiter:
Northern Trust wins $1.5B
October 31st, 2008 at 3:39 pm
Updating the previous link regarding the first injection into the financial circulatory system of OR, the reporter has fleshed out a tad the implications of Treasury’s blatant program of strengthening the strong, of enriching the wealthy, of aiding those who do not need aid:
http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1225247150237600.xml&coll=7
In 2003, the Bush administration declared patriotism to be equivalent to shopping. So it should be no surprise that Treasury has decided to give strong banks pocket money to buy other banks. Those other banks, dealt a steroidal disadvantage by Paulson, are more likely to succumb to rapacious consolidation. How patriotic. Umpqua, btw, is not a community bank — a form of financial institution to which Paulson and his cronies seem completely antagonistic.
Could someone provide current data on layoffs and unemployment in the banking industry?
March 4th, 2009 at 9:20 am
John Allison fully explained his view on the bailout in his talk, “The Financial Crisis: Causes and Possible Cures.” The full talk can be viewed online here: http://www.aynrand.org/site/PageServer?pagename=reg_ls_financial_crisis.