Bankers! Motto: We Take Other People's Money, Lose It, Then Make Them Give Us More

Truth be told, economics sort of scares us. Several times the invisible hand of the market has come upside our heads due to hyperbolic discounting, which we have to say was not our fault, but rather because of a model having compiled an empirical record of parameter instability particularly in the face of breaks in the stochastic behavior of the exogenous variables and disturbances.

Getting fired probably didn't help either, although in our defense the Principal was an idiot. We were just pointing out the obvious.

The point is, we've stayed out of this whole give-the-banks-money-because-if-we-don't-they- won't-have-any-because-the-people-who-run-them-are-dumber-than-moss-on-a-stump-and- lost-it-all controversy, preferring to leave these decisions to our betters. What little we have been able to figure out though is that the idea was to give the banks money so they could get back to doing what banks do, which is lending money to people so they could buy things and make things and start businesses and stuff so the economy would get going strong and we could finally invade Iran.

So how's that working out?

Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy. But many banks that have received bailout money so far are reluctant to lend, worrying that if new loans go bad, they will be in worse shape if the economy deteriorates. "See, the government gave us money to put back into the economy and stimulate growth," said John C. Hope III, the chairman of Whitney National Bank in New Orleans. "But the economy's is so unstimulated right now, it's not growing at all, so we're hanging on to the money until times get better."

What?

"It's high level econometrical stuff," Hope said. "You wouldn't understand."

OK, so what are you doing with the money?

An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future. Oh, also redecorating offices, and paying each other bonuses too."

Oh, come on. Congress wouldn't just give you billions and billions of dollars without asking for some accountability, would they?

Individually, banks that received some of the first $350 billion from the Treasury’s Troubled Asset Relief Program, or TARP, have offered few public details about how they plan to spend the money, and they are not required to disclose what they do with it. "It's the banking version of Don't Ask Don't Tell," said one Congressional aide who asked not to be identified because he didn't want his family to know he had anything to do with giving all that money to people who had already demonstrated they didn't have the sense god gave a cheese omelet. "They think I'm in greyhound racing," he said.

Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury.“With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out. As for you folks about to lose your job or your house, hey, should have gone into banking, know what I mean?”

A Congressional oversight panel reported on Jan. 9 that it found no evidence the bailout program had been used to prevent foreclosures. The report concluded that the Treasury’s top priority seemed to be to “stabilize financial markets” by simply giving healthy banks more money and letting them decide how best to use it. "They've done such a good job so far," said one Treasury spokesperson. "We figured why fix it if it ain't broke. Get it? Broke? Like most of the banks are. I made a joke."

OK, you're a regular walking talking Comedy Central Special, but can you tell us why you're giving money to healthy banks? Isn't that like giving Big Mac Coupons to the Hamburglar?

"It's high level econometrical stuff," Hope said. "You wouldn't understand."

“For the banking industry, this isn’t a sprint, this is a marathon,” Mark Fitzgibbon, research director at Sandler O’Neill & Partners said. “I think over time there will be pressure to lend that capital out and get a return for their shareholders. But they’re not going to rush out and lend all that money tomorrow. If they did, they could lose it.”

You mean like you did when you got yourself in this mess in the first place?