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September 26, 2008 – Comments (1)

That is what changed when a friends company rolled over their credit line with citi today. When my friend expressed his dismay, the citi rep said it could be higher, but you are a good company. The citi rep did not say there was no money.

Which begs the question:

If we recapitalize the banks with 700 bil, at what percentage (bank tax) are they going to capitalize our business's?

1 Comments – Post Your Own

#1) On September 27, 2008 at 10:39 AM, rd80 (96.52) wrote:

This plan only assumes and hopes that banks will loosen lending standards and lower rates as our tax money makes it to their balance sheets.  There is no guarantee that will happen. 

Had this mess been passed a week ago, WaMu might have been saved.  But not all of the money they raised from selling bad assets would have been available for new loans, they would have needed to keep some on the balance sheet to strengthen capital ratios.  Same thing for Wachovia, Citi or any other bank that's struggling. 

The banks that have solid balance sheets won't come to the gov't because of the equity dilution provisions that will probably be in the bill.  So, our $700 billion will have the perverse effects of propping up banks that should go under, doing less than expected to free up credit lines and putting good management at a disadvantage to incompetence.

Since flooding hundreds of billions of newly printed dollars into the system would be inflationary, long term rates may go even higher if this plan passes.


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