Local Banks Not Seeking Bailout Money

Thursday, 13 November, 2008

Despite the news, leading economists are still worried about the federal government's rescue plan.

Not a single Hawaii bank has publicly shown any interest in getting bailout funds and that's good because there may not be much money for community banks.

For many companies the best rescue plan may be the old-fashioned kind, in which cash loans are arranged.

Six out of every seven bailout dollars made available so far have already been assigned, mostly to the huge companies whose problems you've been hearing about. So what happens to the small town bank?

The head of the American Banking Association wonders if the little lenders will get a dime, when megabanks and AIG have already claimed all but 60 billion of the first $350 billion clumps of cash.

Lobbyists have descended on the Treasury Department seeking bailout funds for their clients, contractors who want money to repair foreclosure homes and auto dealers hurt by the tight loan market. Everybody has a reason why he needs a rescue.

But the treasury's senior watchdog official says it's not clear how this will be policed, and oversight jobs that Congress funded have mostly not been filled.

Thus for many companies the best rescue plan may be the old-fashioned kind, in which cash loans are arranged and continuing vendor supplies are compelled by a judge with broad powers to put a company back on a sound business footing. It's called bankruptcy.

Source: http://kgmb9.com/