Superstrategist Andy Busch of BMO Capital Markets on why looking at Ireland gives some the future of the U.S. government's deepening involvement with the banking system (my bold):
Ireland took steps today to stabilize their banks by injecting capital into their financial institutions after one bank had an accounting scandal hit its shares. Remember, this country intervened aggressively after the Lehman collapse to guarantee all deposits and debt of the country's major financial institutions.
For the three major banks, the first part of the plan is to make direct capital injections and take voting rights in exchange. ... And the money comes with serious strings attached. According to the WSJ, "In exchange for the money, the banks have agreed to increase lending to small and midsize businesses by at least 10% next year, the finance ministry said. The banks also agreed to increase lending to first-time house buyers by 30% next year, subject to demand, and to wait at least six months after a homeowner first defaults on a mortgage before taking legal action or repossessing the home. The banks also promised to work with regulators to develop financial-education programs for consumers."
As US banks carry a chain of woe longer than Marley's, I can only think that the incoming US politicos are all nodding their heads in unison in agreement over what Ireland has done. ... Due to the a credit crisis brought on by lack of enforcement of laws on the books and an irresponsible monetary policy, the risk for the United States is that government oversteps its bounds and dictates what lending policies should be for the current financial institutions. While this won't kill a recovery, it will eventually produce massive misallocation of precious resources. Like Scrooge, It's not too late to change...but I'm not sure we're going to wake up in time.
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Philena of VA 6:28PM February 22, 2009
I-Man of NV 6:36PM December 23, 2008