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White House defends money for banks
Key Excerpts from Article on Website of Washington Post
Posted: November 7th, 2008
http://www.washingtonpost.com/wp-dyn/content/article/2008/10...
Under fire from Democrats and Republicans alike, the White House ... defended giving billions of bailout dollars to banks that plan to reward shareholders and executives -- or even buy other banks. Allowing banks to engage in such normal business activities actually could help loosen lending and revive the sagging economy, said Ed Lazear, chairman of the Council of Economic Advisers. He said the administration would not impose any conditions on banks beyond those required when Congress created the bailout program, which authorized the government to buy stock in financial institutions. Lazear was put before the cameras in the White House briefing room amid a rising chorus of complaints from lawmakers about the latitude that banks will have when they receive bailout money from Washington. That bailout was originally sold by the administration as a plan for the government to purchase toxic mortgage-based assets from financial institutions, to get them off their books and inspire the resumption of normal lending. After passage, though, the administration decided the better course would be to devote $250 billion into buying ownership stakes in banks. With taxpayers' money flowing into their vaults, banks are going ahead with paying dividends to shareholders, giving bonuses to top executives and acquiring competitors. Lawmakers are asking why banks with the money to do those things need taxpayer-funded help. The rescue legislation included some limits on executive compensation, considered weak by many. And while it does not allow institutions receiving the money to increase dividends, it does not prevent them from paying those dividends.
Note: For extensive coverage of continuing revelations about the Wall Street bailout, click here.
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