the growing tangle of strings the Obama administration is attaching to the funds that it and its predecessors have pumped into US financial institutions is starting to alarm the corporate beneficiaries and has prompted some of them to start investigating how to return the bailout money.
1. Banks that have recieved money may have to loan money to customers without using sensible risk managment practices.
2. "...for institutions where individual loyalty and motivation has been bought through big incentives and where a big bonus culture is engrained, the backlash against bonuses within taxpayer-assisted institutions jeopardises long-established business models and corporate cultures. "
Personally I think its a good thing. It shows that the money given to them by the govt had "strings attached" so if they want to work under their own rules they must lift their game. The sooner more banks do this the quicker it will get back to normal.
Greed got us in to this, and looks like it may get us out of this too.
Business Spectator.com wrote:
It would appear that the dawning realisation of what they have agreed to has shocked the bankers, particularly once they realised how intrusive the conditions the government would attach are, and could become. Once they’ve taken the money, the government and/or Congress can add new quid pro quos on a whim.
Business spectator wrote:
So far, the price for accepting public funds ranges from institutional behaviour – banks agreeing not to foreclose on delinquent borrowers, or evict borrowers whose home loans are underwater, or to extending credit into distressed sectors of the economy – to their own incentive and reward systems.
A bank that has accepted taxpayer funds can’t pay bonuses without being pilloried in the media or threatened by the lawmakers. Corporate jets and junkets are out, as are team or morale-building events
The article goes on to say that the 2 main reasons for banks giving money back are:Business spectator wrote:
In some respects, evidence that the taxpayer-supported institutions are already chafing at the restrictions imposed on their behaviour is a positive, because the sooner institutions can wean themselves off the public teat, the faster the financial system will start to normalise.
1. Banks that have recieved money may have to loan money to customers without using sensible risk managment practices.
2. "...for institutions where individual loyalty and motivation has been bought through big incentives and where a big bonus culture is engrained, the backlash against bonuses within taxpayer-assisted institutions jeopardises long-established business models and corporate cultures. "
Personally I think its a good thing. It shows that the money given to them by the govt had "strings attached" so if they want to work under their own rules they must lift their game. The sooner more banks do this the quicker it will get back to normal.
Greed got us in to this, and looks like it may get us out of this too.
