It’s My Money, And I Need it Now
Or was it it’s my money, and they want it now?
The Wall Street Journal reports that the taxpayer funded corporate candy banking bailout is getting requests from all corners of the markets, with handout requests coming from insurance agencies, car manufacturers, and other industries:
The U.S. Treasury Department is considering taking equity stakes in insurance companies, a sign of how the government’s $700 billion program has become a potential piggybank for a range of troubled industries. The availability of government cash is drawing requests from all corners, with insurance firms, auto makers, state governments and transit agencies lobbying for a piece of Treasury’s pie. While Treasury intended for the program to apply broadly, the growing requests could rapidly deplete the $700 billion, an amount that initially stunned many as being quite large.
Barry Ritholtz once said that “Capitalism without failure is like religion without sin.” And even before this government handout is done the toxic effects are already kicking in, with investors worrying that banks that did not get a handout are set up to fail:
The Treasury Department has decided to let banks individually announce that the government will invest in each firm, scrapping an earlier plan to release the names of multiple banks receiving federal money all at once. The decision came after concerns that banks left off any group list would appear too weak for government assistance, spooking investors and depositors and potentially making troubled banks’ situations more dire.
With enough handouts appearance becomes reality. Spread that across dozens of industries and people will make a lot of false assumptions, killing many good businesses in favor of larger and sloppier competitors.