Sunday, January 18, 2009

Trickle Down Economics Not In Action

Another example that trickle down economics is a myth.

At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

Talking Business: In Search of One Bold Stroke to Save the Banks (January 17, 2009) “Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

Banks are not required to explain how the bailout money is being used. Lindsay Beyerstein wrote, "It's absolutely ridiculous that banks aren't required to make more loans as a condition of accepting bailout money." Congress should have written tighter requirements in the bailout bill.

The bailout was needed. Lending institutions going under would have been the economic apocalypse. Let us not kid ourselve that bankers would want to suddenly spread the wealth. That is nonsense.

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