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Bailed Out Banks Should Not Attempt Profit?   April 13th, 2009
That seems to be the consequence of some investigations revealed today       

 
QUICK OBSERVATIONS

More observations...
 

It would seem that the government may be interested in making sure that any bank that is bailed out does not recover to profitability. As amazing as that sounds, it would seem that's the message being conveyed.

Report: Bailed-Out Banks Face Probe over Fees

Over the past several months, as the economy has weakened, banks that received government bailout money have been boosting the interest rates and fees on their customers' credit cards -- and now they may be subject to investigation for those practices...

Elizabeth Warren, the chairman of the Congressional Oversight Panel for the Troubled Asset Relief Program, told The Wall Street Journal in an interview that the panel is working on a report about the consumer-lending practices of banks that have received TARP money.

'In a sense we're asking taxpayers to pay twice,' Warren told the Journal.


In other words, banks are being criticized by the public and politicians for not being profitable and requiring government bailouts. But when those same banks take measures to try to achieve profitability, they're criticized for that, too.

Warren suggests that having the taxpayer bail out the banks while the banks also attempt to take measures to be profitable is like asking the taxpayers to pay twice. Well, sure, that's what happens when government gets involved in places it shouldn't be involved. If this is like asking the taxpayers to pay twice then, perhaps, the governments shouldn't be bailing out the banks so the taxpayers only pay once?

Unfortunately, the alternative that seems to be suggested here is that since the taxpayers are already "paying" through the bailout, the banks shouldn't make any effort to be profitable in the marketplace. After all, the taxpayers have already "paid" the banks through the bailout. If banks are making a profit, that means that taxpayers somewhere are paying twice.

I'm glad that Elizabeth Warren is recognizing that this amounts to the taxpayer paying twice. I just wish she'd also realize the solution isn't to make sure that banks aren't profitable but to get government out of the bailout business.

The problem here isn't the banks trying to make a profit. The problem here is the government trying to make sure they don't.

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