Irony: Many Wall Street Banks May Not Be Participating In Government Bailout
Once again, did we really need the bailout?
Fears are mounting that many Wall Street banks and financial firms will refuse to participate in the US government’s $700bn bail-out package, leaving global markets and world economies in a perilous state for months to come.
’There is a growing feeling that banks ... might instead decide to tough it out,’ said Thomas Caldwell, chairman and CEO of Caldwell Financial, a $1bn-plus fund manager. . . .
’I think this hodge-podge of regulations and rules will be enough to put many [chief executives] off participating,’ Caldwell said.
Sources close to Goldman Sachs and Merrill Lynch indicated the banks might choose not to participate in the bail-out as there is a growing view on Wall Street that the market may be bottoming out.
Remember the urgency as Congress went to war over the bailout? Remember both Republicans and Democrats saying that the bailout needed to pass lest we face economic holocaust? Now the worry is that some banks may not even partake of the bailout.
Which is ironic, in a sickening way.
Of course, some are saying that the mere presence of a government bail out is enough to restore order to the market:
Analysts also believe that the mere presence of the government as buyer of last resort will be enough to get credit markets moving again, and that a large number of banks would not need to take part for the legislation to succeed.
But then, credit markets would have probably started moving again bailout or no bailout. After all, the demand for credit wasn’t going to go anywhere. And Economics 101 tells us that where there is a demand, there will always be someone to supply it.
We didn’t need this bailout, but I’m sure the government will find a way to spend that $700 billion regardless.
