Kevin Walmsley

The Banker's Dilemma

There are other dilemmas.

Banks are now being micromanaged by the Treasury department, who are pushing them to make more loans, but will act punitively when these new loans go bad now that it's the taxpayer, and not the common shareholder, who will be suffering losses. So you can't blame banks for hoarding cash, when the penalty for bad lending might be a Congressional investigation and prison term.

Also, every banker I've ever met loves to make good loans. But in a bad and worsening economy, good luck figuring out in advance which loans will be repaid.

The banking system is broken. And now that the government is now a preferred stockholder in all the big banks, it's screwed completely.