franklbanks: You can now donate to The Frank L. Banks Foundation online. 15 cent or $15. Every little bit helps. Here's the link link
about 4 minutes ago
BurghRE: @burghseyewife True, but banks can be VERY frustrating, for someone trying to catch up, sometimes they don't let you or help when should.
about 22 minutes ago
TdMPhotography: @photo_ed still awake just finished reading Iain Banks Complicity belting read 1st read back when I was 19 or so - forgot how it ended too!
about 37 minutes ago
johngapper: Or nationals, locals and verticals @moorehn NYT, WSJ expanding into SF, Chicago. We're going to have megaliths and regionals, like banks
about 40 minutes ago
JBGoodbody: Food Banks are at an all time low. Buy an extra turkey or ham this holiday season and drop it off. Find yours at link
about 54 minutes ago
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Are banks drawing too much heat during the current financial crisis? |
 | By Steve Jagler   Special to OnMilwaukee.com E-mail author | Author bio More articles by Steve Jagler |
| Published Feb. 18, 2009 at 7:29 a.m. |
|
(page 2)
Boy, did that backfire. Suddenly, people were talking about these banks being "bailed out." Despite the compelling stories and juicy sound bites, nothing could be further from the truth. A bailout suggests that a company was saved from demise. That certainly wasn't anywhere near the truth in the case of Associated -- likewise for many other fine banks across the country. These companies are being falsely vilified.
To make matters worse, any spending by these companies is now coming under tremendous scrutiny. These companies must be allowed to make their own decisions based on business realities. If we tie the hands of the companies that accepted government investments, we will weaken them. Contrary to current thought, these are companies run by smart people. They are already responsible to shareholders.
We certainly don't need or want them to be responsible to the media or politicians.
Associated received a government investment of $525 million. The interest rate the bank will pay for this investment is 5.00 percent for the first five years, rising to 9.00 percent after that. Thus, over five years, Associated will pay the government $131 million of interest.
Meanwhile, the government's most recent five-year Treasury note auction was at a rate of 1.82 percent, costing $48 million on $525 million over five years. I know you're already doing the math in your head -- yes, the government will make a PROFIT of $83 million on the money it invested in Associated.
Who's bailing out whom?
I say let's "give" these quality banks lots more money. Where else does the government actually EARN a return on investment? We should thank these fine institutions for lowering the federal deficit.
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10 comments about this article. Post a comment / write a review. |
Recent Talkbacks ...
Posted by Banking_101 on Feb. 20, 2009 at 3:59 p.m. (report)
I'm pretty sure that most of you have no idea what you're talking about. Yes, they took the money. But this was no bailout. These banks, and most others that participated in the CPP took the money so that they can make more money. Anyone that knows anything about banking knows that banks make money using money. Banks take your money as deposits, borrow money, and in this case sell preferred stock to get money at low interest rates. Then they turn around and lend that money at a higher rate of interest to make money. Now, if this is your business model, and you are offered millions from the government, at a relatively low cost to you (I believe it's 5% for the first 5 years), would you not accept it? Plus, with lending regulations they way they are, for every dollar you have, you can make 10x that in loans. So if you were to get $1 million at a cost of 5% to you, you can make $10 million of loans at 5% and make quite a bit of money. So, allow me to repeat, this is not a bailout. This was a sound business decision by profitable banks that have since lent much of that money to communities they serve. So, if these profitable banks want to reward employees for a job well done, I see no problem, except that they didn't take me. Educate yourself before you rush to judgment.
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Posted by pickingMemberIdSucks on Feb. 18, 2009 at 12:32 p.m. (report)
"Associated Bank and most other banks that accepted the government's investments didn't need the money" then these holding banks shouldn't have taken it. and since the government (and by proxy, the taxpayers) are now preferred stock holders in these banks, they unfortunately have opened themselves up to public opinion and scrutiny - and public opinion on bankers and banks is: untrustworthy (and a bit slimy). "Contrary to current thought, these are companies run by smart people. They are already responsible to shareholders." they took the money when they didn't need to, with negative consequences - not too smart. these smart financial folk didn't see the financial ruin our country was heading toward with all these funky loans and financial instruments being bandied about: not too smart. responsibility to shareholders didn't stop a whole lot of investment and holding banks from making bad loans and investments. "Who's bailing out whom?" we're bailing your industry out against our will for 'the betterment of America' or somesuch, remember that, finance guy.
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Posted by rabid652 on Feb. 18, 2009 at 11:46 a.m. (report)
Chateau, who are you refering to?
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Posted by ChateauDweller on Feb. 18, 2009 at 11:30 a.m. (report)
Quit whining about not "getting yours."
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Posted by yinger73 on Feb. 18, 2009 at 11:01 a.m. (report)
I think some of you may be missing the point. You shouldn't feel bad that the bank's employees didn't get their reward trip. You should feel bad that the bank is under pressure to bring it's expenses in line with public opinion. What's next? Some reporter deeming a loan candidate not worthy? Or a new depositor?
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