....here's a plan for Washington DC, tell the banks to stop paying dividends to their shareholders. I went back and looked at just 20 of the top banks, including GS, MS and MER and saw that they are paying out $40 Billion per year out in dividends. The lending rule of thumb is $1 of capital can service $10 of lending. That is $400 Billion in lending capacity that can get freed up. That is more than half of the Paulson bailout plan and it costs the taxpayer ZERO.
Peter Boockvar
I don't mean to hyperbolic, but this is a robbery folks, plain and simple. These banks are threatening the lifeblood of our economy in order to extort an open federal credit line in the amount of $700 billion, through which they can launder all of their worst assets at our expense.
No, I don't doubt that the "credit crunch" could have a real effect on "Main Street" America. But I do doubt that these banks don't have the ability to solve it without federal funds. I also doubt that applying federal funds will in fact solve it. I think that they are using this crisis as a pretense to get in one last gorging at the public trough before they are run out of town by Barack Obama in January.
If the banks are solvent, as paying $40 billion a year in dividends would indicate, then they don't need this money. If they are truly insolvent, they need to be forced into bankruptcy so that their bad debts can be forgiven and they can raise new capital. In neither case is federal money required.