Bailed Out Banks In Trouble Again?

From the Huffington Post

Nearly 100 banks previously rescued by the federal government are again poised to fail, despite billions of dollars of support from the American Treasury.

The number of banks on the brink of collapse rose from 86 to 98 during the summer months, according to analysis of federal data from the Wall Street Journal. The banks in question have received $4.2 billion dollars in aid through the Troubled Asset Relief Program (TARP). Most of the troubled institutions are relatively small.

The latest sign of distress in the financial system suggests the bailout may have simply been a stopgap solution for a sector still contending with the aftershocks of the greatest banking crisis in 80 years.

If you own a business in the United States and you lose money instead of making it you go out of business. If you are a bank, the government runs to you with large bags of money and gets you back on your feet.

But twice? It’s only been two years. Is the government going to save these banks and, if so, do it again in two years.

What’s the ethics here?

Those who have committed crimes should be punished? Okay, have the banks been investigated for fraud?

The incompetent should not be rewarded for botched work or destroying their business. Has the government in the previous bailout or in the one likely to happen now, asking about competence and cleaning house in these institutions? Shouldn’t those who have ruined the banks by poor management find jobs elsewhere?

Ethically, is it wise to encourage the kind of behavior you get when you bail out failing institutions? Doesn’t that encourage immoral activity like risk taking? Doesn’t that give bank officials the impression that risky behavior is to be encouraged? If you win, you win big. If you lose, your dear Uncle Sam will find money for you?

What do you as a citizen want to happen? Maybe the government should’ve asked that question, “What results are we looking for in this bailout?” two years ago?

James Pilant