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Posted on 01/04/2009 1:28:24 AM PST by rabscuttle385
WASHINGTON – Thanks to the government, PlainsCapital is getting bigger.
The Dallas-based bank received $87.6 million last month from the U.S. Treasury Department's $700 billion rescue program, known as TARP. The bank says it intends to put the money to good use – increasing loans for businesses, students and even jumbo mortgages. But it doesn't rule out using funds for acquisitions.
"As we see this economy shake out, there are going to be some that make it and some that don't make it," said Alan B. White, PlainsCapital's chairman and chief executive. "And there are going to be good opportunities that people are going to be able to take advantage of. I hope I'm one of those."
Congress and taxpayer groups have objected to using bailout funds for acquisitions and grown impatient with the lack of new lending. But the government didn't dictate how banks can use TARP funds. And it has no system for monitoring the funds after they are handed over.
(Excerpt) Read more at dallasnews.com ...
Gee who’d a figured?
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Old habits die hard, I guess.
Liberals appear shocked and dismayed to learn that, after giving the destitute alcoholic crack-addict a whole bunch of money, the addict promptly blows the entire wad on more alcohol and crack.
It’s not that I conclude that the banks’ acquisitions are equivalent to alcohol and crack; it’s that those who enable the perpetuity of pathological behavior should detach from any expectations whatsoever that consequent behavior should be anything but identical to previous pathological behavior, or otherwise to the pleasure of the enabler.
This is the danger of the left’s bailouts: They’ll seek to control the behavior of those they bail out, resulting in more and more government control and central planning of economic decisions until all liberty is a thing of the past, and America becomes more and more like a prison a la Cuba or the former East Berlin.
Rather than bailouts, we need an end to government forcing businesses to make bad decisions (like affirmative-action loans) and a new climate of tough-love toward those who repeatedly make bad decisions on their own!
See what I’m saying? The banks could have done the ethical thing, but instead their lust for more money kicked in.
Read my tagline and get out of credit card and other unsecured debt. Then start from $0 and live ‘cash’ or barter only.
Why is this necessarily a bad decision? If this bank can pick up a good pool of deposits for a cheap price, it is a great deal for the shareholders and the best thing they could do with the money. In the long run they will expand their lending power greatly, which is what the government wanted them to do in the first place.
Isn’t that called recycling the same problem they caused?.
I agree! What I don’t agree with is when the incompetent enablers, the politicians and bureaucrats, second-guess and wring their hands over the after-the-fact decisions, like this one, of those that they bail out. If they want to insist on having say/control over such decisions, it should be in the deal up front. But of course I’m opposed to the bailouts in the first place.
Once they decide to bailout a bank, they should then STFU about how the bank invests (or squanders) the funds, unless the bailout is explicitly conditional on how the money is spent—which of course is anathema to me as it amounts to outright socialism.
We have a saying, if an alcoholic asks you for a loan, and you want to give him the money to help him out, you’d better just consider your help a gift rather than expect to be repaid.
I am not assuming its a bad thing but the lack of accountability from Congress is breathtaking.
Well, what do you propose? Should a Congressman recommend each loan recipient?
I say, let the banks do their jobs. Some of the banks that received these funds did not even make subprime loans, and never lost money.
“PlainsCapital Corporation is an independent financial services company based in Dallas. PlainsCapital was founded by current Chairman and CEO Alan B. White and a group of investors in 1987. The corporation’s cornerstone is PlainsCapital Bank, the second-largest privately held bank in Texas with more than $4 billion in assets.”
They are a fairly recent startup, only 21 years old, far from gigantic, and seem to only do business in Texas. Any banks they would be acquiring are would be quite small indeed, probably just a few branches.
Even in 2008, new banks continued to start up. While there were fewer than usual, about 30 or 40 opened their doors.
Citibank and BofA cannot buy this bank because it is privately-held. The few stockholders have a good thing going, and have no interest in selling out. This is a typical business model for most of the startup banks.
Of course, if they grow to a large size in 50 or 100 years, and the second and third generation takes over, then they might be in play.
Why is this a bad decision? Maybe because these institutions were "too big to fail," and now they're going to get even bigger with our tax money?
The only problem is that the “rescue” funds reward the bad banks and poor risk managers at the expense of the better risk managers.
Financial stability requires that the government provide a lender of last resort function to prevent or control meltdowns like the one we’ve just had. But poorly executed lender of last resort function creates an unproductive zombie business model - as we should have learned from Japan.
Look at Detroit. Ford told congress that Ford is viable, GM told congress that GM essentially is not. The government’s approach has been to reward GM’s management and stockholders - which by definition punishes Ford’s management & stockholders. Guess how the American sutomotive industry will evolve over the coming decade?
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