Payday Loans for Obama the Bank Buster

It may take payday loans at times, but what the American economy needs most is a grand flourish. Will Barack Obama pull back the curtain to reveal something extraordinary… or merely ordinary? The psychological boost a big move could give America may mean so much more than numbers, dollars and cents.

It must be big

Ready to bust some banks, Barack?

Financial strategist and author David Smick’s recent Washington Post editorial  “Memo to the Banks: Lend or Else” suggests that the President-elect must make bold moves in order to help recapture consumer (and institutional) confidence in the U.S. economy. One of the best ways he sees to accomplish this is via a showdown with the country’s afflicted banking system. Something like this would be much more important (and much less destructive) than cracking down on faxless payday loans that actually aid consumers.

At one time, banks were considered “too big to fail.” Clearly that is no longer the case, though, as massive bailouts from the Bush administration have shown.  Did you know, however, that current post-bailout cash reserves for America’s banks sit at over $800 billion? What are they doing with the money? They’re sitting on it! Smick blasts American banks, for they have shifted from reckless abandon to static safety. The result of this is that they are tightening their belts so much that credit has been unable to flow as it needs to.

The economy suffers

Banks have been doing something with the money. Unfortunately, it’s nothing good. The cockeyed leadership of these financial dumps have taken it upon themselves to send their executives on spa vacations and double their investment in Chinese banks. Common sense or a drive to tackle issues at home head on are nowhere to be seen.

The mortgage crisis is tightly wound up in this, too. Smick points out that giving loans to people who could scarcely repay them was one thing, but the banks made things even worse by burying their errors in off-the-books ventures. We may never know exactly how big a hole the banks dug for themselves, or whether they needed as much money as they received from an all-too-eager government in the first place!

Obama had better bring a shovel

If banks won’t lend, Smick suggests that Obama ride a hard line with these deeply diseased behemoths. He should insist that their Troubled Asset Relief Program (TARP) funds be used to buy Fannie Mae and Freddie Mac debt. Since it is now federally guaranteed, bank executives have no excuse. They cannot sit on their freshly manicured hands, they cannot pass Go and they cannot go on any more “team-building” retreats. It’s time to act like big boys and girls now, or else.

Some bankers are saying they’re confused by the government’s efforts, that some are telling them to demand more capital and lend less money, while others say they’re receiving the opposite message. Poppycock. You know that increased lending will improve liquidity and get this economy on the right track again. You want to make excuses, Mr. and Mrs. Bank.

Wow. Now.

America is in a financial crisis. This is not a test, but the real thing. As Smick sees it, Obama’s only move is to take banks to the carpet and make them heel. Busting banks for their misdeeds is what is needed, not punching payday loans in the mouth. Whether or not this will be possible remains to be seen, but what America wants to see is bold moves. They will appreciate the effort and (hopefully) savor the results.