No More TARP $ To Wall St.
I know you're all political junkies so you might have missed this morning's report from Oppenheimer & Co analyst Meredith Whitney, who had just spoken with Michael Cavanaugh, the chief financial officer of JP Morgan. During his interview with Whitney, Cavanaugh flat out admitted that TARP money will not get JP Morgan to spend more.
This is Whitney's assessment:
"The industry is pulling in its horns, and JPM is no exception with respect to its diminished risk appetite. Cavanaugh noted that no amount of capital provided by the government would change JPM's tolerance for lending risk, and that JPM does not feel capital constrained regarding lending opportunities for its customer base."
JP Morgan is one of the strongest banks out there but it has still taken public money. The folks at Morgan are not interested in lending more than they already are. They are not interested in taking risks, even with taxpayer dollars.
The message is clear: If we cut them checks, they will hoard the cash.
Cavanaugh also addresses the "bad bank" issue and again, his take is not good. It might loosen up credit at "peer banks," Whitney reports. Notice that he doesn't say it would loosen up credit from JP Morgan. If you take Cavanaugh at his word, the only thing that will do that is an end to the recession.
If a "Bad Bank" and taxpayer money won't get JP Morgan lending, we have no reason to believe it will get any of Morgan's competitors lending either. It's time to rethink TARP.
This is Whitney's assessment:
"The industry is pulling in its horns, and JPM is no exception with respect to its diminished risk appetite. Cavanaugh noted that no amount of capital provided by the government would change JPM's tolerance for lending risk, and that JPM does not feel capital constrained regarding lending opportunities for its customer base."
JP Morgan is one of the strongest banks out there but it has still taken public money. The folks at Morgan are not interested in lending more than they already are. They are not interested in taking risks, even with taxpayer dollars.
The message is clear: If we cut them checks, they will hoard the cash.
Cavanaugh also addresses the "bad bank" issue and again, his take is not good. It might loosen up credit at "peer banks," Whitney reports. Notice that he doesn't say it would loosen up credit from JP Morgan. If you take Cavanaugh at his word, the only thing that will do that is an end to the recession.
If a "Bad Bank" and taxpayer money won't get JP Morgan lending, we have no reason to believe it will get any of Morgan's competitors lending either. It's time to rethink TARP.
