When the Treasury was pushing its $700 billion bailout, it assured us that once banks had cash, they’d start lending. “I don’t know about you,” writes Joe Nocera in the New York Times, “but I’m starting to feel as if we’ve been sold a bill of goods.” On a recent JP Morgan conference call, Nocera heard an executive say there were no plans to use its $25 billion infusion to lend more.
Instead, the executive promised to be “active on the acquisition side,” which is the Treasury’s real goal in this. Paulson has even directed Treasury to use bailout money to facilitate mergers, which is great news for whichever big banks the Treasury crowns—and no one else, really. Meanwhile, lending, which would help the economy, looks a lot like a "fig leaf," he says. “Treasury’s version of the weapons of mass destruction.”