Community Reinvestment Act II? PLEASE NO.

Community Reinvestment Act II? PLEASE NO.
We are seeing some normalization in the credit markets. The interest rates on corporate bonds are beginning to decline slowly. LIBOR is staying down and the rate panic that was hitting the small businesses is beginning to subside. Now I do understand that the price of money and the availability of money are very separate issues---perhaps more so today than at any other point in my life time. But there may be new trouble on the horizon. We heard compelling arguments from Mish Shedlock about the difficult plight of the regional banks--as he expects several hundred to fail in the next year.

While I try to stay away from politics, the greatest threat that I see is potential "strings" attached to the government TARP money. I want accountability as much as anyone with the TARP funds, but in no way should we force the banks to loan money that they would not otherwise loan. We got into this current credit crisis partly because the Community Reinvestment Act forced banks to loan to individuals that were very high risk. Even though we had to invest untold taxpayer dollars into these banks--we cannot afford to force them to loan money to those who are unable to pay. We would be much better off having the government send those individuals a check (in no way am I advocating that idea). I have no problem with the government making a profit--a very substantial one--off of their investment in the banks. If we force the banks to put a new asset on the books that is really not an asset--we are just recreating the same crisis over again at a later date. Private enterprise has to fix the banking system for confidence to be restored. If we see strings attached to these TARP funds, I will begin selling stocks as fast as I can login and enter sell orders.


I was pleased to see natural gas hold up as well as it did after today's sharp oil decline. Are we really shocked that we are getting terrible numbers everytime we have any kind of economic report? Not much in the way of employment numbers are shocking to me. We are not going to see any improvement in the labor markets for several months. I still believe that natural gas is a good investment---I am still holding UNG. I added also added EOG and more FLR to my portfolio.
www.stockshotz.blogspot.com

"mish" has found out about the troubles in regional banks: excellent! the prediction by the banking analysts of 200 failures has been around for over a year and blabbed all over bloomberg news and CNBS, LOL. does "mish" realize how small this is and that 1600 FI's failed in the late 1980's? yesterday he was concerned about m3. m3 is not even measured anymore, LOL.

We got into this current credit crisis partly because the Community Reinvestment Act forced banks to loan to individuals that were very high risk.

This is an example of your Community bank lending? Do you make up your own reality.