Newly Discovered Concept: Self Interest
I’m not sure why anybody’s surprised at bailout recipients’ reaction:
At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.
“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”
There’s really no way around the reality of human nature and its self interest — especially when the decision makers are acting in their capacity as employees or representatives of business entities. Add strings, and the question will become one of cost-benefit, and in this case, the government wanted to make sure that the money wasn’t refused.
That’s why I’m not sure what difference this is supposed to make:
That lack of specificity has led to calls for tighter restrictions on the next wave of disbursements, approved by the Senate last week as President-elect Barack Obama pledged to “change the way this plan is implemented and keep faith with the American taxpayer.” The incoming administration promises to create a system to track how the money is spent and place stronger limitations on executive pay.
Track it or not, the recipients will siphon as much out of the funding flood as they can. They’ll look out toward the future and leverage unplanned windfalls to increase their competitive edge when circumstances change, buying up or elbowing out smaller competitors. And if the government is so perspicacious as to know precisely how banks ought to spend the money, then there’s no need for the middle man.
Me, I say that the government should learn from my financial straits: Spending money that you don’t have doesn’t patch the floor in hard times; it digs a hole.