Finance Geek

When Treasury Secretary Henry Paulson announced last month that he would use TARP funds to directly buy shares of banking firms, many on the left and right rejoiced. With an alleged run on the banks in progress, federal dollars borrowed from a private sector already short on risk capital would supposedly lead to a revivification of the banking system.

To its proponents, Paulson’s plan surely sounded nice amid frightened markets, but so far the results have shown yet again that government intervention in the private economy is always and everywhere a false God. Since mid-October the shares of Bank of America, Goldman Sachs and Citigroup are respectively down 45, 51 and 60 percent. Many would note that this past month has been a difficult one for stocks generally, but over that same timeframe, the S&P 500 has fallen a relatively pedestrian 11 percent. It’s also notable that the shares of San Antonio based Frost Bank, a banking concern that refused TARP funds, are down a scant 4 percent.

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This entry was posted on Wednesday, November 19th, 2008 at 4:19 pm and is filed under RealClearMarkets. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.