I mean wouldn't you think that when the government is offering a bail out to the banks, the banks would be lined up for their fair share of the money? So why aren't they?
It's really rather simple if you look at it in layman's terms: (which are the only ones I know)
All banks have camel ratings:
1- Top bank with lots of capital and liquid equity
2- Great bank with good ratio of capitol and liquid equity
3- Good bank with 15% or more of capital and liquid equity
4- Good bank with 10% or more of capital and liquid equity (most newer banks rates)
5- Bank that has had some issues with maintaing capital and holds many bad assets or loans
The Legislative branch of the government get together and, heaven forbid, even work a weekend for what they term "the biggest financial crisis of our lifetime". They decide that they must step in and "rescue" the banks.
How? Well by bailing them out financially? "We must rescue the middle class! Of course while we're up here rescuing the nation from the biggest financial crisis of our lifetime, there are a few earmarks that we would like to add to this "finacial rescue package"!" Couple of studies for cloves and the affect they have on men vs. women's libido. A case study for whether or not the caribou can remain unscathed when man has entered their environment? ETC.....19 earmarks tagged to the most important bill of our lifetime! WHEW! Thank you Federal Government! I don't know about you all, but I could care less what cloves do to men vs. women or any other earmark they broached during this week long bail out session!!!
Okay....so banks 1 & 2 are first in line for the government bail out. Of course with the feds there is always something attached to the money. In this bill the government says to banks 1 & 2- "We'll give you the money, but we want you to buy out banks 3,4, & 5 and rescue all their bad investments". Banks 1,2 say "Why? Why would we want to buy up stocks on banks that are already struggling, have minimal capital, high risk loans and to top it off pay you interest on the money that you give us to buy up these struggling financial institutions when we have nothing but sound capital and liquidity based on our loan practices over the years?" The government says, if you don't- we will not give you the money! Banks 1 & 2 say "see ya"!! It really is that simple! Why do you think the money is still sitting in Washington? They can't get anybody to take it! CAPITALISM.....Ain't it grand?