In the House hearings/whippings of the CEOs of the banking industry,  Rep. Gary Ackerman (D, NY) rises to the occasion.

A gourmand of self-righteousness, he says he hears from the CEOs that the banks are lending: "we listen to you and we hear words, words, words and no answers. It seems to me and some of us that this money hasn't reached the street - that you're not loaning it out."  What did you do with all the money?  Jamie Dimon, CEO of JP Morgan, tries to give him a primer on banking and mortgages, but he doesn't want to hear it, he wants to pretend he's Law and Order, interrupting with the pointed questions.  "Can you tell us what you did with $25 billion [of TARP money JP Morgan recieved]?" 

And to further display his ignorance, he adds, "not what you did with all your other money, just that $25 billion."  As if the money is separated somewhere.  His and hers bank accounts.

Then he asks, "Why can't people get mortgages?"  That's it.  He means of course, why aren't you out there giving people mortgages?  What, to anyone who needs one?

Dimon:  We did $35 billion in mortgage originations [in 2008].
Ackerman: What did you do the year before?
Dimon: Approximately the same.
Ackerman:  So with $25 billion more, you gave out the same amount?  There's no increase.
Dimon (while having a stroke): But...
Ackerman:  If you did $35 billion last time, you did $35 billion this time, we gave you $25 billion more to do it, nothing went out then.

They must not have holes in New York.  The reason they got $25 billion is because without it, they would have lent out zero.

Of course they are hoarding the cash, tightening lending standards.  They want to stay solvent.  Or would you prefer they take TARP money and then go bankrupt?  Are bank deposits up?  

Businesses want lines of credit, but what if they can't pay it back?  Hell, what if they actually tap their line of credit-- that's money the bank no longer has that it needs to keep up adequate capital ratios.   They don't want to lend, they want to hunker down and ride out the recession.   Does Ackerman want them to lower the standards, lend to everyone who needs it-- with the taxpayer money? 

Some of these banks are completely insolvent, no amount of money will get them to increase lending, the hole is too big and it happens to be on top of an even bigger hole.

II.

But all this is beside the real point, which is this:  You might know how banks operate, that $25 billion in TARP is not automatically lent out, but he is supposed to know.  That's why he's there.   No one expects him to have been a finance expert before all this started, but he is supposed to be a finance expert now, that's his job.  But he didn't bother, he didn't think he needed to, he has his crazy paradigm that he's sticking with, wrong or not.  It's like a doctor who chooses not to learn about a new medication because "I'm comfortable with what I already know."

He authorized $800b, gave out $300b, and never once investigated how money gets used.

Worse than ignorance is that what he and Congress want are entirely contradictory things:  on the one hand give out loans to prop up the economy; on the other hand, stay solvent and don't lose the taxpayer money we're giving you to loan out to everyone; on the other hand, you jerks loaned out too much money.

Another Congressman actually looked at these CEOs, and said, "I don't have much personal experience with bankers, so I rely on my impression of the old, conservative banker, like  Jimmy Stewart."  That's how he imagines the banking system operates.  Fine, now that you know it doesn't work that way, could you at least go look up on Wikipedia how it does work?  Before you say we need more bankers like George Bailey, remember that he almost committed suide, and what saved him wasn't a sense of duty to his family or a desire to atone for his life's mistakes, but an angel.   Maybe an angel will buy up toxic CDOs?

That these men can be in Congress so long yet still be so ignorant not just of basic finance but of current events-... can anyone expect Congress to do the right thing, even assuming noble intentions, given that they do not understand what is happening and do not not feel any obligation to find out?  But they don't need to know all that new-fangled finance.   They're like Mike Birbiglia's mother:  "I'll fax this to you, but you'll have to fax it back when you're done, it's my only copy."

III.

One more thing: would everyone please stop saying the we, the taxpayers, are on the hook for all this money?  We're not.  Have your taxes gone up to cover all this spending?  It's no different than before, we want something for nothing, we want the lifestyle we deserve, not what we can afford.   Our time horizon for anything is our lifespan or less, never about the next generation.   "They'll have to find their own way."  How?  You're not leaving anything behind.   I have not met one person ever who was thinking in terms of saving enough to leave their kids something, anything, some legacy.  People barely think in terms of retirement, let alone dynasty.  Which is how we all got into this mess, and why we will not get out for another half-generation.